Chris Anderson’s new book, The Long Tail, argues that the low inventory and distribution costs for the internet (Amazon, iTunes, etc) allow small niche items to thrive in a way that’s impossible in a bricks and mortar world. An item that might sell a few times a month isn’t viable for taking up shelf space. But it is viable for iTunes or Amazon and because there are a lot of these items (the long tail), they can make a serious contribution to the bottom line.
He also has a lot of interesting insights into what he calls the democratization of production—think blogging and wikipedia. Check out the video in this post at his blog.