The Long Tail

Total sales of unpopular items often exceed total sales of popular items.  Consider some stats from a recent article in Wired magazine. 

The average Barnes & Noble carries 130,000 titles. Yet more than half of Amazon’s book sales come from outside its top 130,000 titles. Consider the implication: If the Amazon statistics are any guide, the market for books that are not even sold in the average bookstore is larger than the market for those that are… Venture capitalist and former music industry consultant Kevin Laws puts it this way: “The biggest money is in the smallest sales.”

Next think music sales.  A record store carries only the most popular items.  The ones they can sell.  But how much of a market is there for minor tracks?  Consider Rhapsody, an online music streaming service (which I subscribe to, and enjoy):

Not only is every one of Rhapsody’s top 100,000 tracks streamed at least once each month, the same is true for its top 200,000, top 300,000, and top 400,000.

For those of us thinking about how to make money online, there are some important consequences.  Try to think of all the really successful online businesses.  Which ones exploit the ‘long tail’?  Ebay?  Clearly!  Nearly everything there is a ‘one off’.  Yep, see above.  Google.  I’2013-08-28 13:52:39’d guess yes; that most of their ad revenue comes from very targeted ads related to searches.  Netflix?  Again, there are thousands of movies in the ‘long tail’.  I’m a Netflix subscriber.  Mostly because it’s the only place in the US I can get reliable access to German language DVDs.  Any others?  Can you think of a very successful online business that doesn’t rely on the long tail?