The Long Tail and Your Niche: Why dare starting your (online) business
You know that I do believe there was never a better time to start a business. Because we all want to be free and well. And a successful (home) business is the ultimate freedom and being well.
But I am not talking about any business like plumbing (what does Joe the Plumber do these days, by the way?) or CPA. And I am sure that you wouldn’t claim that plumbing is your niche, your hobby, your area of expertise. The same with the CPA. These are typical offline jobs – only created by demand.
The problem about these jobs – not speaking about you liking or disliking them – is that they are nearly completely OFFLINE. In your area there are so and so many neighbors with such and such a need of plumbing. And as long as you do not start to drill holes in their installations at night (not a strategy I would recommend), the demand in your area will not grow overnight. And you cannot serve the area 100 miles away, since there are costs and travel time involved and this area will have its plumbers, too. Not to speak about energy efficiency here.
But why are we used to “standard” jobs like “plumber” or “lawyer”. Why do ie. Clowns have to travel? Because people only can make a living if enough demand exists in their area of service. A dentist without customers (people with teeth) won’t run his practice for long. So in history the classic “jobs” developed because if you did and learned this or that you would be able to make a living and marry Mr. Miller’s daughter. The best way to impress Mr. Miller and hopefully his daughter was to become a very successful doctor or lawyer.
So our image of what a real job is developed by a demand scheme that always was local. Very similar (we all do have plumbing) but nether the less always local. The same in your Wal-Mart. Wal-Mart has only so much space on their shelves. In order to have a local advantage over the local competition (K-Mart, Macy’s…), they have a central buying department which kind of buys “locally” for the whole US (better buying prices). If you want your product on their shelf you compete with a huge amount of competitors about the buying decision of one “local” guy at Wal-Mart’s central buying department. Although the distribution would be US wide (or further) your “market” is this one, probably not very likeable guy at Wal-Mart (I was a central buyer for a big department store chain, I do recognize me 🙂 )
So we learned that the classical jobs and selling are about competing locally. If Joe the Plumber is in your town, you probably have a visibility problem against him (how to make OFFLINE businesses more successful with the internet see another post). Your potential customers are limited, especially by the radius around your home you can serve economically.
This is changing. In his groundbreaking book “The Long Tail” Chris Anderson from Wired magazine shows that the Internet changes the rules of the game.
While until now a Pop group could only live well if they made it into the charts with some “local central buyers” at the major record labels deciding who got a chance, the distribution over the internet WORLDWIDE is nearly…FREE.
The “local” distribution restrictions for getting your great new record to the stores changed from somehow bribing those very powerful “central buyers” at the few major record labels to having the possibility to spread the word and the music nearly for free.
The bottleneck “area/local” can be kicked. You can…now.
Now, it is not totally free. What you really do need on the internet is one very important thing: TRAFFIC, exposure. We will cover that in another post. But now we are not dependent on these braking bottlenecks anymore. We are kind of freed.
This has NEVER happened in human history before. So whatever can be distributed electronically (books, music, ideas, photos, voice, video, software, knowledge, coaching) directly has a kind of worldwide “area”.
So: if you love crafting, up until now you probably could not live on that. Your “customer potential” in your area was too small. Now with the internet, you can show the whole world your crafts (…video, photos…) and just have it shipped by US Post (or UPS).
True, you could do that already…but nobody found you in Omaha as long as you didn’t put big money in a media campaign.
The difference is now you just put up a web presence and follow certain steps to get heard. Actually if you do it right (I am not aware of a alternative way that works) the search engines bring you traffic and you can deliver and monetize. My favorite school of thought calls it the CTPM (4-step) process:
What you have to do is to build your webpresence in the way that search engines deliver you organic (read free) traffic. THEN you can distribute your goods all over the world. Reaching the world is no bottleneck anymore. No shelfspace you have to fight for. So the bottleneck you could argue is not totally gone (now it is traffic while it used to be location), but the costs for that have dramatically fallen. For example the Service SiteBuildIt has a huge success rate over 62 % in getting its customers into the google TOP 3 %. You have won when your site is there. For about 30 USD a month. Compare that to a worldwide media campaign.
Or if you prefer writing you can distribute your book or music directly. So the Internet changes everything. Now your niche can make you money and a life. Because now you nearly have a worldwide audience, potential customers.
And this changes the demand. While some years ago you as a customer only had the chance to buy the preselected goods (ie. on Wal-Mart’s shelves, when the central buyers decided if a product was in high demand or not), now can go on the internet and find the very special niche type product you always wanted. There are people making a great life on juggler’s stuff (never would have thought that).
So back to Chris Anderson and the book “The Long Tail”.
He predicts and shows that the removal of the bottleneck “distribution”/shelf-space/air-time/area people also demand more and more products and services. And it’s not the “hits” so much which will earn the big money in the future. More money will be spent for more products, the “Long Tail” in the distribution graph:
The Long Tail in delivered goods is the yellow part
It is not anymore that only the “hits” (red area) make money, and the third or less best selling product gets unavailable, even if you wanted to buy them – not on the shelves.
Now you can get it on the internet. And here we go. You now have your niche to offer it to a worldwide audience. And even if I or my family in Washington D.C. is not interested in your service/knowledge/book/crafting…, there are more than 6 billion people (alright, some do not have internet, but you would wonder where some hits on my pages are coming from) to find your customers…and to make a living off your niche.
More so: The more “niche” it is (less competition worldwide), the more chance you have of quickly making a living on it.
As Chris Anderson in “The Long Tail” puts it:
“…the future of business does not lie in hits – the high-volume end of a traditional demand curve – but in what used to be regarded as misses – the endlessly “long tail” of that same curve. As our world is transformed by the internet and the near-infinite choice it offers consumers, so traditional business models are being overturned and new truths revealed about what consumers want and how they want to get it. The world of books has been transformed by Amazon […] a similar transformation is coming to just about every industry imaginable. Where ever you look, modest sellers, niche products and quirky titles are becoming an immensely powerful cumulative force.
So the internet is our freedom. Our niches and interests have a chance to prosper and make us a life or even rich. Listen to this interview with Chris Anderson here.
Addendum: I am an affiliate of amazon and used to be of the interviewer Ken Evoy of SiteBuildIt.