Posted: 2020-09-22 20:41:19
From Ben Thompson at Stratechery by Ben Thompson
Originally published 2020-09-22
This makes sense when you remember that the business model for the Amazon Prime bundle is less subscription revenue than it is increasing usage of Amazon.com. Back in 2015 Prime customers were estimated to spend an average of $1,500/year on Amazon, compared to $625 for non-Prime customers; according to eMarketer earlier this year, 80% of Prime subscribers start their product search on Amazon, and only 12% on Google, while that split is 50/50 for non-Prime subscribers.
At the same time, content is highly differentiated, while goods in physical space are rivalrous but subject to commoditization. The former, delivered in a bundle with the latter, makes it possible to charge a premium for or drive increased usage of the product as a whole, whether that be a theme park or cruise ship, a cardboard box or console. What is interesting is that the same forces that broke up the old distribution-based bundles and reduced content to a differentiator for physical goods and experiences, have also made content directly monetizable through business models like subscriptions. This, in turn, has made content-only bundles that much more difficult to create: the higher the bar there is for any individual content creator to join a bundle, the more necessary it is to have an orthogonal business model that justifies clearing that bar.
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