The Long Tail theory is playing out well for music lovers

Broken CD

Background – anyone unfamiliar with Chris Anderson’s Long Tail Theory can check out his book, his original Wired article (which gets it down to five pages).

I was reading in the Economist this morning about the death of the UK record store. HMV and Virgin are both struggling, and Music Zone with 104 shops has gone into administration.

Part of the story is that supermarkets retailing the top 100 bestsellers now account for a quarter of all album sales. (This fat head apparently accounts for a third of the album market, so the supermarkets seem to have captured the lions share.)

The other part of the story is, of course, the internet. Etailers like Amazon now account for 11% of the market, legal download sites for 3%, and illegal downloads are on top of this. All the internet channels are growing fast, while the overall music market is shrinking as rising download sales can’t compensate for falling DVD sales.

One of the conclusions of the Economist article is that all this is bad news for small record labels and those who love their music. The argument is these companies rely on record shops to stock their music and knowledgeable shop workers to recommend them to punters.

I am not so sure about that.

It ignores the other side of music on the web – sites like LastFM, Pandora and parts of Myspace and Bebo are all about music discovery.

These sites are offering new ways for people to find new music – either via automated recommendations on LastFM or Pandora, or via recommendations from friends (in the internet sense of the word ‘friend’) with similar taste on the social networks.  I would say that these tools are better at helping lovers of niche music find what they are looking for – the internet is great at aggregating small niches.  Indeed I have friends that were struggling to get sales via record shops who now excitedly show me their MySpace sites and the traction they are getting (one of them even reads this blog – Hello Scott!).

So far from getting left in the cold by the demise of the record shop I think that niche music lovers (and I am one) are leaving record shops because they are better served on the internet.  More choice, lower prices and greater convenience.

Over at the other end of the market, mainstream music lovers are also doing well.  They get their music much cheaper from Tescos than they ever did from HMV.

This is the long tail theory playing out in practice, and it is good for consumers.  It is not good for legacy distribution networks – from record shops to record labels.  For music artists, I think it is a mixed blessing.  Some have very successfully embraced the internet (look at Lilly Allen – warning, this link is to her MySpace site which isn’t exactly easy on the eye!) but many others feel they are suffering from a lack of copyright protection.

As an interesting aside – I’m not sure why, but whilst record shops are in decline, book shops are in resurgence.