There are only two ways to make money in business: One is to bundle; the other is unbundle.
This bit of wisdom is apparently frequently quoted by digital entrepreneur Marc Andreessen, who attributes it to Jim Barksdale, his former colleague at Netscape. The two of them discussed the bundling/unbundling dichotomy earlier this year in a Harvard Business Review article.
Their point is that it’s a two-way street. You can challenge a legacy company that has bundled a lot of products and services by unbundling them. But then someone else comes along and re-bundles things in new ways, and makes money with that. For example, Apple unbundled the music business by selling individual songs through iTunes, but then Pandora came along and re-bundled the songs into a personalized music stream.
As Barksdale and Andreessen say in their discussion, nobody uses “bundling” and “unbundling” as strategies — it’s just a way of describing what happened, after the fact.
But it would be interesting for someone to do a deeper analysis and infographic about historical trends in bundling and unbundling stuff.
I bet what you find is that whatever product category you look at, there is a long-term trend from unbundled to quite bundled and then back to unbundled. The natural state of things is unbundled. The bundled state is a result of scaling up for competitive advantage. But ultimately, technology (almost) always gets cheap enough for unbundled to win out.
For example, in addition to their examples of music and video, there’s:
- Ground transportation: (a) started out unbundled — use your own feet, horse, or carriage, (b) got bundled through expensive technology, permitting larger volume, cheaper travel — buses, trains, (c) got unbundled with automotive technology permitting cheap personal transportation with complete flexibility of destinations and routes.
- Computing: (a) pre-1945, an unbundled individual task using pencil, paper and adding machines; (b) got very bundled through mainframe computers, (c) got unbundled into personal computers and mobile devices.
- Beer: (a) used to be a local product, every town had one or more breweries, (b) got very bundled, with a few major brewer producing all the beer in the country, (c) is now getting unbundled with lots of local brewers back on the scene.
Television, as it moved largely to cable delivery, became more and more bundled. But according to IAC chair Barry Diller, it is going to see plenty of unbundling over the next five to ten years, with the traditionally bundled cable packages fragmenting into streaming delivery of individual bits of content. CBS has announced plans for a streaming service, and HBO GO will be available without a cable subscription.
What happens when we apply that cycle to news? Well, (a) news used to be person-to-person, town crier to neighborhood, or networked newspapers where news traveled printer-to-printer, (b) it then got very bundled with newspapers and news services, enabled by the industrial technologies of the 19th century and early 20th, and (c) it has been very gradually unbundling since about 1960 into a plethora of special interest publications, then web sites, now Facebook posts.
Other than LPs and other forms of the “album”, music never really got bundled very much at all — much of it has been consumed unbundled, via radio or in live venues, using the settlement services of ASCAP and BMI to allocate royalties.
News can do the same thing without any major new technology or difficult reinventions of networks.
Besides the unbundled-bundled-unbundled trend lines in lots of areas, we also have long term trends that move from linear to non-linear systems of all kinds. It’s fairly obvious that trains, mainframes and newspapers are linear systems, while their successors like personal transportation, personal computing and the internet are nonlinear.
So any startup, any business expansion, any new organization should spend some time examining where, on these two trend lines, they are positioning themselves and what direction things around them are moving.
Along with the tendency to move from bundled to unbundled, there’s a parallel drift from linear (centralized, hierarchical) to networked (or distributed). And anything being unbundled or networked is inherently more personalized.
I submit that when it comes to news, things are moving firmly toward less bundled, less linear, more personalized systems. As I wrote here back in 2010 in reference to the then announced but not-yet-released iPad:
The Web has atomized content; consumers have learned to surf and explore; new tools will connect them with more content from more sources than ever before. Therefore, selling content in packaged, dated “issues” that emulate the old print product won’t work. Consumers want a hyperpersonalized stream assembled from atomized content.
Photo by Elvert Barnes, used under Creative Commons License.