No, really. We purchased cassette tapes and albums that cost actual money to create -- and we were happy to pay for them.
We had special players that we would put the cassettes in (and hope the tape didn’t get caught and tanglespool everywhere), and special turntables for the albums (which we hope didn’t get scratched).
But then along came digital music, and everything changed.
Once a product becomes digitized, it typically becomes dematerialized: represented only by ones and zeroes, rather than by etchings on a vinyl disc. And once it becomes both digitized and dematerialized, it becomes demonetized: you could make a billion copies, for free, with no loss of fidelity.
So what happened to the music industry? It started generating value in different ways. The indies went to platforms like Patreon and asked their fans to support them. The corporate money consolidated in platforms like Spotify, generating value not from the copying of bits and bytes, but from a value package: the consolidation of every song you’ve ever heard, the ease of access, the playlists, and the artificially generated “radios” that knew exactly which songs you’d like.
Spotify is a different business from Tower Records. It’s got a different value proposition, appropriate to a dematerialized, demonetized industry.
Products that are demonetized rarely get sold individually (e-books being a major exception). Instead, they get packaged up as part of a subscription service, or included in a product bundle.
Take GPS. Remember when GPS was expensive?
A GPS unit used to be a whole separate machine like the size of a brick, and it cost three or four hundred dollars. If you rented a car and wanted to know where you were going, you had to pay $20 extra per day.
Hard to imagine, right? When every one of us now carries a hugely sophisticated GPS in our pockets -- one that came for free with our phones?
GPS has become dematerialized and demonetized, and is one of the many value-add products that Google offers in order to amass data and elbow its way into your path.
If I search for directions to my hotel, Google can provide sponsored ads for nearby restaurants. If I search for the best route to the football game, Google can suggest gas stations on the way.
The GPS companies’ value proposition was straightforward: You give them the money, they give you the GPS unit. It’s impossible for them to compete with Google’s value proposition: You buy the phone you were going to buy anyway, they bundle in the GPS for free.
This is why, when I got not one, not two, but three emails from Mailchimp this week touting its free website builder, my thoughts immediately went to Squarespace.
Squarespace’s website-building business is straightforward: You give it money, you get a combination of flexibility and guardrails to create beautiful websites that work just fine for a huge number of businesses.
Meanwhile, Mailchimp offers a broader business platform, but claims to also offer a straightforward website-building product: You give it money, you get a combination of flexibility and guardrails to create beautiful emails that work just fine for a huge number of businesses.
For Mailchimp, the payoff for branching out to website building is clear: If I can make a free website on Mailchimp that’s just as good as a Squarespace one, why would I use both platforms?
I went and had a look, and I can report back: Squarespace does not, today, have anything to worry about. Mailchimp’s website functionality is extremely limited, useful to only the most entry-level customer.
But it will get better over time -- just as Squarespace’s email marketing functionality will get better over time.
Which bundle will win?