The phrase The Long Tail was coined by Wired Magazine writer Chris Anderson who observed that the future of Internet business is selling of less of more. Such effect has been studied and well documented in academia, and Anderson attributed to several key academic papers in his article. Nonetheless, it was interesting to listen to the discussion of The Long Tail on NPR earlier today. An archived of the radio segment can be found here.

The notion of the The Long Tail is based on a statistical distribution called Pareto distribution, which starts off from high-frequency population from the left of the chart, then drops off quickly to a very low-frequency population with a long, gradual decline to zero - the shape is similar to the exponential decay. In terms of ecommerce business, the more popular goods (top hits and such) that sell a lot are on the left of the curve and less popular goods that sell little are on the right. Traditionally, with limited shelf space, the few things that sell a lot dominate. So not so long ago, big hits rule. Well not any more. With a huge virtual shelf space, online stores can offer much wider variety of things, including many low demand items, to consumers (aka niche markets). When this happens, the tail end of the curve stretches out and the resultant accumulation demand of less popular goods can outnumber that of more popular goods. What does this mean? From the introduction of the radio program: "shop online and everything becomes available to anyone, no matter when it was made and where. Top ten hits whether they are on the radio or TV or on the bestseller books list are giving ground to a universal ground of more obscure music, films, and books." Well... that pretty much describes the business model of iTunes, Netflix, and Amazon.

7/18/2006 11:56:38 PM (Eastern Daylight Time, UTC-04:00)

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