The cognitive burden of unbundling

Department stores. Computer software. And even education. Products and services are being broken into their atomic units and optimized for price, selection, features and, most importantly, customer satisfaction. This is an inexorable trend that cannot and should not be stopped.

Roger Ehrenberg in a post called “The Great Unbundling”

This unbundling is happening. But I’m not convinced it’s every consumer’s desire to consume media or purchase clothing a la carte. Or that this is the end state of commerce. Instead, the future is a hybrid model. And it’s already in market.

In the bundled world, consumers only chose from the products an editor had selected. Editors are paid to sift through the morass of choices, curating a subset for consumption. Department stores, record stores, newspapers, etc.

Unbundling is attractive because it replaces an opaque curation process with transparency. In the unbundled world, consumers can browse every conceivable product.

But in exchange for choice, unbundling imposes massive time costs on consumers. Given access to every product, which one is the best for me? How might I even begin to decide which is the best for me?

Sometimes consumers just buy the brand of product over and over - like their jam or jelly. But for many products sold on the web like music, clothing, movies the decision is more complicated. Consumers want variety of good quality choices which requires research and time. There are always new styles of clothing and music and new movies.

Take music. At some point, it takes too much time to discover new music and users stop creating new playlists on services like Spotify and Rdio and become bored with these service.

This is the paradox of choice. For this reason, many opt for Pandora instead which offers a lean back experience of quality music discovery without much effort. But neither is perfect.

Ultimately, the best music service will offer both radio and a la carte. And that’s why Spotify launched Radio. Netflix offers a similar value proposition with their recommendation algo and their search functionality for video.

Unbundling shifts the burden of choice from a select few, to the masses, and in so doing, grows the time allocated to the decision exponentially. This isn’t the best outcome. Instead, consumers prefer a hybrid. Curated most of the time, a la carte by exception.

Nov 11, 2012

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