The Volume / Niche dilemma

The Volume / Niche dilemma

Entrepreneur and manager friends, when a resource is scarce, the consequences can be truly surprising. A few years ago the radio broadcast "Hit Parade", one of the leading programs of Radio 2, was in vogue. The first episode aired in 1967 with the conduct of Lelio Luttazzi until 1976. That ranking of the 10 best-selling singles conditioned to along the record market. Those records were being promoted and were the hits of the week. Success generated success. Who was on the list multiplied the sales. Those who were out were often relegated to a lesser role.

In 2019, before the pandemic, about 2,500 cinemas were active in Italy. In multiplex cinemas, strong titles took the best theaters and often several theaters at the same time. If we think of Checco Zalone's films, distributed in over 1,000 copies, over a third of all theaters were occupied by one of his films. 99% of the films therefore found themselves sharing the remaining crumbs, also because, apart from Checco, there was also the classic Marvel film and maybe some Oscar-winning titles. In summary, few films occupy the market for months. If you go to the bookshop (or even the Autogrill), you will find the list of best sellers on display. These titles change infrequently, with the result that whoever enters the list can stay there for a very long time.

And then, there are the others…

Marketing and statisticians know the term “long tail”. This expression was coined by Chris Anderson in a 2004 article ("The Long Tail") on Wired Magazine to describe an economic and commercial model used for example by Amazon, in which revenues are obtained not only from the sale of many units of a few objects (the so-called "best sellers" which constitute the "short head" as opposed to the "long tail"), but also by selling a few units of many different objects.

The term is also commonly used in statistical sciences, for example to define distribution models. In these, a population of high frequency or value ("short head") is followed by a population of low frequency or value ("long tail"), which gradually decreases ("tail off").

Ad For example, applying the concept of long tail to publishing, a generalist magazine with millions of readers would be in the initial part of the curve, while everything else would represent the long tail in which hundreds of niche magazines are placed, perhaps more specialized and with few readers each. In theory, the combined readership of these many small magazines could exceed the total readership of the leading magazine. This means that a publisher may decide to produce many magazines with few readers and perhaps sell more copies than the publisher who publishes only the market-leading magazine.

Thinking about the digital world, many initiatives have a quantitatively irrelevant success. Most YouTube videos have fewer than 30 views, but you don't need to have hundreds of millions of views like Michel Jackson in Thriller to be successful. For example, 100 views (or listens, for podcasts) are enough but the right people. If you make a podcast targeting the Chief Information Officers of large corporations and 100 of them listen to it carefully and then contact you, you are not Michael Jackson, but you did bingo!

This is just what happened to the industry of cinema in the 90s when the number of theaters multiplied. The same goes for an increasingly fragmented TV, where there is no longer the audience of 20 million spectators nailed to Rischiatutto and Portobello, but more modest numbers are enough as long as they are focused. For example SuperTennis TV has been visible for years on digital terrestrial channel 64 and therefore the (relatively) few, but fair, viewers justify its existence.

Thinking of the multiplication of opportunities offered by the long tail, we can start to imagine the infinite or almost. Outside of physical bookstores, there will be room for a virtually unlimited number of e-books. Same for YouTube videos or Netflix shows. With digital, the pendulum seems to swing in favor of the long tail

But ... there is a but ...

It is since we discovered the long tail that the pendulum swings back and forth. Because many businesses are based on attention and attention is scarce and difficult to scale.

Instead of thinking about an infinite number of successful stocks, the market starts to segment. So, in addition to a blockbuster film, more markets are created, more audience segments. But within those segments, there are "best sellers", therefore "short heads" built on multiple "long tails". Yes, having the most popular podcast in the world is something important. But even having the podcast most listened to by a certain audience is still valuable.

The problem occurs when trying to average and tone things down, generalizing messages and hoping for success on a large audience but that will not come. Or when you spend too much to then arrive at a modest result. The opportunity lies in finding a valid audience and matching the objective and budget of the project to the market and to the people who really want to use it.

In conclusion

Friends entrepreneurs and managers, if you are not the new Michael Jackson, but, equally, you do not want to end up in the oblivion of the generators of initiatives noticed only by you and your cousin , the answer lies in a mix of "short head" and "long tail". Specifically, I offer you 3 ideas:

Choose an audience, segmented and focused enough to be addressed precisely but broad enough to make economic sense Create something special and powerful for them, a centered offer and unique And then promote it in a focused way Your future: being the “short head” of your “long tail”, being the rooster of your chicken coop. No longer the volume VS niche dilemma, but volume IN the niche.

It can be done. Do we want to talk about it?

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