Long Tail Economics
Digital businesses face near-zero marginal inventory costs, global demand aggregation, and algorithmic discovery that make long-tail products profitable.
Digital economics don't eliminate power laws - they make both head concentration and tail aggregation profitable simultaneously.
While ecological communities exhibit power law-like abundance distributions with a few common species and many rare species, the rare species constitute most diversity. Similarly, digital economics enable profiting from both the concentrated head and the aggregated long tail.
Business Application of Long Tail Economics
Digital businesses face near-zero marginal inventory costs, global demand aggregation, and algorithmic discovery that make long-tail products profitable. While each niche generates small revenue, aggregating thousands of niches creates substantial collective revenue approaching the hit-focused head. Strategy becomes 'concentrate marketing on hits while profitably serving entire tail.'