Online Video Wags the Long Tail?

Noted in today's business press: Netflix: Never Mind the Mailbox. The long tail is so yesterday. The long tail, you may recall, is the phenomenon first described by Wired Magazine's Chris Anderson in his book of that name. The term refers to the advantage online merchants have over the bricks and mortar guys: by having the ability to offer a rental catalog of, say, 70,000 DVDs online instead of -- at most -- a couple of thousand at your local Barnes and Noble, a merchant like Netflix earns the lion's share of its revenue on the bottom 90% of its catalog. The hot new videos still sell the largest number of copies individually, but it's the thousands and thousands of titles renting only five or six times a year that generate the most profit. But here's the deal, see: Netflix is still operating in the world of physical objects that have to be moved around. Investors, apparently, don't think that's going to cut it in the future. Everything's going virtual. Why wait for a DVD of that rare documentary when you can have it delivered to your computer screen -- and soon, no doubt, your tv -- the very moment you want it? The Netflix business model, long tail and all, seems in danger of being bypassed by the very technology (the internet) which spawned it, and investors have punished the stock. So now Netflix will offer online streaming to its members for free -- although with significant limitations -- as a first foray into that business. The competition will be brutal, and Netflix, some say, may not survive. The new becomes old so quickly these days that it makes my head swim.