This is the third in a series of articles about The New Music Business.

Before I undertook the writing of this series on music business I wrote about the decline of CD sales and mentioned a book called The Long Tail. I mentioned that book as an information resource to help you understand the way the internet is affecting the marketing and sales of CDs. I know there are objections to The Long Tail and I’ll discuss those in the next post, but here I want to review ideas contained in The Long Tail for those that haven’t read it.

Fist a definition. Wikipedia defines the statistical distribution feature known as the Long Tail, in this way.

In these distributions a high-frequency or high-amplitude population is followed by a low-frequency or low-amplitude population which gradually “tails off.”

Take a look at the image to the right. The Long Tail is represented by the yellow portion of the graph.

The book, The Long Tail, was written by Chris Anderson, editor of Wired magazine. Anderson focusses on the long tail in the retail distribution world. He talks a lot about Amazon.com and Rhapsody (he didn’t have access to figures for iTunes). The basic idea is, the internet has changed the way people shop and interact with culture. Before the internet people only knew about music that was played by local bands or on their local radio, and was sold in their local record store. He describes this as a “world of scarcity” where retailers simply did not have enough shelf space to carry every recording that was available. The ones they did carry were the hits. The hits live on the left side of that curve. There are few of them and they sell a lot.

Our culture, and the marketplace, is changing though. Today young listeners want to be listening to the coolest new thing that no one else has heard yet. I work with the youth at our church and they are constantly wanting to be the one who introduces the group to a new artist. That gives them some sort of coolness points or something. When we go on trips they all listen to their iPods and they are all listening to something different.

The internet has allowed this to happen because they can find music that isn’t even on the radio yet, or may never be, and certainly isn’t at Wal-mart. This music is down in the tail on the right side of the curve. It doesn’t sell millions of copies. People haven’t heard of the artist. It’s not available at record stores, but it is available on the internet.

Anderson approaches this model and says that aggregators like Rhapsody win because they can “stock” so much more music than Wal-mart can (Wal-mart = 60,000 tracks, Rhapsody = +1.5 million tracks). The consumers win because they can find music they really like, that fits them as an individual, and aren’t limited to the “hits” available on radio or local record store shelves. He suggests that there is a lot of money to be made in selling a few copies of a lot of tracks, and I think he’s right. With basically infinite “shelf” space, Rhapsody and iTunes can make everything available and it doesn’t matter to them that a certain track might only sell 5,000, or 5, copies. Total that track together will a million others and you’re making money.

A very, very big number (the products in the Tail) multiplied by a relatively small number (the sales of each) is still equal to a very, very big number.

He goes to say that the sales in the Tail are steadily increasing and becoming a larger part of overall revenue for the aggregaters.

In my next post on this subject we’ll take a look at some objections that have been raised to The Long Tail concept, and discuss ways that individual bluegrass artists can take advantage of and benefit from The Long Tail.