Classroom Companion: Business

 
Chapter 16 · The Long Tail

---

233
16
printing in advance or as e-books. Books that are low in demand are offered 
through a combination of third-party booksellers, e-books, and on-demand print-
ing of digitally stored books. Hence, Amazon can accommodate the 10,000–
100,000 books offered by a physical bookstore (the head) and, in addition, millions 
of other books not offered by the physical bookstore. These millions of other 
books that are not offered by physical bookstores constitute the tail—books that 
are low in demand individually, but collectively constitute substantial sales. This is 
called the long tail of supply.
An illustration of the long tail concept is shown in 
.
Fig. 
16.1
. Here, products 
are ranked (abscissa) according to sales (ordinate), where the top-selling products 
are those in the head and the books that sell the least are in the tail. Chris Anderson 
observed that companies like Amazon earned about half its revenue from products 
in the tail. Anderson based his conclusions on observations made by Brynjolfsson 
et al. (
2003
). Brynjolfsson and coworkers found, for example, that on Amazon, 
2.3 million book titles were available, while the shelves of an ordinary large book-
store contained between 40,000 and 100,000 titles. They estimated that the sales of 
books not found in ordinary stores amounted to between 20% and 40% of the total 
sales of Amazon. In a new survey published in 2010, they found that 36.7% of 
Amazon’s sales came from the long tail (Brynjolfsson et al., 
2010
). This is illus-
trated in 
.
Fig. 
16.2
.
16.2 
 Internet and the Long Tail
In a paper from 2011, Brynjolfsson et al. also argued that the long tail phenome-
non is a common aspect of many Internet businesses (Brynjolfsson et al., 
2011
). 
Low production costs, cheap storage, small shipping costs, and efficient informa-
tion searches are the key ingredients for long tail businesses. They emphasized the 
Products ranked according to sales
Sales
Head
Tail
. Fig. 16.1 The long tail. (Authors’ own figure)