Think of the traditional newspaper operation as a production pipeline. At the end of the pipe, the product pops out each day, the newspaper. A reader buys it and gets a whole bunch of information, all at once.
Startups first cracked the newspaper business model by using digital technology to offer pieces of that information at lower cost to readers. Shopping for a secondhand table? Look on craigslist. Buying a house? Realtor.com. Restaurant review? Check out yelp. Latest news? Google.
That business strategy has been dubbed “unbundling.”
“New digital players grabbed the opportunity to distribute news, music, movies, etc., online and deliver only what people wanted to consume, even if that meant just a portion of the full content,” explains Thales S. Teixeira and Peter Jamieson in “The Decoupling Effect of Digital Disruptors.” “This unbundling of content was the hallmark of the first wave of digital disruption.”
Unbundling doesn’t just happen to newspapers, the authors point out. “Apple’s iTunes unbundled songs from albums. Amazon’s Kindle unbundled chapters from books.”
Small comfort. Well, we’re not looking for comfort. We’re looking for answers. And one lies in the pattern discerned by Teixeira, this strategy called unbundling.
To understand it better, let’s revisit two more ideas introduced in our first post on Teixeira’s findings.
First, the concept of consumption as a series of separate stages, or activities: evaluate — choose — purchase — consume. Someone buying a TV, for example, might:
- go to Best Buy, talk to a salesperson and look at models (evaluate),
- make their pick (choose),
- buy it (purchase), and then
- use it (consume).
Key point: unbundling occurs at the consumption stage.
Second concept: Each activity in the consumption process can be of one, and only one, kind. The activity either:
- creates value for the consumer,
- captures value for the producer, or
- erodes value for the consumer without capturing value for the producer.
Second key point: unbundling separates value-creating products.
Clear as mud? We’re trying to understand the challenges the traditional newspaper faces using a new vocabulary. Stick with us. It will be worth the work. More tomorrow. …
This is the second in a series of posts reviewing a presentation given by Thales Teixeira, a Harvard Business School professor, at the 2017 New England Newspaper Convention. To read the series in order, please view: