Long-tail distribution in the Internet and open source Software…

January 18, 2008

 

I was reading Anderson’s blog and I found it very interesting. Anderson’s theory is a big tag to change the world of business. Anderson’s theory on the internet is “it is very easy to sell unlimited choice of products through the internet to the billions of people which are transforming a consumer culture based on big hits and best sellers into one that supports more idiosyncratic, specialized niche products”. He wrote “With online distribution and retail, we are entering a world of abundance. And the differences are profound”. Time magazine said “If Anderson’s thesis is correct, most media and technology companies will have to do no less than rethink the core of their business”.

Big companies are convinced with the long tail and it is very relevant for any business. For example Microsoft relies on monster software hits like office. Long tail is the perfect way to look at any open source software and understand how it is going to save the time.

Question can be asked, “Should price get lower or higher as you more down to tail?”.

After reading the blogs I have found, for thing people want like entertainment, the price should be lowered to encourage exploration and for things people need like information, you can raise the price.

..... Romiz

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2 Responses to “Long-tail distribution in the Internet and open source Software…”

  1. Jeremiah Blaquière Says:

    One would think that because the world is becoming more globalized, there is so many more target markets a company could consider, not to mention the size of their current target markets.
    On this note because there are more consumers for any given target market, one would suspect that ALL market prices would DECEASE, because company’s breakeven points would be much lower with the price of products/services staying constant. By lowering prices in any given market, companies could possibly sell more, with having the cost lower.
    With that do you think that prices would remain the same on products/services that could only be obtained locally or with companies that offer many products/services would they lower their prices in one market because another market would be doing a lot better?

  2. romizuddin Says:

    Well said Jeremiah, I just want to add one more point. Supply and demand are two important factors that influence the price. Both of these factors influence the price of goods. If there is a large supply of product/services which few people want to buy, the price of these product/services will go down. On the other hand, the price goes down when demand usually increases. Ultimately a balance between two factors is reached and the optimal price for the product/services is determined.


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