Why are you surprised by Amazon's pricing fluctuations?
A Band-Aid for B&N's gunshot wound

Bundled vs. a la carte content

Once upon a time when you liked a song and wanted to own it you had to buy the entire album it appeared on. It didn't matter if the other 11 tracks were terrible. You were forced to buy them all.

That all changed in the digital era, of course, and now we can buy tracks individually. Consider that a victory for the a la carte model.

Spotify and a number of other all-you-can-listen-to music streaming services then arrived on the scene, further disrupting the music industry. There was a time when I insisted on owning my music, not renting it. I guess I've evolved though since I can't tell you the last time I bought a track but I know I've listened to Spotify several times in the past week. Advantage, bundled content...or is that just a new, even more liberating way to enjoy a la carte music?

Let's shift the focus to books. Many publishers, myself included, made the mistake of thinking books are like music and we should make them available by the chapter. Oops. That hasn't worked yet and I'm not sure it ever will. It's more accurate for me to say that I don't think it will ever work on a wide variety of genres; some, like cookbooks, lend themselves to it, but the typical book doesn't. Looks like bundled content wins here.

A more appropriate example in the book world would be one of the many all-you-can-read ebook subscription services. They've been moderately successful so far and I think there's a great deal of genre-specific upside here (e.g., broad ebooks subscriptions for sports, history, etc.) Again, bundled content looks like a winner.

How about shorter-form written content, like newspapers and magazines? Up to now we've been forced to subscribe to the whole paper or issue. Publishers haven't been willing to let us pick and choose the topics, writers, etc., that we want. I think that will change in the not-too-distant future. I'd love to be able to select my favorite columnists, sports, locations, etc., and create my own custom product. In this space, bundling is the only option today but a la carte looks very promising.

I mention all this because of an article I read recently about how cable TV's pricing model is supposedly unfair. The article's author notes we're forced to pay for a lot of channels we never watch. True, but what happens when that content is unbundled? If ESPN costs every cable customer $5/month does it really remain $5/month if only half the households in an a la carte world sign up for it? Highly unlikely. So in many respects, non-sports fans are helping subsidize my ESPN habit while I'm helping subsidize their Travel and Lifetime channel habits.

You don't have to look any further than Comcast's "triple play" model to see how bundles are often a better financial option than a la carte services.

My point here is that bundling and a la carte shouldn't be considered mutually exclusive. We've seen some areas where both work well while other segments tend to favor one over the other. So why not offer both and let the customer decide? But as a consumer, don't fall into the trap the author of that cable TV pricing article did and assume that adding one magically leads to lower prices.

Comments

The comments to this entry are closed.