In 2004, Wired magazine editor Chris Anderson wrote an article suggesting media should focus on the long tail — small niches — instead of the big subjects.

The idea took off in news, most often interpreted as a move toward hyperlocal coverage online. The Washington Post‘s LoudounExtra most often cited, but there are other niche examples as well, including WCCO-TV, the dominant network TV news station in Minneapolis, and KCRW-FM, public radio based in Santa Monica, Calif.

During a Second Life interview last year, Anderson stretched his “Long Tail” theory into a discussion about technology giving people the power to create information for free.

Most notably, Anderson said, “There are two (long tails) in content. One is broad appeal down to narrow appeal. The other is new vs. old. So the LT revenues that you describe as being slow mostly refer to the second, the monetization of archives over time.

“The other big point to make is that we’re not just talking about a monetary economy. Most of the content created in the LT these days — from blogs to web video — is done for free, with no expectation of financial return. There are plenty of business opportunities in *aggregating* that content, but the money doesn’t necessarily accrue to the creators.”

Earlier this month, Anderson talked about “the emerging market of free” at Nokia World.

It’s an interesting yet potentially scary idea if applied to the news business. Already, we know aggregators like Google, Yahoo, Digg, etc., are profiting from media outlet output, which Web users essentially get for free. But without some fundamental changes to the outlets’ distribution strategy, where will the money to pay news workers come from?

You could argue that journalists are aggregators, interpreters and analyzers of information, and the inherent value in what we can be translated into real dollars that users should be willing to pay at least something for. After Radiohead‘s “In Rainbows” experiment, though, I’m not certain how optimistic I should be.