PUNCHLINE: Anderson's Long Tail Theory is not a true theory and lacks value due to its narrow applicability to general decision science and, or economics. In other words, capital investors and business executives would be well advised to avoid applying the "Long Tail" theory to most business decisions - as the dot.com bust proved.

A theory is an explanation of a set of related observations or events based upon a testable hypotheses and verified to a certain acceptable level of confidence (usually multiple times by multiple researchers). Step one of discovering and identifying a theory is to state a hypothesis, its boundaries and to then test the null hypothesis (that the theory is wrong).

In the article there are several observations that include conclusions that state the correlation proves causality. John Stuart Mill established the basis for testing causal inference, inductive reasoning, in three steps: 1) Event A preceded Event B, 2) Event B is statistically significantly correlated to Event A, 3) All other causal inferences (Events) can be statistically significantly tested away - to which many add a fourth requirement - 4) Repeatability of Deduction - that if you "employ" the theory then a statistically significant number of observed results will match the predictive result.

Anderson made an observation that the WWW would increase awareness of obscure "things" to a larger group of "searchers" of "things" and then hypothesized that this would CAUSE the acquisition of the "obscure things" to increase.

The applicability of the hypothesis is - at best - limited to low search cost and low acquisition cost "things" - books, movies, music, clothes, ... "things" that fall into a category of "discretionary" consumer spending. Contrast this to buying a hydraulic actuator for a Boeing 787 wing flap or buying a car or buying a washer and dryer.

The value of the decision and the basis of the decision making economics is less discretionary therefore the low search cost and low acquisition cost do not enter the decision making process.

The Internet and the WWW have significantly changed the way business is transacted, created markets where none previously existed, significantly expanded markets which did exist and established the medium for the democratization of commerce - the economics of mass collaboration via the networking effect - or as Dan Tapscott calls it - Wikinomics.

May I suggest that Wikinomics' intersection of the psychology of individual decision making and the sociology of group social networking and group think via the disruptive technology of the internet is a phenomenon worth testing and applying to business and capital investments.