The Long Tail Theory

This is the graph showing popularity ranking. To the right is the long tail; to the left are the few that dominate. The area of both sections match. The vertical axis is sales; the horizontal is products.
This means that while consumers are buying many of one product, there are also people that are buying less of more products.

"The distribution and inventory costs of businesses successfully applying this strategy 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 total sales of this large number of "non-hit items" is called the Long Tail". The phrase "The Long Tail" was first thought of by Chris Anderson, the editor in chief of Wired magazine.

The long tail basically refers to our culture shifting away from a focus on mainstream products and markets and into selling less of more.

One company that this theory has affected is HMV . Over the years, HMV has adapted its stores to suit needs of a much broader audience. It started out as a record shop in London and was opened on July 20 1921 by Sir Edward Elgar. This is the earliest known in-store appearance from a music celebrity. In the 60's the store was refurbished and featured a small recording studio and some of the first commercial television sets. Over time, they have expanded as a company and now have stores globally selling products such as CD's, DVD's, Books, Clothing, Posters, Merchandise, Games and gadgets such as headphones and music players.

HMV is a company that now provides almost every service for its customers, keeping it up to date with other companies. It sells every form of media and also caters for online customers.

There is a service called "Pure HMV" which allows customers to collect 100 points per pound on everything they buy in store and online, then spend on special gifts such as tickets to film screenings, music festivals and signed merchandise. HMV also have an online music downloading service called "hmvdigital" and film rental service called "hmv ondemand" http://www.hmvondemand.com/. This is how they have had to change their services to keep up with the current trend of online shopping and companies such as LOVEFiLM.com whcih allow you to rent and watch dvd's from your home.

At the end of 2011, LoveFilm claimed to have over 1,500,000 members, over 70,000 titles, and over 4 million rentals per month across five countries. LoveFilm has, in a few years, become the leading online DVD rental outlet in the UK and across Europe. This is a prime example of the long tail theory, it provides thousands of DVD's and makes a huge profit from it, yet it only sells one product, subscriptions to it's service. If it begins to get competition, it can only be assumed that it will begin renting CD's and start a downloading service.