The thesis of the piece is that in the digital entertainment industry there is a lot of money to be made in selling to the “long tail” of the demand curve, “those millions of niche markets at the shallow end of the bitstream.”
If the entertainment industry in the 20th century was about selling "hits" or best sellers, says author Chris Anderson, the 21st will be equally about selling those items that only a few people want.
Anderson cites the need of entertainment businesses to “carry only content that can generate sufficient demand to earn its keep” and the physical constraints of only so much radio spectrum, so many TV channels, so much shelf space, or hours in a day.
New digital technologies, Anderson implies, removes the constraints of location and scale found in hit driven economics, unleashing the hidden power of selling to lots of small users, anywhere, any time. Amazon, Netflix, iTunes and others, he points out, have discovered that selling to many smaller markets makes money too. And that it can "add up quickly to a huge new market, outside of the top titles."
So too with many other industries. If the 20th century was about the power of mass marketing, the 21st century is about the power of micro marketing, the ability to reach and satisfy the needs of many narrowly defined markets anywhere in the world. This is the power of the Long Tail, and companies willing to explore it may find themselves well rewarded.