How Internet shapes the economy

Perhaps the principle theory of F. Pareto – 20% of the products generates 80% of turnover – is not always the norm. In 2004 the editor of Wired magazine, Chris Anderson, argued that almost all the offered products on the Internet are finally sold, no matter how exotic or superfluous at first seems to be. This means that the high turnover (and market in general) prefers variety, instead of uniformity.

internet economyAnderson uses a curve graph in order to support his theory. The curve climbs steeply upwards to the left. This Best Sellers books and blockbuster films account for 20% of the market. The curve descends gently as it is stretched to the right, where we find the least popular books and movies. In this axis the urine of the curve is much longer compared to the vertical. We instinctively assume that the principle of Pareto: the Best Sellers (20%) yield more than the rest (80%).

On the contrary the figure indicates something else. The long tail (so called from Anderson the great longitudinal axis of the curve) achieves a higher turnover of the few and most folded products (Best Sellers).

The mass market wants books best-selling / Best Sellers, but there is also demand for limited demand products. The limited demand is low, but on the whole the limited demand products have a greater value than successful products.