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September 22, 2009

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LarryK

Interesting article on the differences in the Long Tail effect for movies and music. Here are a couple other factors that might explain why the Long Tail effect is more pronounced for mp3 downloads than Netflix rentals:

1) The long tail effect may not depend on only the cost of distribution and storage (near zero for mp3s, only a little higher for Netflix), as Anderson says, but also on the cost of producing the product itself. It's obviously far more costly to create even the worst movie (The Room cost $6 million!!!) than a song. This means the 'tails' of the distribution will necessarily be much longer for music than movies, simply because it's so much cheaper to create the product so there will be more varieties available. Now I know this is the supply side of the marketplace, and the long tail refers to demand, but I think it stands to reason that before you can have a long tail effect you have to have a long tail, and this is more likely for music than movies. Plus it impacts the second potential reason, which is:

2) Because there are fewer movies than songs, if demand is to be moved into the tail and away from the hits, then it will be moved farther and farther away from the current time and towards movies that were made much earlier. This is far less true for music, where at any given point in time there's more music out there than you can ever listen to. It's reasonable to think that demand is going to drop much faster as the products available in the tail become 'older' since cultural fashions change and older movies (and music) seem less interesting and relevant over time (at least to most consumers). It would be interesting to see if the long tail effect is evident for songs from the 40s and 50s, as opposed to the more ultra-obscure indie artists of today.

Also, just wondering, does Tyler Cowen read this blog? If so, he should blog about it!

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