Niches more profitable than hits?

I posted about Nimbles Long Tail here.

I've been reading a lot about the Long Tail and came across this post describing how niche markets are actually more profitable than hits.  From the LT Blog:

But in Long Tail markets, where the costs of shelf space are very low, the niches have the same costs as the hits, and potentially the same profit margins. This explains that last profit bar in this graphic, which is the same as the revenue bar that comes before it.

But I underestimated the effect of lower niche content acquisition costs. The readers were right. The economics of niches turn out to be even better than the hits. Way better, as it happens...

 This Long Tail stuff is killer.

Comments

[Srinivasan]

I was wondering if the Million Dolalr Homepage is an extreme example of the long tail scenario you have explained. "The costs of shelf spaces is very low" - well, its almost zero in this case. And there are definitely no loss leaders here.Its all same.