From The Art and Popular Culture Encyclopedia
The phrase The Long Tail (as a proper noun with capitalized letters) was first coined by Chris Anderson in an October 2004 Wired magazine article to describe the niche strategy of businesses, such as Amazon.com or Netflix, that sell a large number of unique items in relatively small quantities.
However, the concept of a frequency distribution with a long tail — the concept at the root of Anderson's coinage — has been studied by statisticians since at least 1946. The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group of persons that buy the hard-to-find or "non-hit" items is the customer demographic called the Long Tail.
Given a large enough availability of choice, a large population of customers, and negligible stocking and distribution costs, the selection and buying pattern of the population results in a power law distribution curve, or Pareto distribution, instead of the expected normal distribution curve. This suggests that a market with a high freedom of choice will create a certain degree of inequality by favoring the upper 20% of the items ("hits" or "head") against the other 80% ("non-hits" or "long tail").
Ken McCarthy addressed this phenomenon from the media producers' point of view in 1994. Explaining that the pre-Internet media industry made its distribution and promotion decisions based on what he called lifeboat economics and not on quality or even potential lifetime demand, he laid out a vision of the impact he expected the Internet and consumer choice would have on the structure of the media industry, foreshadowing many of the ideas that appeared in Chris Anderson's book The Long Tail: Why the Future of Business is Selling Less of More (ISBN 1-4013-0237-8).
The Long Tail concept has found a broad ground for application, research and experimentation. It is a common term in the online business and mass media, but also of importance in micro-finance (see Grameen Bank), user-driven innovation (Eric von Hippel), market mechanisms (e.g., crowdsourcing, crowdcasting, Peer-to-peer), economic models, and marketing (viral marketing).
A study by Anita Elberse, professor of business administration at Harvard Business School, calls the "Long Tail" theory into question, citing sales data which shows that the Web magnifies the importance of blockbuster hits. On his blog, Anderson responded to the study, praising Elberse and the academic rigor with which she explores the issue but drawing a distinction between their respective interpretations of where the "head" and "tail" begin.
A study of UK music sales by a royalty agency found that they exhibited a Log-normal distribution rather than a power law.