A real world example of this phenomenon is Netflix. A typical Blockbuster has about 3,000 movies in stock. (Numbers are from Chris Anderson's article.) Netflix, without a brick and mortar inventory limitation, has over 40,000. Applying the 80-20 rule, only about 600 titles make up 80% of Blockbuster's sales. If we examine the sales data of Blockbuster's 3000th title we observe that it only sells maybe once or twice per month. But what of the 3001st title? For Blockbuster there is no number 3001, nor are there numbers 3002 through 40,000. The tail is shortened and so only adds up to 20%. But if you keep extending the tail from 3001 to 40,000 and all the tiles sell if only a couple times - they'd add up to many more overall sales at the end of the tail. In aggregate, the end of the tail contributes 50% to overall sales rather than just 20%. Netflix inventory is over 13 times larger than a typical Blockbuster store and yet all of their titles sell - if only a few times per month. Christopher Null in his article1 on Netflix in Bussness 2.0 stated "On any given day, in fact, 98 percent of the 15,000 titles in Netflix's inventory are in circulation with customers." (His article was from July 2003 - Netfilx inventory is now over 40,000.)

Other examples where the shift from 80-20 is changing to 50-50 can be observed in Amazon.com sales percentages compared to a typical Border's or Rhapsody's or iTune's compared to a Strawberries or Tower Records. But enough explanation - Chris Anderson does a much better job at it anyway.


When an economic shift like this takes place there will always be opportunity in the marketplace. That's why venture capitalists and current big time internet players like Google, Yahoo, and Microsoft are so interested investing in and buying up so many Web 2.0 internet startups. But this shift is not just about selling consumer products like books and CDs. Information and content itself is a hot commodity. Especially since Google figured out an effective way to monetize content through AdWords and AdSense. In fact, for any industry where distribution can be expanded using the internet and the logistics of delivery can also be facilitated, the Long Tail can flip the current market upside down. It's already a reality in music, movies and books, and it starting to be felt in the news and publishing industry with the rise of the blogosphere, and now in software development too.   next >