On the internet, sometimes people *do* know you’re a dog

Yesterday I wrote about the democratisation of production, distribution and consumption of digital information (I still find it extremely hard to use the word “content”, it makes me anything but content). The conclusion I was trying to get to was this: at the rate information was being produced, it would not be possible to curate it without asking for the help of the people producing the stuff in the first place.

In the post, I suggested that there were at least six different preferred outcomes of digital curation: authenticity, accessibility, veracity, relevance, consume-ability and produce-ability. In posts to follow I will try and unpack each of these preferred outcomes, extending what I wrote yesterday. Your comments will help me do that. I appreciate the time you’ve already spent in reading and commenting thus far.

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.

14 thoughts on “On the internet, sometimes people *do* know you’re a dog”

  1. The same thing is starting to happen with the gaming industry too.
    Game developers and publishers are starting to see the benefits of type one bundling and the disadvantages of type two. Of course, they ARE still beating the dead horse that is paid-for downloadable content, but some companies don't learn.
    Steam has been practising the concept of bundling similar games together at discounted prices whilst still leaving the constituent parts unbundled, and it's been quite successful. They've also capitalised on the goodwill and social connections of others, by selling some games as a multipack, where you can buy multiple copies of the game which you can then share with friends, and for cheaper than buying each game individually. So it's not all lost in that industry either.

    Back on subject though, I do think the digital curation idea is going to be something that emerges strongly in the next few years, especially if Google manages to power forward with it's current book archiving project and restore the ideal of net neutrality.

    The future's still somewhat bright, as long as you look in the right direction.

  2. Thank you, JP Rangaswami. I agree, “…at the rate information was being produced, it would not be possible to curate it without asking for the help of the people producing the stuff in the first place.” Main reason: the sender of a communication is the only one who can make it easy to understand.

    Two examples.

    1. Paragraph text, which naturally bundles multiple types of information. Good for storytelling, less so for technical information where or quick focus and selection adds real economic value. Robert E. Horn proposed one solution: structured writing. The most common information types: concept, procedure, process, principle, fact, structure, and classification.

    2. Conversation, which bundles at least four information streams: a) on-topic, b) emotional (about me or about the relationship), c) nicety, diplomacy, d) about the channel or the media (“can you hear me now?”) .

    I agree, curating, which includes unbundling the information streams can make writing and conversation easier to re-use, hence more valuable. Aiming at a simple tool to < a href=”http://cocreatr.typepad.com/everyone_is_a_beginner_or/2010/06/how-to-sort-out-the-conversation.html”>sort out the conversation.

  3. You're right, and there will be many more. This form of curation will have to work on a federated basis. BTW thanks for dropping by, I don't have many readers I've known for over 40 years!

  4. JP, excellent insights as always. One qualm though – your definition of type one vs. type two bundling depends on what the buyer wants, which changes from one buyer to the next. One person's type two is another person's type one – e.g. one fan might really want every song on an artist's latest album, so bundling and selling them at a discount makes sense, and the album is a type one bundle, but for another fan who only wants certain songs the album is a type two.

  5. JP, interesting blog but i’d pick up on one aspect (because it’s the only one i know anything about), that of the album vs single argument. The thing here is that a lot of good music takes multiple listens to appreciate. In the sample-then-download model this rarely gets a look in, but how many albums do you have where songs that you initially passed over subsequently became favourites?

  6. Adam, I think the HBR paper makes a similar point, obviously I didn't address it well enough. But you're right.

  7. In the world of print publications we're seeing the same forces at work. As long as they had a protected revenue stream in the form of classified ads and local business advertising, the strategy was to have something for everyone. The trick was to offer at least one thing that gets the commuter to pay for the paper. it could be the comics, the crossword , the ads, a quick run of the headlines. Contrary to much of the popular discourse, since the advent of TV news back in the late 60's, it was hardly ever the “news.'

    it turns out that “shoppers” – free publications primarily filled with local ads have been growing nicely, even through the “end of print.”

    Moving forward it seems to me that the new printing technologies allowing ultra niche publications – primarily ink jet at close to newspaper press speeds, will lead to more publications that are edited to the standard of “interesting 2 me” where the me is a well defined tribe in a 3D physical space.

  8. I appreciate your points but IMO they are wide of the mark. I do indeed “capiche.”

    Type 3 bundling by people who understand the new landscape, e.g. NIN and radiohead, put together an album, an opportunity to remix and collaborate, a live experience, limited-run collectibles — not for sale on iTunes.

    “People want to buy the small things, loosely joined” and kids love to eat junk food that makes them obese. This is hardly “news” and irrelevant to the work of the curator. People don't know they want what they don't know exists. The TechDirt Saves Journalism event I attended included a short music-related presentation that claimed that unbundling, not piracy, was the value destroyer in the music industry.

    How to you propose that curators get paid for their work, assuming they are adding real value? Who is a curator? Must artists curate themselves because there is no place for the digital curator to make a living? Those are hard questions.

    There are 375233 members on members.nin.com . http://en.wikipedia.org/wiki/In_Rainbows was a Type 3 bundling smash hit.

    Apologies for the late comment, this was shared today by someone.

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