“If the 20th- century entertainment industry was about hits, the 21st will be equally about misses.” The two concepts, Long Tail and Free, are changing the way companies think of traditional revenue streams and ways to market their product. The Long-tail concept is the idea that if you were to add up all the “non-hits” or “non-mainstream” music, movies, or books sold, they would equal the same as, if not more, all the “hit” movies, music or books.
The freemium concept was created years ago in the early 1900s by King Gillette. King hatched a master plan to give away his razor for free, but by doing so, creating demand for the blades needed to use the razor. This mastermind plan seamlessly turns into one of the most iconic marketing tactics used to this day. Chris Anderson describes this method as ” the idea that you can make money by giving something away is no longer radical.”
These two approaches have changed current business models. Online companies such as Amazon, Rapsody, etc are now capable of expanding the amount of products they can offer to their consumers because their products aren’t having to compete for shelf space. As Chris Anderson points out, there is more money to be made in the 80% non-hits verses just focusing on the 20% hits. Additionally, companies are no longer worried about the overhead of adding more products to their product lines, therefore making it even easier for them to add more products to their library. As Hung explains, “with no shelf space to pay for and…no manufacturing costs and hardly any distribution fees, a miss sold is just another sale, with the same margins as a hit.” The way companies market their products have also completely changed. We have now shifted to a more streaming consumer environment. Customers want to enjoy the benefits of pandora, Spotify, and other streaming services without having to pay for them, but these companies also offer an alternative paid option that doesn’t include commercials or ads. These freemium type business models allows consumers to try the products or services without having to commit any money. The Internet has completely transformed the way businesses operate. Consumers are more knowledgeable than ever.
Since the development on review pages on websites and the ability to compare prices between competitors, the consumers are now in control of their buying experience. This online retail evolution has forced companies to be price competitive and ensure their products are quality items, as to prevent bad reviews. I believe that as we continue toward a more online storefront model, as opposed to brick and mortar that consumers will continue to become more and more knowledgeable and powerful within the buying process. The need for a diverse product portfolio will be expected by consumers.
In the videos and articles on the D school, David Kelly talks about the importance of creative and innovative thinking. He compares the process of finding your creative confidence to the fear of snakes, which I thought was genius. Anything that is new and unchartered territory can be scary and intimidating, just like a snake, unless you face the fear and conquer it straight on.
The role of creativity and design will continue to be more important to companies as the way consumer expectations change. Schools such as the d.school will also become more and more prevalent as employers demand these innovative and thought-leader employees with the skills taught in these classes. Yoohee Hung describes the courses at the d.school as, “tackle various problems, the methodology to think about the root of the problem, and think about making products and services that have never existed, is consistent.” The ability to empathize with consumers to understand their pains and what they are looking for in a product or service is pivotal to creating a successful product. This way of creative design and thinking is the future and should be taught across different fields of study. These skills will help to hone a more innovative way of thinking.