Long Tail Economy

The concern about whether consumers are willing to pay for online content or not has been a hot topic in media economic research. Unlike traditional media, the nature of online media provides another way to make a profit rather than asking readers to pay. Cha mentioned the long tail economy to explain this phenomenon.

Three forces of the long tail economy are “more producers/content”, which extends the tail to the right, “the low cost of distribution”, and “more access to niches.” (Anderson, 2006). Those three characteristics of online media are very different from traditional media, and they provide a way for online media to make a profit.

Social Network Sites (SNS) collect users’ content, and they can monetize this content. That is, syndication is a major source of revenue for SNS.  When more content generated by users brings in more revenue, then the SNS can provide better service. This will attract more users which in turn can the site attract more advertisers. In this sense, users are not using a free service. They produce content that SNS uses to make a profit.

Another way that online media make money is due to low cost of distribution. Users distribute their messages without spending a penny. Compared to traditional media, it probably cost SNS less to reach target customers for advertisers.  The lower the cost, the larger the profit. Once SNS can reach a more precise target market than traditional media, why can SNS not make a more profit than traditional media?

The third force of long tail economy is “more access to niche.”  It is easier for online media to target a niche market than traditional media. What I think interesting is not about how much niche market can online media have. What amazing is no matter how small that market is can support the survival of online media. Like Cha mentioned in the article, Facebook derives more revenue from niche markets than from hit markets. What I am thinking is that can traditional media rely on small market, just like SNS do?

Anderson, C. (2006). The long tail: Why the future of business is selling less of more. New York, NY: Hyperion.