Personally, I've been miffed by the candy industry's constant push in price lately. While they can chalk up price increases to distribution capabilities, can't they apply the same principles of Netflix and Rhapsody and so on?
There's an interesting dive into this that leads me to believe there is a limitation to The Longtail effect. Consumption of pre-existing goods which can be recycled or reused (books, cars, music, speeches, other intellectual properties, etc.) can have variable costs which spiral down over time because they assume a one-time cost creation structure. In other words, once a book is written it is written; once it is printed, it is printed.
However, consumable goods such as candy, health bars, protein shakes, baby formula assume constant cost creation structures. In other words, once a piece of candy is made, it is made but another must be made to replace it. It cannot be recycled or reused once consumed.
So then, we see a gap in The Longtail flow -- it cannot be applied across the consumer continuum where one-time consumable goods apply ... much to the disappointment of my sweet teeth.
And to the delight of your dentist!
ReplyDeleteAvery raises a great point and I wonder whether there is a news or media analog. While anybody can make a "movie" on a video cell phone, top directors like Ron Howard make better movies - and their "brand" makes them instant hits. So you can "recycle" Apollo 13, with a dwindling return, down the long tail - but to make another $200 million for the studio, he has to make another blockbuster. Is there anything like "Holton's Candy Theory" in news?