The Long Tail Theory Applied to the Music Industry. Georgia, Ellen and Sophia.

-The Long Tail Theory by Chris Anderson (2006) states that the internet and introduction of broadband has effected economics, commerce and consumption within society. -The Long Tail Theory states that online distributors of niche products are more powerful collectively than the physical head businesses, this is most evident with the music industry.

“The Long Tail is… an economic principle that reveals a strategy that can be used by creative businesses: sell less of more. That is to say, release a large amount of things that sell in small quantities. To date (and much to everyone’s surprise) the major record labels have grasped this far more quickly than the independents.”

By allowing popular products to be sold in one place, they create niche market that allows a online retailer to create a market area, which appeals to the consumer of the product. The dominance of the niche market allows the distribution of the products to be cheaper as it allows them to be sold over a multi-media platform. The distribution of products is key in the music industry as they are able to reach a much wider audience with specific needs ensuring the retailer has fulfilled the consumers wants.

As with previous three years, digital downloads are up but CD sales and total revenues are down. The study discovered that, of the tens of millions of tracks available for sale on the web, 80% sold no copies at all – and that 80% of the money spent on the 20% that did sell went on just 52,000 songs. As Andrew Orlowski pointed out in his excellent

Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist's works, the long tail offers no path out of the quiet doldrums of minuscule sales.

In other words, new technology is bringing about changes in media commerce that allow songs, books and movies to keep selling -- modestly, but in aggregate, profitably -- long after their shelf life. eMusic, which sells DRM-free songs through a subscription system, is one of the world's largest digital music retailers. Despite dealing only with independent labels, it has sold more than 250 million tracks since 2003.

So what's the effect of this new technology? First, there are more tools to produce content, such as Apple's Garage Band software, which can remix and create digital music, blogging software, and so on -- all of which puts more niche content out there. Second, the cost of buying media is cheaper, whether through peer-to-peer software or through Web sites such as eBay. So it's both easier and more convenient to buy this stuff.

DMG's best-selling titles in June: Fats Domino's Ain't That a Shame, The Tams' Be Young, Be Foolish, Be Happy and The Foundations' Build Me Up, Buttercup. None of these will ever again be bestsellers, but there's pent- up demand to buy them online, because buying them on a CD usually means buying a dozen other songs you probably don't want. Add up enough of these microsales, and you can end up with a megafortune.