Home > Entrepreneurs > Startup Contributor

The Long Tail Business Model

By Luis Fernando Pelayo - ATALIA


By Luis Fernando Pelayo | Founder - Thu, 02/02/2023 - 09:00

share it

I remember perfectly when I first heard this theory and it blew my mind. Well within my knowledge (and I think that of many), besides what I had always heard, was that "selling to a market where there are many people with the same interests is better than selling to one where there are few people." If you think about it quickly, it sounds very logical that your business should be aimed at a large number of people so that at the end of the sales funnel, the number of customers will be rewarding. But another great option, which is what today's theory is all about, is the Long Tail Theory. 

This theory was coined by Chris Anderson in 2004 and details a strategy that is used by big companies like Netflix, Spotify and Amazon, among others. In fact, he  published a book called, The Long Tail: Why the Future of Business Is Selling Less of More; that is, selling less but of many products. 

We are talking about a strategy where the target audience is not the average audience, but that which popular sales still fail to satisfy. Let's take an example: 

Netflix has released Pinocchio, a movie that targets an average audience because it is a story popularly known and accepted by most of the public. At the same time, Netflix has movie "X," which is a cult or art film that is unknown by most of the popular audience but, and here the word “but” is very important, that doesn't mean that the movie will not be well accepted by MANY subscribers. Can you see  where the theory is going?

If not, let me explain: The strategy we are talking about invites us to think about those audiences that are looking for other types of products that are different from popular choices; although they will be small sectors, they are still important and offer very good sales opportunities. 

Is it a smaller market? Yes

Does it mean less income? Not necessarily. 

What happens when you are looking for something and you can't find it anywhere and then, suddenly, you find a store that has it? You become one of their most loyal customers, right? Well that is one of the best effects of the long tail market: your customers will be loyal customers because there are only a few places where they find the product you are offering. Thus, they’ll thank first for having thought of them and second,  for putting the product within their reach. 

Let's say that the key word in this long tail strategy is "specific:" focus on a more specific market or on a niche market. 

In fact, this has a lot to do with the Pareto principle, which says that 20% of what you do produces 80% of the results you get. The same applies here: 20% of the products are consumed by 80% of people but also a minority group that would be the 20% consumes a large amount of products (80%). This is how we see the enormous potential of "minorities" or niches. 


Here are a couple of examples of this theory:

- Amazon, which offers traditional best sellers, but also a catalog of almost 4 million "other" books of lower demand, and all generate sales.

- Netflix offers movies like those presented in movie theaters, but it also has such a diverse and differentiated catalog that almost anyone will be able to find something that interests them.

You don't need to be a technology giant to do this;  any of us can do it with our businesses. The key is to look for what part of your market you are not serving and, no matter how small it may be, create something for them and measure the reaction. Besides, the interesting thing about working with this theory is that it is much easier to create something that we have already talked about in previous articles: community:  a group of people united by a common taste, and if this taste is difficult to please or find, so much the better! The stronger our community will be. 

Currently, the theory of the long tail is considered a business model among the many that exist. I think it is very noble because you can sell something specifically for "the long tail" or you can add to your sales catalog a space targeted for "the long tail" while continuing to sell the more popular product or service. 

Now that you know this theory, would you dare to use it? What precautions would you take? Remember to listen to your market, think about the idea, apply it and measure it until you find the idea that best suits you. 

Photo by:   Luis Fernando Pelayo

You May Like

Most popular