Citation
The Long Tail: Why the Future of Business Is Selling Less of More
TL;DR
Digital economics enable profitable long-tail strategies
Influential thesis that digital economics make the power law tail profitable in ways impossible for physical businesses. Near-zero marginal costs, global aggregation, and algorithmic discovery enable profiting from both head concentration and tail aggregation.
While subsequent research (Elberse 2008) showed hits remain disproportionately important, Anderson's insight that digital platforms can profitably serve both head and tail simultaneously transformed strategy in entertainment, retail, and media.
Key Findings from Anderson (2006)
- Digital economics enable profitable long-tail strategies
- Near-zero marginal inventory costs in digital
- Global aggregation makes niches viable
- Recommendation engines surface tail products
- Both head and tail can be profitable simultaneously