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10% of alcoholics buy 75% of beverage companies alcohol - long tail isn't real!
350 sats \ 7 comments \ @tomlaies 4 Feb 2024 econ
10% of Americans drink more than 10 drinks per day. That 10% consume 75.1% of total alcohol. Which means alcoholic drink companies are basically in the business of supplying alcoholics. Without alcoholics, their revenues would be a quarter of what they are.
https://pbs.twimg.com/media/GFgr3ESWMAA-rfA?format=jpg
One of my other smaller gripes about economics is the lie of the long tail. Long tail often isn't real. Heavy consumers drive revenue and profit. Focusing on the long tail as some sort of deeper well to draw revenue does. not. work. Long tail isn't real.
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0 sats \ 6 replies \ @Undisciplined 4 Feb 2024
That's an interesting fact, but I don't understand what your gripe is. This phenomenon (colloquially the 80-20 rule) is pretty well understood.
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3 sats \ 5 replies \ @tomlaies OP 5 Feb 2024
Tell that to startups trying to eat the crumbs after big competitors ate the cake. Like Spotifys small musicians ambitions, Amazons unprofitable consumer devision, ducking investopedia etc
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0 sats \ 4 replies \ @Undisciplined 5 Feb 2024
gripes about economics is the lie of the long tail
I still don't understand what you're referring to. Is it the misleading way mean averages are used as though they're representative: i.e. "The return on investment of going to college is high". If so, I've just never heard that referred as a "long tail". It seems like you mean something else though.
Economists often use median values, rather than mean, precisely because they understand the skewness of these distributions.
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29 sats \ 3 replies \ @tomlaies OP 5 Feb 2024
It's not the same as the 80/20 rule. The 80/20 rule refers to the amount of effort and reward for this effort.
The long term refers to the amount of money and customers sorted by popularity. The idea is that for Spotify there might be a lot of money in streaming Taylor Swift but there might also be more money in streaming thousands of musicians that each get few hundred listens per month. With this idea a lot of startups get pitched to cover niches, get funding, and even big companies sell this idea to shareholders.
I think long tail is almost always a myth. There is no f*cking money in serving many small consumers. Spotify didn't push their earnings with small musicians and podcasts, alcohol vendors don't make money with the bottom 50% of their customers. It's a myth, don't waste your time with building such a startup.
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0 sats \ 2 replies \ @Undisciplined 5 Feb 2024
The 80/20 rule refers to the amount of effort and reward
That's just one example of the 80/20 rule. It is a general rule about how quantities tend to be distributed (specifically, it is a colloquial term referring to Pareto distributions). It applies to many situations (like the ones you're mentioning) and it seems like you are simply unaware of the fact that economists are well aware of this phenomenon.
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29 sats \ 1 reply \ @tomlaies OP 5 Feb 2024
If they were they wouldn't fund so many startups around this.
Btw, I think you still haven't understood the difference. The 80/20 rule is true and works, while long tail doesn't. https://www.investopedia.com/terms/l/long-tail.asp
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