Disruptive Forces in Media (and where the opportunity is)

There is no question that disruptive forces in media are changing the way we access information and experience digital content such as text, images and videos.

Interestingly, at Medill and Kellogg, while we examine the ways in which companies can create more integrated media campaigns, we also explore the opposite: the “unbundling” of media content. Before, songs are only sold as part of albums, but with the advent of such platforms such as iTunes, consumers can select and buy only the songs they want without having to spend on the entire album.

What made this possible is the economics of the digital landscape. Before music was available this way through iTunes, if music labels package and market each song in a CD or vinyl, it wouldn’t be economically feasible, since that would incur the label the cost of each tangible product. Nor would it be convenient for the consumer to continuously swap out these products on their players. The issue that distributors are facing with this great unbundling is the decline in revenues (since people only buy one or just a couple of songs from the artist instead before when they would buy the whole album.

The opportunity is when content distributors (ie. major labels) are able to package the unbundled components and sell those in the marketplace for a lower price than buying the entire bundle. This is also known as “curation.” This will give consumers new combinations which would appeal to them, and there is less of a barrier for them to purchase if the package is sold at a reasonable price. Birchbox is an example of a company that is doing this successfully: by selling trial to travel sizes of products in a bundle, they are able to derive revenue from a small bundle, which consumers are willing to pay for since it allows them to try new products, that they don’t have to pay full price for (two barriers shattered: price and uncertainty of product liking). In addition, this gives each brand exposure not only through Birchbox’s marketing but also enter the households of women who could potentially like their products. Birchbox’s expertise and friendly brand tone is also a draw for consumers, and it keeps them coming back for more (paying for subscription) because they receive value in the form of skincare and cosmetic advice.

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