The piecemeal economy

In his column in today’s New York Times, Daniel Akst does a nice job of illustrating the fundamental tension on the internet: that between convergence and anti-convergence, or bundling and unbundling, or centralization and decentralization. The “bundling of the world’s computers into a single network,” he writes, “is ushering in what may be called the unbundled age.” Apple’s iTunes has unbundled music, making it easy to buy by the song rather than the album. Amazon has announced plans to unbundle books, selling them by the page. The head of the FCC is lobbying the cable industry to allow people to subscribe to individual channels rather than big packages of channels. With RSS, you can subscribe to stories by your favorite writers rather than buying entire newspapers or magazines.

On the one hand, the unbundling of media is great. It gives us all more control over what we buy. Economically, there’s a lot less waste. But there could be a dark side, too, as Akst points out: “Theoretically, all this unbundling will make everyone better off. But one consequence may be to force worthy cultural products to support themselves somehow – without being subsidized by commercial junk.” It’s not a sure thing, in other words, that an a la carte menu will end up giving us the widest possible array of choices. Rather than promoting the creation of a “long tail” of diverse products, unbundling may end up pushing even more economic rewards to the “hits,” squeezing out a lot of the good stuff.

The internet is unleashing a whole bunch of new and contrary economic forces. The fact is, we’re a long way from knowing how it will all shake out.

13 thoughts on “The piecemeal economy

  1. phil jones

    I disagree that the connecting of all computers into one network should be called “bundling”.

    There’s a qualitative difference between the connecting of the computers (voluntary, one-way, decisions by each individual consumer to join the cloud) and the bundling of multiple stories into a newspaper (not a decision by the consumer but by the provider, with two-way dependencies – I can’t buy A without B or vice-versa)

    There’s a higher-dimensional field here, rather than a single bundled-unbundles axis.

    Also worth a re-read :

  2. nmcclure

    While buying a single song is a freedom that appears to have little repercussion (other than to the artists who make suffer from the lack of sale of whole albums), the filtering of news articles, etc., would greatly limit exposure of minority opinions and emerging voices.

    I still opt to look up words in a physical dictionary, rather than online, because I’ve realized I learn as much from what I’ve skimmed over, as from what I’ve specifically sought out.

  3. TWAndrews

    Rather than promoting the creation of a “long tail” of diverse products, unbundling may end up pushing even more economic rewards to the “hits,” squeezing out a lot of the good stuff.

    Doesn’t this just mean that not very many people want “the good stuff”?

    It’s true that unbundling may result in fewer choices theoretically, but practically, it they will all be choices which are sufficiently appealing to find some sort of audience.

  4. Derrick D.

    When the internet arrived, everyone thought it would make it easier for small artists to sell through the payola of the major labels. But what has happened is now that you can steal music digitally on peer to peers, small bands that might have been able to make a living selling 20,000 CDs, actually have very little chance of selling that many, because of theft. Thus making competition with the majors even harder. At least the majors have resources that can partially counteract the theft and they can now use their marking wings to control the most visible outlets. Decentralization kills the unbundled.

    Add in the fact that to find a good band on the internet you have to wade though 60,000 bad artists, you end up going back to the majors anyway.

    The point of this being that the majors are the bundle and they continue to win (at massive cost). The unbundled artist having gone unchecked by quality control, build a wall between the consumer and the product. They unbundled artist does not have the commercial junk which aids the sale of the majors, to prop them up.

    So the unbundled world of music in my opinion is not working. Will it be the same for other products like books and art, what about news, will this affect that as well? I think so and I think we are already seeing it, at least those who are looking.

  5. wanha

    In today’s world, there is an overabundance of practically everything. That means there are more books, cds, movies, etc than we will ever have the time to go through to find the ones we like. And searching through 60,000 bands to find one you like is clearly uneconomical.

    Does that mean that big label, branded products win? After the rapid growth in branded products over black label ones since 9/11, one might be tempted to say yes.

    However, I believe that consumers are getting smarter over what, and more importantly, who they believe. Thus, consumer taste-sharing will become more important than ever before in finding new products, including artists and music. Already, this is the main function of celebrity playlists and iMix’s on iTunes.

    In the future, I expect more and more tools are created for consumers to share their tastes and to find others with similar tastes to discover new products.

  6. esm

    One of the factors leading to the un-bundling of content is the cost of distribution relative to the cost of producing the content. In traditional print media, the cost of producing content is small relative to the cost of distributing it. Bundled products are less expensive under this method as when someone purchases the “bundle” for content you have no interest in, it subsidizes the cost of supporting the distribution network. This all changes with electronic publication, where the distribution cost is negligible in comparison to the cost of producing the content. Expect to see continuation of bundling in physical media, and increasing separation of content on-line.

  7. Hot_Soup


    I have to wonder if you don’t work for Interscope or Capitol or one of the other majors you seem to be cheering for. The Internet is undoubtedly the best thing to ever happen to music. Most small bands make their money, if they’re making money, touring–how many are baristas when not on tour?. What better way to gain exposure and get people out to your shows than the Internet? As for wading through 60,000 bands of crap, while this may be true at MySpace, especially on my New Friend Request page, the cream always rises to the top. Sites like Pitchfork and Prefix and mp3 blogs do the sorting better than the MSM, and they make access so easy. I would be a quarter the music fan I am now if it weren’t for the ‘net. If only my beloved newspapers weren’t all freaking. My journalism degree is officially useless.

  8. John Lynch

    Conceptually, unbundling can reduce choice in the long run when what is unbundled is a product and its associated service and information. Consider retailers, who bundle products they sell with service and information that helps people appreciate differences among products in quality. Often, really innovative products cannot find a market without that bundled service and information. It has been argued that specialty stores are essential to give sellers incentives to create innovative goods that would not sell without demonstration and information — e.g., high end electronic goods. See Sheffet and Scammon

    But when some discounters compete with the specialty sellers by selling the product unbundled from the service and information, customers may free ride on the information from the specialty sellers, buy from the lower-priced discounters, and drive the specialty sellers out of business.

    As that happens, innovation in the market will decline. Because it will become more costly for a buyer to appreciate the potential value of the innovation, only the kinds of popular products that can sell in Wal-Mart can survive. That will reduce the incentive of sellers to create innovations that needed the bundled information to be chosen in preference to the goods with mass appeal.

  9. Tom Foremski

    It is not just products that will be lost but also services. It is cherry picking. The reason Google or Craig’s List can sell advertising cheaper is that they don’t have to pay for the journalism. When I worked at the FT, my employer sold advertising to pay for my salary and services, Google et al don’t have to pay for the journalism. What will fund journalism?

  10. Tom

    I know this is an old blog post, but still quite relevant.

    If anything since the original post date – this issue has developed further yet still is not resolved. I have to agree with Hot_Soup, the internet has been great for otherwise unknown artists and small business in general. The expansion of the long tail for creatives publishers services etc. has simply put more power into the hands of the consumer and taken it out of the taste makers. We no longer look to the TV for what is popular we are turning back towards the community and seeing popular votes from our own peers.

    As more people learn how to share their work online the smaller the world will become. We no longer need to depend on a record label or network to create entertainment anyone can produce it and anyone can distribute it for free.

    This not only opens up doors for every single person who has access to the internet. It opens door after door for entrepreneurs, investors, advertisers you name it the largest problem is the willingness of the dinosaurs from past industries to catch up. If they don’t it will hurt them more then anyone else.

  11. jbach

    Hi all

    As above, an old piece but still relevant, at least to me anyway. I am a creator of content that fits in the “long tail” category.

    While this whole “long tail” idea is wonderful from the buyer and shopper point of view, that seems to be the only pov anyone ever takes (maybe I have missed the threads I need to read). The part that Anderson and Carr and others ignore is the part where the ability of the niche creator/producer to make a living from their content is explained.

    It turns out that to make a living as a producer of specialty content you need to buy back into the high volume distribution business. Or else write a book about your theory or display ads on the sidebar:)

    No one seems to look at the economics of selling low volumes from the seller’s side. Anderson’s and Carr’s theories either encourage a nation of part-timers, independently wealthy producers who do not need the money, or aggregation of small specialty producers into a large group. imo, Aggregation makes money for the aggregator not the producers who are clustered together.

    So Carr and Anderson, now that you guys have made your mark and got us all excited, why don’t you take a look at the reality of what someone who produces long tail specialty content needs to support themselves? The main answer is enough sales volume to pay the mortgage. Sadly, it looks to me like you need scale, eyeballs and market heft to make a go of it, or else another job to support your hobby.

    Niche markets are great for buyers and in many cases poverty for the bulk of the creators.


  12. wtanaka

    Doesn’t it depend completely on the interface used to navigate “nearby” space? With an album, the nearby content is the other tracks by the same artist. Online, “nearby” products can be picked to maximize profit, but they could be picked in other ways if people cared enough.

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