The Effect of Costs and Economies of Scale on Bundling

Stremersch and Tellis make this proposition in their paper on Strategic Bundling.

P10: The profitability of price bundling is likely to be higher
than that of unbundling (a) the higher the relative contribution
margin and (b) the stronger the economies of scale
or scope.

Relative contribution margin is the ratio of price less variable cost to the price.

Given their condition (a) there are special cases that exist in which unbundling is preferrable

1. The Variable cost is 0 or close to 0
2. The price approaches zero

 For example, in case of newspapers the variable cost of a single article is 0. It is a fixed cost operation. The costs of setting up the reporter network, building distribution and printing newspapers are fixed cost. The variable cost to print the newspaper is independent of the decision to whether or not print any single article. To take this example to the Internet, the variable cost of whether or not to  display an article to a reader is 0.

Sticking with the same example for the second point, when articles are always sold as bundles, the price an individual article can be sold for is 0.  The price approaching 0 does not mean that the customer RP is 0 as well.  When denied access to certain articles, customers may have a non zero RP for certain articles and will be willing to pay for single articles instead of buying the whole subscription.

Given these two conditions, it would be more profitable to unbundle than bundle.