Explanation of Commoditisation by blogger Andrew Kelly http://andrewblackdog.blogspot.com/2007/09/commodisation-is-word-im-hearing-lot.html

1. Andrew Kelly: Commodisation is a word I'm hearing a lot Page 1 of 1
Commodisation is a word I'm hearing a lot
It seems to be a business buzz word at the moment - something
businesses should fear. So here is a definition.
A commodity is a product that is completely undifferentiated. If a
product becomes less differentiated, so that buyers care less about
who they buy from, this change is called commoditisation.
The key effect of commoditisation is that it reduces the pricing power
of the producer: if products become more alike from a buyer's point
of view they will tend to buy the cheapest.
Commoditisation is a key reason why many growth markets
disappoint investors. Sales volumes grow as expected but, as the
market matures, prices come under pressure and margins shrink.
This is a key issue to consider when picking growth stocks.
In order to avoid commoditisation companies need to be able to
differentiate their products with something unique, that is not easily
copied by competitors, and which is valued by customers. This may
take the form of a strong brand, a technology lead, good design, good
retail locations, or anything else that will convince customers not buy
the cheapest product. The alternative to avoiding commoditisation is,
of course, to compete on price.
I'm not sure how that applies to the book trade.
My understanding of comoditization in the publishing context is the
the quality of book stops mattering and the marketing, including the
choice of author/subject/celebrity, becomes everything, and the
success of the book is then thought to depend on the size of
theadvance and the concomitant size of the marketing spend. It's
what's happened to a good chunk of UK publishing. It appeals to
publishers because it removes uncontrollable variables, like the
quailty of the writing, from the equation.
The gorgeously sounding word quot;fungiblequot; is an allied definition; A
commodity is fungible if it is perfectly interchangeable with any other
of the same type and class. So a fungible celebrity biography is one
that is perfectly interchangeable with any other celebrity biography.
http://andrewblackdog.blogspot.com/2007/09/commodisation-is-word-im-hearing-lot.... 12/10/2008