Instead of concentrating on blockbusters, the main bulk of revenues is generated through a 'long tail' of niche products. Individually, these neither demand high volumes, nor allow for a high margin. If a vast variety of these products are offered in sufficient amounts, the profits from resultant small sales can add up to a significant amount.
How they do it: Spotify features a library of tens of millions of songs, with 20,000 songs added daily. The library features high-profile acts with hundred of millions of ”listens” as well as less-know musicians, whose songs attract less than a couple of thousand ”listens”.
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How they do it: CDnow, Inc. operated an online shopping website that sold compact discs and music-related products. In 1995, it already provided listings for over 100,000 music CD and cassette titles via its website.
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How they do it: Nintendo offers a wide variety of games for its game consoles. The games are not necessarily developed from Nintendo itself but all need to be certified by Nintendo to run on the consoles. The large variety of games allow for targeting of different age groups and genres.
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How they do it: Amazon Kindle has a library of millions of digital books. A new Kindle e-book is published every five minutes. Amazon Kindle is offering bestsellers and a vast majority of niche publications on its platform while ensuring that they are competitively priced. Hence it allows them to adress a big audience of potential customers through its wide offering and good prices, rather than few high margin products. Individual margins might be low but the sheer majority of transactions add up to a significant revenue.
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How they do it: By making their search engine universal and allow customers to look for anything in the internet, Google has become the leading search engine provider. It’s value proposition is to give customers exactly the search results they are looking for, no matter how small the niche. This leading market position supports itself as with a large enough customer group, the probability that someone has searched for a certain thing before increases.
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Below, the top industries for the pattern "Long Tail" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 5 firms using this pattern.
Below, the pattern "Long Tail" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
