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What Vann-Adibe had discobered was that the aggregate market for niche music was huge, and effectively unbounded. He called this the '98 Percent Rule.' As he later put it to me, In a wordl of almost zero packaging costs and instant access to almost all ocntent in this format, consumers exhibit consistent behavior: They look at almost everything. I believe that this requires major changes by the content producers - I'm just not sure what changes!... Everywhere I went the story was the same: Hits are great, but niches are emerging as the big new market. The 98 Percent Rule turned out to be nearly universal. Apple said that every one of the then 1 million tracks on iTues had sold at least once (now its inventory is twice that). Netflix reckoned that 95% of its 25,000 DVDs (that's now 90,000) rented at least once a quarter. Amazon didn't give out an exact number, but independent academic research on its book sales suggested that 98 percent of its top 100,00 books sold at least once a quarter, too.

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In fact, as these companies offered more and more (simply because they could), they found that demand actually followed supply. The act of vastly increasing choice seemed to unlock demand for that choice. Whether it was latent demand for niche goods that was already there or a creation of new demand, we don't yet know. But what we do know is that the companies for which we have the most complete data - netflix, Amazon, Rhapsody - sales of products not offered by their bricks-and-mortar competitors amounted to between a quarter and nearly half of total revenues - and that percentage is rising each year. in other words, the fastest-growing part of their businesses is sales of products that aren't available in traditional, physical retail stores at all. These infinite-shelf-space businesses have effectively learned a lesson in new math: A very, very big number (the products in the Tail) multiplied by a relatives small number (the sales of each) is still equal to a very, very big number. And, again, that very, very big number is only getting bigger. What's more, these millions of fringe sales are an efficient, cost-effective business. With no shelf space to pay for - and in the case of purely digital services like iTunes, no manufacturing costs and hardly any distribution fees - a niche product sold is just another sale, with the same (or better) margins as a hit. For the first time in history, hits and niches are on equal economic footing, both just entries in a database called up on demand, both equally worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability.

~ Chris Anderson