Welcome to Econ Talk, brought to you by the Library of Economics and Liberty.

I'm your host, Russ Roberts of George Mason University.

And today we are podcasting from the offices of Wired Magazine in downtown San Francisco,

the corner of Bryant and Third Street, where the magazine is located.

I'm interviewing Chris Anderson, the Editor-in-Chief of Wired and author of The Long Tale,

why the future of business is selling less of more.

And we're located in an old warehouse that's been revamped for modern journalism.

So you may hear some street noise in the background. I hope it adds to the ambiance.

Chris, in traditional retail and elsewhere, there's an 80-20 rule.

80% of the sales come from the top 20% of the items.

But you talk of a 98% rule, a whole revolution in how people choose things,

the choices available to them, and the way business is done. Explain.

The 98% rule, which is not a rule, but a couple data points that got me started on this whole thing,

came out of one particular meeting in early 2004 with a company called Ecast,

which is a digital jukebox company. And digital jukebox is like a regular jukebox in a bar with lights and speakers, etc.

But rather than having just 100 CDs, it has a broadband connection and a big hard drive.

So it can have many thousands of tracks. And the CEO asked me,

what percentage of the top 10,000 albums I thought sold at least one track per month.

And I thought about the 80-20 rule and assumed that it was probably around 20%.

And that thought maybe digital is different. Maybe I go way out there and say 50%,

which would be a lot. That would be 5,000 tracks compared to a few hundred in traditional jukebox.

So I thought that was really pushing out there. And the answer was that I was just way off.

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