The long tail theory was written by Chris Anderson, editor-in-chief of "Wired Magazine", as an article in Wired, and then published as a book in 2006. Long Tail Theory is a way to describe the way niche marketing works over the Internet. Traditionally records, books, movies, and other items were geared towards creating "hits." Stores could only afford to carry the most popular items because they needed enough people in an area to buy their goods in order to recoup their overhead expenses. The Internet changes that. It allows people to find less popular items and subjects. It turns out that there's profit in those "misses," too. Amazon can sell obscure books, Netflix can rent obscure movies, and iTunes can sell obscure songs. That's all possible because the Internet has taken geographic location out of the equation.An example of Long Tail is Netflix. A regular video shop, like Blockbuster, has about 3,000 movies in stock, whereas Netflix has over 40,000. about 600 titles make up 80% of Blockbuster's sales, and one of its 3000 sales will only sell once of twice a month, however, with Netflix having 40,000 titles, then if they only sell once or twice a month then they'd add up to many more overall sales. Every day, 98 percent of Netflix's inventory are in circulation with customers.
More money can be made by internet sites, as they can afford to keep more films/games/music etc, because they are not using up literal space, just internet space, which there is plenty of. Because the sites can afford to keep these old/lesser known titles on sale, they are constantly making a small percentage off them, while actual high street shops are not.
