Articles by Chris Dixon
How bundling benefits sellers and buyersChris discusses the economic logic behind bundling and how it benefits both buyers and sellers. • The assumption that bundling will go away with the rise of à la carte distribution on the internet has proven to be incorrect. • He uses a simple example for the willingness-to-pay of two cable buyers, a sports lover and a history lover, and shows that bundling benefits both buyers and sellers. • In real life, bundling tends to flatten the demand curve, which lets sellers charge prices that capture larger areas under the curve and pass more surplus back to consumers. • The article notes that bundled pricing is one reason why subscription models like Spotify should ultimately win out over à la carte models like iTunes.
- The “thin edge of the wedge” strategy
This strategy involves attacking smaller problem first (inside of your overall vision), and then expanding outward from there, rather than attacking the entire problem all at once.
- Come for the tool, stay for the network
Chris details a strategy for building a network: use a single-player tool to generate critical mass and enough data so that a network-based product becomes compelling.