Tuesday, January 24, 2006

Long Live the Long Tail!

The graph that is helping to revolutionize the world:

This week in Economics class we've been looking at the idea of The Long Tail, and it's pretty exciting. The basis of the long tail is that digital technology and the internet is changing our economy in a profound way, and creating whole new niche markets for off-the-mainstream music, movies, and books that were simply unavailable or very hard to find when physical retailers were the foundation of the entertainment industry. Because the costs of storage and distribution are so much lower at hybrid stores like Amazon (with large warehouses rather than physical retail stores), and especially, at pure digital stores like iTunes or Rhapsody, selling less popular fare has become profitable. For example, Wal-Mart carries about 40,000 songs in its physical stores, whereas Rhapsody has a catalog of 1.3 million songs. Barnes & Noble has 130,000 titles, compared to 2.3 million at Amazon. Or a Blockbuster with 3,000 DVD's competing with NetFlix 25,000 DVD's. In all cases, they both carry the bulky part of the sales chart (the hits), but only the non-traditional retailer can offer the long tail (the misses). The implications for culture are pretty amazing, as unique tastes and preferences can be better catered to, rather than fitting everyone into the most popular parts of pop culture. It means fewer Beatlemania-like events, but it will help create a diversity of entertainment options. Seems like a great thing to me.

If you're interested, the original Wired article by Chris Anderson on The Long Tail is here, and a beautiful souped-up version with graphs of the same article is available here (he's writing a book on the subject that will be available in June). Wikipedia has an excellent entry here.


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