Bundling, unbundling, and pricing of multiform products: The case of magazine content

Abstract

The Internet has given rise to a new class of multiform (i.e., hybrid) products that can be offered in both offline and online forms, such as music and magazines. The online medium enables bundling, and unbundling, of such products at negligible cost. Focusing on a print magazine publisher, we develop an analytical model to address three questions. Under what product-market conditions should the seller offer the magazine content online? What assortment of online forms (bundle, unbundled modules, or both) is optimal? What are the pricing implications? A key result is that going online is profit enhancing even when the market strongly prefers the print medium and there are no advertising revenues. Under these circumstances, the online modules, rather than the online bundle, better complements the print bundle. Also, the wider the product line, the higher the prices of the individual products.

Bye-Bye Bundles: The Unbundling of Music in Digital Channels

“…Focusing on the case of a magazine publisher, Venkatesh and Chatterjee (2006) theorize that offering individual products online as a complement to the offline offering is favorable when the market strongly prefers the offline good. I believe the present study, the first "real-world" empirical examination in this area, offers meaningful new insights into how firms can best design and market mixed bundles.…”

“…While the relative preference for digital versus physical formats may increase over time for all consumers, levels and rates may vary over the population. This could have important implications for bundling strategies (Venkatesh and Chatterjee 2006 through α 7 and β 1 through β 5 , show whether the impact of digital music consumption on sales differs depending on the number and the relative popularity of songs as well as the artist's track record.…”

Some people just want to read: The roles of age, interactivity, and perceived usefulness of print in the consumption of digital information products

“…The marketing literature to date has generally studied digital information products not as a separate product class, but as enhancements or add-ons to their ''hard-copy'' counterparts (Koukova et al, 2008;Venkatesh and Chatterjee, 2006). Koukova et al's (2008) research offers a hint that this assumption may need to be revisited, especially among today's younger generation, and that young people today may actually view digital media as a primary vehicle and print media as the add-on.…”

Multiplication des canaux et valeur perçue de l’offre digitale dans la presse écrite : un effet de complémentarité ?

“…Concernant les contenus, si des premiers travaux ont souligné la similarité forte entre les contenus traditionnels et digitaux et donc leur caractère étroitement substituable (Venkatesh et Chatterjee, 2006), d'autres travaux en majorité ultérieurs se sont éloignés de cette hypothèse pour envisager des effets de complémentarité (Bendana et Rowe, 2003 ;Koukova, Kannan et Ratchford, 2008 ;Bleyen et Van Hove, 2010). En effet, en raison des possibilités de différenciation offertes (contenus différenciés, fonctionnalités différentes), les contenus traditionnels et digitaux apparaissent comme moins substituables et l'élasticité croisée des deux contenus décroît.…”

“…Plusieurs recherches ont ainsi clarifié le processus de choix des canaux ou des offres multiformes par les individus durant les phases de recherche d'information et de prise de décision (Keen et al, 2004 ;Balasubramanian, Raghunathan et Mahajan, 2005 ;Venkatesh et Chatterjee, 2006 ;Laukkanen, 2007 ;Teltzrow, Meyer et Lenz, 2007 ;Choudhury et Karahanna, 2008 ;Kauffman et al 2009 ;Bleyen et Van Hove, 2010).…”