The Long Tail

I've been seeing the buzz phrase "the Long tail" alot lately, so I decided to try to figure out what the heck it was...

Its best explained by examples.
The long tail is the yellow portion of the graph to the left...

The concept says that the demand for "niche" items, not found in traditional brick and mortar stores due to their low volume of sales, is as big or greater than the demand for "hit" items. If inventory and distribution costs can be substantially reduced, then the total profits will be greater for these niche items.
Online retailes like Itunes/Apple, Netflix, Amazon are beneficiaries, since their inventory are stored centrally and/or distributing the items can be done digitally, minimizing costs.

I also think alot of people use this phrase to refer to the niche group of consumers (or products they buy) that are going to be loyal repeat customers due to the selection of products that can't be found elsewhere. Finding this business "sweet spot" is seen as one of the keys to long term success of a new company.

Here is the Long Tail article from Wired Magazine that started it all... well worth the 5 page read. It offers a bunch of interesting examples and ideas.

Here is Chris Anderson's (the author) blog on Long tail. Offers a good aggregation of links on the left of other smart people's ruminations about applying this concept to industry.