The Long Tail Prevails Again

Sorry I haven't blogged in quite a while - been very busy with my day job. Hopefully, I can get back into a regular blogging schedule.
In 2004, Chris Anderson of Wired Magazine coined the term - The Long Tail. In the subsequent book The Long Tail: Why the Future of Business is Selling Less of More, Anderson describes Long Tail businesses (amazon.com and netflix.com) abandoning traditional models (think brick and mortar Barnes and Noble, Blockbuster, CompUSA) of selling products to the large masses and instead focusing on digital distribution - for little or no cost - to smaller niche' market. Anderson argues that a great deal of income is available from that "long tail" of the curve.

A January 4, 2008 New York Times article "U.S. Album Sales Fell 9.5% in 2007" provides more evidence of Anderson's visionary thinking. According to the article:

Album sales in the United States plunged 9.5 percent last year from 2006, as the recording industry had another weak year despite a 45 percent surge in the sale of digital tracks, according to figures released Thursday. [emphasis added]

The availability of downloadable digital music from iTunes, Amazon and others has been a major factor in the erosion of album sales - along with peer-to-peer file sharing. The critical factors, according to Anderson, are the low cost of digital distribution and storage and the ability to leverage niche' markets. Music and video lend themselves to the long tail because they are easily stored and downloaded in digital form. No warehouse; no physical media (CD); no increase in costs whether you're serving 10, 100, or 100,000 customers.

As bandwidths continue to increase, old media (music, video, books, magazines, and newspaper) are all going to see their markets shares continue to erode.