The Long Tail theory

Lately, I have become a fan of the "Long Tail" and am looking for its application in various business models.

The phrase "Long Tail" was first used to describe certain business and economic models by Chris Anderson in 2004. Examples are Amazon and Netflix. These are businesses with the distribution power to sell a greater volume of otherwise hard to find items at small volumes than of popular items at large volumes. The term Long Tail is also generally used in statistics, for example to display wealth distributions.

From Chris Anderson's blog: The Long Tail

The Long Tail, in a nutshell

" The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of "hits" (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail. As the costs of production and distribution fall, especially online, there is now less need to lump products and consumers into one-size-fits-all containers. In an era without the constraints of physical shelf space and other bottlenecks of distribution, narrowly-targeted goods and services can be as economically attractive as mainstream fare ". The graphical representation looks like this:

Regression Analysis and Randomized Experiments

It has been a while since my last blog entry. Frankly, I missed blogging.
Needless to say, only regular blogs with interesting content get read. So, I will have to become more disciplined.
In this blog, over the past two months, I have made reference to two very useful and interesting books, Tom Davenport's "Competing on Analytics" and Ian Ayre's "Supercrunching". Prof. Davenport's book was first out of the gate in early March 2007 while Professor Ayre's book came out in August. In a recent entry his own blog, Professor Davenport has brought out some good points about Supercrunching. Two analytical techniques that are quite useful and get some space in Supercrunching are Regression Analysis and Randomized Experiments. And of course, the main take-away, for me, are the many good examples of data mining that have worked.

Finding a mate using economic analysis

I believe that "Freakonomics" has sold 3 million copies worldwide. The authors, Levitt and Dubner are keeping up their creative output with their blog, and I don't miss glancing at it with my morning coffee. This entry from yesterday, although borrowed from another source is a hoot. Enjoy!

Google, Power and Transperency

"Who is afraid of Google" is the cover story in the Aug. 30, 2007 issue of The Economist. It is a superb article. We all agree that Google is in the data business: Between your search history (Google search), your mail (Gmail), browsing history (Google toolbar), your financial transactions (Google payments), your blog habits (Blogger) and all other behaviors reported by Adsense cookies and Google analytics, it can be argued that Google has a "complete" view of many of our online behaviors. It is becoming the custodian of a wide and intimate range of information about individuals.
We will soon find out what society will tolerate.

Evidence-based medicine

A fascinating book I recommend is Jerome Groopman's How Doctors Think? Maybe you are wondering why am I mentioning it in this blog. Well, there is a connection to Analytics.

Dr.Groopman believes that today’s physicians are increasingly encouraged to behave as if they were computers, and to reason from flowcharts and algorithms. This is intended to produce better diagnoses and fewer errors; it is also embraced by insurance companies, who use it to decide which tests and treatments to approve. This approach can be useful for “run-of-the-mill diagnosis and treatment — distinguishing strep throat from viral pharyngitis, for example,” Groopman writes. But it can be limiting for difficult cases.

Another observation: Why are doctors such good writers? Atul Gawande and Michael Crichton are two names that come readily to mind. Dr. Groopman himself writes regulary for The New Yorker. Check out his web-site which has links to many of his pieces and to his blog.