Long Tail theory contradicted?

The following article states some stats on digital music sales and quotes people who question the Long Tail theory:

The internet was supposed to bring vast choice for customers, access to obscure and forgotten products – and a fortune for sellers who focused on niche markets.

The idea that niche markets were the key to the future for internet sellers was described as one of the most important economic models of the 21st century when it was spelt out by Chris Anderson in his book The Long Tail in 2006. He used data from an American online music retailer to predict that the internet economy would shift from a relatively small number of “hits” – mainstream products – at the head of the demand curve toward a “huge number of niches in the tail”.

However, a new study by Will Page, chief economist of the MCPS-PRS Alliance, the not-for-profit royalty collection society, suggests that the niche market is not an untapped goldmine and that online sales success still relies on big hits. They found that, for the online singles market, 80 per cent of all revenue came from around 52,000 tracks. For albums, the figures were even more stark. Of the 1.23 million available, only 173,000 were ever bought, meaning 85 per cent did not sell a single copy all year.

I think the article, and the critics, missed a few points:

1. It still takes marketing for people to know how to find a particular track or album. Just because there are hundreds of thousands available, doesn’t mean that potential customers know about them (or have had time to stumble upon them). Social marketing, such as Amazon’s or iTunes’ customer recommendations, will help but only as the data gets populated and catches up with ever-increasing inventory.

2. On a lighter note, face it, there are bad tracks and bad albums. Even on albums from artists that I adore, I can find tracks that have me rushing to press the ⇥ (FF) button of my Shuffle. While there may be people who like music I dislike, there probably are universally accepted “bad” songs.  (William Shatner comes to mind).

3. Lastly, and most importantly, there were 52,000 tracks that accounted for 80% of the revenue? If I recall correctly, 80% of the revenue before the Internet was coming from Billboard’s top 40 (or was it Casey Kasem?). What did that translate to, about 300 new tracks, at best, per year? Something like 40 or 50 new albums per year making up the 80%? Seems to me that digital music sales are proving to be a Longer Tail than what we had prior. It is a mistake to compare sales to the inventory, rather than to historical sales. (Especially when the inventory can languish without rot, perish, or inventory costs).

Read the original article at:

Long Tail theory contradicted as study reveals 10m digital music tracks unsold – Times Online .


~ by mz on December 24, 2008.

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