Chris Anderson, Editor-in-Chief of Wired magazine, published The Long Tail: Why the Future of Business is Selling Less of More in 2006 after writing an article in Wired of a similar title back in 2004. This is another “must read” book that provided me with a number of insights into the scalability of businesses on the internet. Using a few examples, like Amazon.com and Rhapsody, Anderson demonstrates how the value proposition in retail business shifts when retailers utilize the internet. Typically, stores stock the items most likely to turnover (sell) the fastest since physical shelf space is at a premium. The better your selection, the higher your gross revenues. Anderson shows that the long end of the traditional demand curve is longer than many realize. An example of contrasts is the demand for music downloads.

The largest music retailer in America is Wal-Mart. The average Wal-Mart stocks 4,500 unique CD’s. The top 200 albums account for 90% of Wal-Mart’s CD sales. Rhapsody has approximately 2 million tracks available. The top 25,000 tracks on Rhapsody are the equivalent of Wal-Mart’s 4,500 CD’s. Sales of the next 75,000 tracks (from 25,001 to 100,000) are nearly 25% of Rhapsody’s downloads and there are sales beyond that. From 100,000 to 800,000, the downloads are about 15% of Rhapsody’s totals. According to Anderson, every time Rhapsody adds a track, there’s at least one download a month indicating that someone in the world is interested in purchasing even the most esoteric track. Rhapsody doesn’t have to give up shelf space to add these tracks. Once they’re digitized and added to the virtual inventory, they’re available to the consumer.

Anderson concludes by saying that successful internet companies will adhere to two rules: 1) make everything available and 2) help me find it. I keep his book on the shelf nearest my desk and I subscribed to his blog’s RSS feed.

Despite being the CEO of an internet-based education company, I have had difficulty in getting my hands around the discussions about Web 2.0 and social marketing. Groundswell: Winning in a World Transformed by Social Technologies“, authored by Charlene Li and Josh Bernoff, may be the best text that I have read on the subject. The authors are partners at Forrester Research and provide 25 different examples of companies that have used relationship marketing, social networking, the internet, and various research tools to increase their customer satisfaction and either increase revenues or save costs. Their four step POST (people, objectives, strategy and technology) process for creating social marketing strategies is easier to remember for foundational purposes but important to consider implementing the technologies necessary. I enjoyed reviewing some of their charts that allow you to profile your customers regarding their critic/creator/joiner/spectator tendencies.

I read this book during a round-trip flight to the West Coast which is usually when I catch up on my sleep. I also sent emails to friends and colleagues recommending the book and took the initiative to subscribe to the Groundswell blog. I’ve even asked the gurus who maintain my website to add the same RSS or email subscription option. The book was great and I hope I learn a few things by subscribing to the blog as well.