Long Tail Theory

2.2. Explanation of the Long Tail Theory and its relevance in explaining the success of musical streaming platforms

The second theory we will focus on is Chris Anderson 's Long Tail Theories on Business Models published in October 2004. Anderson 's (2004) theories claim that our markets are switching from being mass markets to niche markets thanks to the overabundance of online markets stores. Amazon and eBay, for instance, are displacing the classic bricks and mortar stores with their ever-growing catalogues. The author applies this theory to the music industry and to the streaming platforms like Rhapsody, Spotify and Pandora as they are allowing consumers to discover and listen to niche music, which wasn 't as accessible as today in traditional

Traditionally hits and Blockbusters have been the way to go for the entertainment industry, as they represented the most viable solution for industries in constant need of cash flow in order to fund their newest artist 's album or the printing costs of their future bestseller (Anderson, 2004). However today thanks to the arrival of several big players like Amazon, Netflix or Spotify to name just a few, the balance is shifting towards an economy of abundance where customers have at their disposal an increasing number of products that would have never been accessible in regular retail stores: the long tail (Anderson, 2004). In the graph below (Figure 5) representing the average number of plays-per-month on Rhapsody and the popularity of titles, the Long Tail is represented by the bottom right part of the curve. The graph gives a clear overview of the size of this tail, which almost amounts to the number of plays of the hits and blockbusters also available in conventional retail stores (Anderson,

Pareto 's principle - the 80-20 rule - who 's driven management theories for almost a century claims that most markets "have traditionally been dominated by a few best-selling and featured products" (Brynjolfsson, Hu, Duncan, 2006). And that "a small proportion (e.g., 20 percent) of products in a market often generate a large proportion (e.g., 80 percent) of sales in the market" (Brynjolfsson, Hu, Duncan, 2006). However Anderson 's Long Tail Theory suggests that the Internet has had a major role in shifting this balance and that today "Rhapsody streams more songs each month beyond its top 10,000 than it does its top 10,000" (Brynjolfsson, Hu, Duncan, 2006). Consequently today, thanks to the proliferation of online retailers, the consumers ' choice is finally not only limited to heavily advertised - and therefore highly visible products - but also to more obscure documentaries, LPs and manuscripts that drawn the attention of a whole new population of consumers interested in niche products (Brynjolfsson, Hu, Duncan, 2006). In recent years the chief executives of the biggest online platforms like iTunes, Amazon, Spotify and Netflix have discovered that what would be considered as "misses" in the traditional offline economy normally make money too. And as the amount of misses, according to Pareto 's Principle, represents the 80 % of the markets - and