Friday, November 07, 2008

"Long Tail" Debunked?

The Register today reports on a new analysis of the popular "Long Tail" theory ("The future of entertainment is in the millions of niche markets at the shallow end of the bitstream." See here also.) suggests that it may be a lot of, well, hooey.

The new study, conducted by Will Page of the MCPS-PRS Alliance and others, argues that "instead of following a Pareto or 'power law' curve," as the Long Tail theory would suggest, "digital song sales follow a classic Log Normal distribution. 80 per cent of the digital inventory sold no copies at all - and the 'head' was far more concentrated than the economists expected."

The analysis of tens of millions of on-line music transactions revealed that 80 percent of the revenues were generated by roughly 52,000 songs, which, as The Register points out, is about the number of songs included in the "typical inventory of a conventional high street record store."

Clients who are building businesses -- or investing in businesses -- that depend on Long Tail assumptions being correct would do well to consider this alternative view.

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