Apple said that every one of the 1 million tracks in iTunes had sold at least once / the Pareto principal part 2

“Apple said that every one of the 1 million tracks in iTunes had sold at least once

This is a common expression (from 2006) used to emphasize the long tail theory.

Another one is the story in the introduction to the “long tail” book, of how Mr. Anderson learns from Ecast, a music-streaming company, that 98% of its catalog gets played at least once a quarter. Much more than most would predict.

I remember that at that time, when I first read it, I was also surprised. It does show that there is a demand for almost all pieces of niche music.

But does it support the long tail theory or oppose the Pareto principal? Of course not! It only shows that Ecast and I-tunes have a lot of stuff to sell and that there is some demand to almost anything, but it doesn’t say anything about the revenues generated from that long tail or about the percentage of products that is responsible for 80% of the revenues. It can still be 20%.

By the way, during its first week (on May 2003), I-tunes sold one million songs. Only 50% of the 200,000 titles were sold at least once. By June it jumped to 80
%

 

The 98% becomes 88%

In july 2006, Lee Gomes wrote in the Wall Street Journal, that 2 years after Anderson’s conversation with Ecast (2004) in which he learned that 98% of their catalog gets played at least once a quarter, things have changed. Their catalogue has grown dramatically but the 98% has become 88%. 12% of the songs were not played at all.

At the same time even less positive information about the 98% rule was coming from another music streaming service, Rhapsody – From the 1.1 million songs, 22% had no demand what so ever and another 19% got just one or two plays.

 

Double Pareto

In his article, Gomes demonstrates how the long tail is not that long and how the Pareto is no longer 80/20 – it is now 90/10!

“Ecast says 10% of its songs account for roughly 90% of its streams … monthly data from Rhapsody showed the top 10% songs getting 86% of streams … 2.7% of Amazon’s titles produce a 75% of its revenues … Bloglines, the widely used blog-reading tool, lists 1.2 million blogs; real ones, not computer-generated spam blogs. The top 10% of feeds grab 88% of all subscriptions.”

And what about Itunes?

In August 2006 the Guardian reported that “at a recent debate hosted by digital music consultancy firm MusicAlly, eMusic’s chief executive David Pakman came up with a startling claim. He said that 10% of product on iTunes accounts for 90% of the store’s total sales. Rather than smashing the 80/20 rule, the world’s most popular download store appeared to be exacerbating it.”

 

One year earlier, Netflix, the movie rental company (at that time they were an online DVD movies rental service), made its data available as part of a $1 million prize competition to encourage the development of new ways that will improve its ability to introduce customers to lesser-known titles they might find appealing.

Professor Serguei Netessine and doctoral student Tom F. Tan from Wharton took the challenge.

They did find a long tail of titles (the number increased from 4,470 in 2000 to 17,768 in 2005) but they also found that the 80/20 principal had an even stronger effect, with demand for the top 20% of movies increasing from 86% in 2000 to 90% in 2005.

 

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