Mass Niche Markets & contextual narrative

May 23rd, 2006

A short interview with Chris Andersen of the Long Tail book and blog

When Chris Anderson, editor of Wired, started to write about the theory of the Longtail a couple of years ago it seemed to cause a satori-moment among readers – an ‘a-ha’ that compelled folk to spread the theory so much that today it has become part of the daily business lexicon. The theory suggests that the fall in production and distribution costs, especially online, will allow companies to ignore product “hits” in the market and make money by targeting niches. Chris is about to release a book on the Longtail and we wanted to ask him not only to explain the theory further – but also his approach to promoting his book

Our world view is very much aligned, in that we see the growth of mass niche markets that enable businesses to sell via a more contextual narrative and demand led model, which creates value for businesses and their customers.

Previously this was not possible, but I think many industries are now waking up to this new socio-economic paradigm.

Andersen references a Lego case history

which now only ships you the pieces you need rather than expensive bags of (too many) assorted parts. They (LEGO) pack the kits by hand, piece by piece. In one of Lego’s Denmark factories, one packing station is now dedicated to Factory. The 520 pieces available in Factory are a number large enough to be interesting but small enough to be stored in bins that are no more than a step or two away for the packer. (The previous model used prepacked bags from the Creator series, which it could ship from a US warehouse). As it happened, Lego had recently automated some other parts of its Denmark operation so it had a few extra workers, who it was able to reassign to this job.

It’s not a big job so far–only about 3,000 kits have been sold from the 75,000 uploaded – but that relatively small number and high upload-to-purchase ratio may be in part due to the high kit prices imposed by the previous inefficient parts strategy, which could easily double to price of a model. Now that Lego has been able to drop the average model price by 60% with this only-what-you-need packing process, I suspect more people will be tempted to buy what they design.

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