An overlooked point from the much talked about long tail feature in the most recent edition of Wired is that it is in fact only Amazon that makes more money from "not in physical stores" inventory. But the good question is whether Amazon in fact created that phenomenon by aggresively pursuing a big catalog.
As far as I know Amazon publishes quite simply everything available in print in English. Even a lot of stuff not in print is available second hand through Amazon's interface. In contrast, the Netflix 25000 film catalog is only 8 times that of a typical Blockbuster according to the article; where Amazon has 18 times the catalog of a typical Barnes & Noble. Is Netflix offering everything that is available at 25000? That seems like a low number (Hitchcock made 50 films, do you mean to tell me there's only 500 times as many in total?).
Same thing with Rhapsody's 735000 song catalog. At at 19 multiplier against Wal-Mart they seem to have a lot, but is Wal-Mart who you want to compare yourself to in music retail? I doubt very much that 735000 songs is really a very full catalog. I have about 1000 albums on tape, disc and vinyl, so my collection is maybe on the order of 10000 songs. I would expect even a half way decent record shop to have at least ten times that number, possibly more, and someone offering a full catalog to have several million tracks, just in popular music (The Rolling Stones catalog is over 300 songs. Do you mean to tell me there's only 2000 times as much music as that put out by The Stones?).
Isn't Rhapsody and Netflix in fact failing right now at capitalizing on the law of the long tail?