The Long Tail is fast becoming a mainstream moniker in the content and distribution business, and we also hear a lot about Web 2.0. But how do we make sense of all this jargon, and more importantly, how does it impact us in the kids entertainment industry?

Let’s start by de-mystifying the terms a little. Web 2.0 is analogous to what was referred to as ‘convergence’ at the peak of the tech bubble, and it also includes a number of other emerging behaviors such as social-networking, crowd-sourcing and user-generated content. But unlike a few years ago, it’s actually happening this time, spurred on by three significant factors.

The first is broadband penetration. In most of the developed world, households with broadband connectivity now make up more than 50% of the population. Industry prognosticators also expect a new personal computer upgrade cycle since the PC in the average home is more than three years old. More powerful PCs that are broadband-connected should create a big new market for kids content owners and producers.

The second factor centers around digital rights management (DRM), which is our ability to protect the valuable content we own from web denizens who might want to pirate our shows. Content can now be encrypted and encoded or ‘wrapped’ in a variety of DRMs. This makes content portability via the web a viable opportunity.

The final development is the appearance of a multitude of new platforms and appliances. The iPod gets credit for connecting supply with demand in the music business, and it is now trying to morph into a home for video content. But there are many more gadgets (Xbox 360, PS3, cell phones, PSPs) and platforms (YouTube, Vista, Metacafe, SonyConnect, Azureus, etc.) that enable our audience to consume content when and where they want to.

These events have culminated to create an exciting new direct-to-consumer marketplace for content: Enter The Long Tail. Chris Andersen, editor of Wired magazine and author of The Long Tail: Why the Future of Business Is Selling Less of More, is credited with coining the term, and I find a before-and-after approach helps when it comes to understanding its impact.

Before, a content owner/producer typically had to go through a series of gates to reach an audience. The gatekeepers included broadcasters, DVD distributors, master toy companies and retailers. Securing real estate on TV or in stores was very difficult because it was expensive. If a show didn’t drive ratings or a DVD/toy didn’t achieve its minimum sell-through, it was moved out of the limelight to make way for another product. The cost of space in this linear world has helped explain what we know as the self-propagating 80/20 rule: 20% of the items will drive 80% of the economic returns.

Now let’s take a look at the after scenario. A content producer/owner is now presented with the wonders of infinite, no-cost space on the web, with no gatekeepers! Andersen cites countless examples of how the sizing of an economic market increases significantly when niche demand can be connected to niche supply. The lesson for content owners is to realize that there’s a whole new market out there.

Consider the opportunities for those with good libraries of content versioned in multiple languages. In most cases, depending on the age of the series, these assets are inert, earning little money with third-window renewals on smaller international broadcasters. Consider taking one show and making it available in every language already versioned in your library to any consumer in the world. It’s not hard to figure out that this market will soon rival in economic terms what we have known in the before world. Here’s how I believe content companies can best exploit Long Tail opportunities.

1. Know what you have. Invest in a rights management system so that you can determine available inventory. Most companies have yet to make this critical investment.

2. Be a student and study the space. Use Google Alert to get notification of developments in the direct-to-consumer world. Everyday, there is a new deal out there.

3. Develop a dance card of partners. In any emerging market, there are many new players. Get to know all of them, get their term sheets, study their business models, and prioritize your activities.

4. Do deals. Get your content out there, but insist upon a marketing plan and do your best to maintain pricing control.

Here’s wishing all of us much newfound prosperity as we explore The Long Tail in the coming years.

As president of Nelvana Enterprises, Doug Murphy is already exploring Long Tail opportunities for his company’s 3,000-hour catalogue. If you’d like to hear more about how these market shifts will play out in kids entertainment, Murphy will be moderating a panel about the future of electronic sell-though at the KidScreen Summit later this month.