In a post a few weeks ago, I hinted at some work I'm doing quantifying how the shape of demand of Long Tail markets differs from their bricks-and-mortar competitors.
This isn't as easy as it sounds: it's often hard to do a proper apples-to-apples comparison between the two. For instance, the traditional retail market for music is for CD albums, while the online market is mostly for digital singles, which often include just a few tracks from an album. But there are ways to adjust the data to compensate for those differences, using such techniques as grouping online singles by album and using an average of their rank as a proxy for the album's rank online. It's not good enough to publish yet, but I'm comfortable that it's at least directionally correct at this point.
Here are two data sets that illustrate this offline/online difference in demand patterns. The first is DVDs, comparing Nielsen DVDScan offline point-of-sale data (a proxy for Blockbuster) with Netflix. I've just shown it through the top 100, since that's where the differences are most visible. But the trend continues throughout the catalog--hits are a far larger part of the business offline than they are online. Or, to put it another way, Netflix's demand is more evenly spread between hits and niches than Blockbuster's.
The next chart does the same for music, comparing Nielsen's Soundscan (CD retail) data with Rhapsody downloads. To avoid over-compressing the vertical scale, I've started this one at rank 100 and to make the curve easier to observe I've only shown the top 5,000 albums. As you can see, online music is even less hit-centric than online DVDs, which is saying something.