Information Bundling

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JP Rangwasami:

"Today, I want to look at just one aspect of the digital information production/distribution/consumption paradigm, that of “bundling”.

I’m sure there are many sophisticated marketing and management and strategy terms and explanations for the technique; but since I haven’t been to those classes I will try and explain the technique the way I see it. Bundling is different from simple discounting, to the extent that there’s more than one type of thing being sold. Then it all branches off into two types.

Type One bundling is where the things in the bundle work together, are meant to work together, yet can be bought in isolation as well. Integrated music systems made from components are a classic bundle play, where you can choose to buy the components in isolation or together; here, bundling is the process where you are incentivised to buy the components together. To me this is “good” bundling, since it appears to bring the technique of volume discounting to volumes constructed of heterogeneous-yet-related things. Everybody wins.

Type Two bundling is insidious: it is one where a bunch of disparate things are grouped together, a “job lot” as it were; in order to buy part of the lot you need to buy the whole lot. Crudely speaking, this form of bundling makes you buy things you don’t want to buy, as part of the process of your buying things you do want to buy.

Such bundling can have unintended consequences. Many years ago, I worked for the City branch of a US computer firm; our offices were in Queen Victoria St, on what was termed “warehouse” leases. [In a warehouse lease, the offices are expected to be largely empty between the hours of 7pm and 7am]. I was working late one night, and there was a call from the City Police. One of my colleagues took the call. It transpired that a large consignment of equipment manufactured by the firm had been found in the Thames while it was being dredged for some mysterious reason. Mysterious indeed. The story could not be hidden any longer. Salesmen were incentivised to sell bundles of equipment that included desktop calculators, we had tons of them. They could not join the “100% Club” and fly to exotic locations unless they met the bundle target. So they sold the calculators that no one wanted. When their customers refused to buy any more they started giving them away. When their customers refused to take any more, even for free, the salesmen did the only thing possible. Quietly and almost-ritually, salesmen would mosey down to the Samuel Pepys on the river for an evening drink or five, and then, just before going home, consign their week’s allocation of calculators to the river. Quietly. And create fictitious customers for those calculators, paying for the equipment out of their own pocket.

So the analog world can have, and has had, problems with Type Two bundling. Yet this type of bundling is routine in many publishing circles: the newspaper and magazine industries tend to practise it, the cable television industry uses it, and the music industry thrives on it. Want to buy a track you like? Buy the album. Decisions as to which tracks to spin off as singles, which tracks to impose on the public as B-sides, which tracks to use to sell the albums by refusing to unbundle them from the album.

I’m one of these people who believes that progress is possible. So when I see retrogressive steps being taken between the analog and the digital world, I am less than happy. I have yet to meet the customer for whom region coding on a DVD is a valuable thing to have. In the same way, take football. The round-sphere variety. If I want to support a team in analog terms, I can buy a season ticket. Go see all the home games. Go see a few away games. And maybe a knockout cup run if the team does well. Yes, that’s what I can do in analog terms. Now try buying the same thing in a digital world. Doesn’t exist. Why? Because someone somewhere, not a customer, decided to bundle things differently.

All this is changing, as has been evinced in the world of music. People are pushing back against Type Two bundling, with predictable results. So album sales go down and singles sales go up. [Obviously there are exceptions, albums that have a consistent selection of good songs, where it could be argued that Type Two bundling is not taking place. Many of the albums I grew up with in the late 1960s and early 1970s weren't really "job lot" collections of disparate things; instead, they were holistic collections of things that went together, concept albums, rock operas, concert sessions, and the like].

If you want to read more about the effects of unbundling on the music industry, you should check out Anita Elberse’s work at Harvard Business School. She published an excellent analysis of the current state of play in a November 2009 paper entitled Bye Bye Bundles: The Unbundling of Music in Digital Channels, a copy of which can be downloaded from here. My thoughts about bundling as an aspect of digital curation became much clearer after reading her article.

I tend to think that this “unbundling” is a critical backdrop to the issue of digital curation. People want to access specific digital things: the song, the clip from the film, the article from the magazine, the section from the newspaper. They are no longer interested in the analog wrap of irrelevance they had to put up with before. And this could have some interesting side effects: it would appear that you can no longer subsidise the weaker parts of your music/news/journalism output by joining them up with the stronger parts. On the internet, sometimes people do know you’re a dog.

Which in turn affects album sales/magazine sales and so on. And their associated revenues. People want to buy the small things, loosely joined.

Curators add to relevance by stripping away the irrelevant and the unneeded and the shoddy.

In order to improve consume-ability and relevance, curators need the tools to do this. There are two ways these tools will come about, the “nice” way and the “nasty” way. In the nice way, the producers and distributors make it easy for people to point to, package and pass on the relevant pieces. Capisce?

Type Two bundling is nothing more than the pig of artificial scarcity wearing the lipstick of producer-driven choice. And you know my views on that: every artificial scarcity will be met with an equal and opposite artificial abundance." (