Long Tail

The Long Tail concept was pioneered by Chris Anderson.

More information: http://longtail.typepad.com/

"The concept of the Long Tail is that globalization, new tools of production, and the Internet have made it possible to radically increase the supply and demand of niche products (in certain product categories). In traditional markets, based on scarcity of shelf space and limited product diversity, the vast majority of revenues are derived from a very limited number of products. In long tail markets, a diversity of products made by new entrants (via newly democratized tools of production and globalization), in combination with unlimited low cost shelf space (the Internet), and an accelerated word of mouth (the Internet) have radically expanded the supply curve. Additionally, this newly diverse supply has energized demand for niche products that meet specific needs. In a traditional market, hit products often get 80% of the revenue. In a long tail market, hit products get 50% of the revenue while the other 50% is shared by a plethora of niche producers." (definition from Global Guerrillas weblog)

Example of one of the effects of the long tail: the dramatic growth of the used books sector through online sales, see http://www.bisg.org/news/press.php?pressid=29

On the long tail and music (filesharing):

"The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading. Form the paper - "Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high." But then "File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work." (http://slashdot.org/article.pl?sid=05/11/26/146221 ; http://www.thelongtail.com/the_long_tail/2005/11/the_effect_of_p.html)

The original paper by David Blackburn is at http://www.economics.harvard.edu/%7Edblackbu/papers/blackburn_fs.pdf ; a summary of evidence from other studies, at http://www.thefactz.org/economics/p2p_summary.html