Sunday, June 20, 2010

Are apps the future of media?

For more than 15 years, we've been trying to get people to pay for content via the Internet. Companies have tried to sell subscriptions to newspapers, magazines, music and video, pay-per-view services and the like, and with a few exceptions, they've failed. Consumers equate the Internet with "free"; they pay once a month for Internet access, but everything else is included. If someone does try to charge for media, consumers will almost always find an alternate source that's free.

Cable television in the U.S. is in a similar situation. Cable operators have figured out how to get consumers to pay (grudgingly)  for tiers of service that contain multiple channels. The premium channels that are sold on a monthly basis, like HBO, Showtime and Starz, have themselves evolved over time into packages of channels to keep viewer interest (for example, HBO East/West, HBO2, Signature, Family, Comedy, Zone and Latino.) Service providers have to offer discounted packages in order to obtain subscribers, and cancellations rise when the discounts expire.

Video service providers outside the U.S. have experimented with a la carte pricing for individual channels, but the results have usually been disappointing; the operators find that they can make more money by offering pre-packaged tiers of programming, and consumers rarely protest the lack of choice.

Perhaps apps, rather than the Internet, are the future of media. Consumers have shown a great willingness to buy apps, if they're inexpensive. The micropayment schemes that failed so miserably on the Internet work beautifully for Apple's App Store, which takes all the friction out of transactions.

Consumers will pay for eBooks, magazines and newspapers in the form of apps. They've made the Apple iTunes store the world's largest retailer of music. They're willing to pay for content, if it's an app, works on a mobile device and is cheap. In this model, the Internet is (sometimes) the channel of distribution and the app is the medium.

As much as many of us have been railing against "old media" companies for bringing their business models to the app world, it seems to be working a lot better than anything they've tried on the Internet. I don't think that we're ever going to be able to erase the perception that "everything's free on the Internet." By comparison, consumers aren't just willing to buy apps, they eagerly buy. If we want to sell content, the most likely way to do it is as apps.
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