Dear Readers,
When you launch a new product or service, you have a choice.
It's tempting to go for the bestseller list, to create a mass market hit. This is the box labeled 1 on the tail above. Everyone wants to be here. It's where ego meets profit. A home run. Pixar lives in box 1.
In order to have a bestseller, you must reach the unreachable. Most of the people who buy a bestselling book buy no other book that month, or even that year. The very nature of the top of the list is that you're reaching not just the frequent purchasers and the passionate, but those that only show up for the hits.
The second pocket is labeled, conveniently, #2 (not because it's second best, merely because it's the second one I'm mentioning). This is the profitable, successful niche product. Roger Corman's horror movies, say, or Vandersteen's $3,000 stereo speakers. Not a product for everyone, certainly, but among those that care and are choosing to pay attention, a fantastic choice.
The reason you can make money in the niche pocket is that it costs far less to compete here. First, because there's less competition and the competition is less fierce, and second because it's cheaper and easier to reach your target market because they're choosing to pay attention.
There's a spectacular amount of overhead associated with a mass market hit. You need to buy shelf space and hype and promotion and noise in order to momentarily have a shot at stardom. If you don't push your way into this arena, you'll be ignored.
The third pocket is to own the long tail, to make a small royalty on a huge range of products. That's CDbaby and iTunes and the Garrett Wade tool catalog.
And The Dip? The Dip really kicks in when you're comparing the first pocket to the second.
If you want to compete with all of those folks shortsighted enough to shoot for the big win, you need to invest a great deal of time and money. And very few make it through the Dip... there are far more movies like Speed Racer than Iron Man. Speed Racer got stuck in the trough. It wasn't the best in the world, it wasn't the one the masses chose to see, it lost. Hundreds of millions of dollars spent, but not enough time or talent invested to get through the Dip.
When the masses went to see a movie in June of 08, they had a choice. Naturally, they chose to see the movie that was the best available, the one they wanted to see the most. If you're the third best choice, you lose.
It's tempting to go for the bestseller list, to create a mass market hit. This is the box labeled 1 on the tail above. Everyone wants to be here. It's where ego meets profit. A home run. Pixar lives in box 1.
In order to have a bestseller, you must reach the unreachable. Most of the people who buy a bestselling book buy no other book that month, or even that year. The very nature of the top of the list is that you're reaching not just the frequent purchasers and the passionate, but those that only show up for the hits.
The second pocket is labeled, conveniently, #2 (not because it's second best, merely because it's the second one I'm mentioning). This is the profitable, successful niche product. Roger Corman's horror movies, say, or Vandersteen's $3,000 stereo speakers. Not a product for everyone, certainly, but among those that care and are choosing to pay attention, a fantastic choice.
The reason you can make money in the niche pocket is that it costs far less to compete here. First, because there's less competition and the competition is less fierce, and second because it's cheaper and easier to reach your target market because they're choosing to pay attention.
There's a spectacular amount of overhead associated with a mass market hit. You need to buy shelf space and hype and promotion and noise in order to momentarily have a shot at stardom. If you don't push your way into this arena, you'll be ignored.
The third pocket is to own the long tail, to make a small royalty on a huge range of products. That's CDbaby and iTunes and the Garrett Wade tool catalog.
And The Dip? The Dip really kicks in when you're comparing the first pocket to the second.
If you want to compete with all of those folks shortsighted enough to shoot for the big win, you need to invest a great deal of time and money. And very few make it through the Dip... there are far more movies like Speed Racer than Iron Man. Speed Racer got stuck in the trough. It wasn't the best in the world, it wasn't the one the masses chose to see, it lost. Hundreds of millions of dollars spent, but not enough time or talent invested to get through the Dip.
When the masses went to see a movie in June of 08, they had a choice. Naturally, they chose to see the movie that was the best available, the one they wanted to see the most. If you're the third best choice, you lose.
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