Superstars and Underdogs: An Examination of the Long-Tail Phenomenon in Video Sales

Academics and industry observers sharply disagree on how online distribution will change the number and variety of products that consumers purchase. Proponents of the “long-tail” idea argue that a significant increase in the supply of products through online channels will fuel a shift in consumption away from hits to a vast number of lower-selling niche products. The “superstars” theory predicts the opposite: as consumers have access to their favorite content wherever they are and whenever they demand it, consumption patterns will become more, not less, uniform. To examine these competing hypotheses, we study the distribution of sales in the U.S. home video industry for the 2000 to 2005 period. We find a long-tail effect in that the number of titles that sell only a few copies every week increases almost twofold. At the same time, however, the number of non-selling titles quadruples. We also find evidence of a superstar effect. Among the bestperforming titles, an ever-smaller number of titles accounts for the bulk of sales. The caveat here is that the decline in sales, which we observe across all quantiles of the sales distribution, is most pronounced among best-selling titles. Our findings thus point to significant marketing challenges for the entertainment industry.