Gutenberg's miscalculation: A lesson for big media?

In Clay Shirky's new book "Cognitive Surplus", he discusses a lesser-known aspect of the achievements of Johannes Gutenberg. Gutenberg invented the movable-type printing press, which changed the way that knowledge was distributed and forever changed education, religion, government and commerce. The Gutenberg Bible is by far his best-known work, but it wasn't his biggest, or even most important work.

Prior to printing Bibles, Gutenberg received permission from the Catholic Church to print and sell indulgences on its behalf. (Gutenberg borrowed the money he needed to build and operate his printing press based on the anticipated revenues from selling indulgences.)  Indulgences were a way for Catholics to "neutralize" their sins and thus move from Purgatory to Heaven much faster, or even skip Purgatory altogether.

Priests and pardoners (authorized agents of the Church) would sell the indulgences and write them down on pieces of paper. Gutenberg saw the opportunity to bring mass production to the process. By pre-printing batches of indulgences, he could sell them much faster and make more money for himself and the Church. The plan backfired, however, when other pardoners got their own printing presses and flooded the market with printed indulgences. The entire practice of selling indulgences (among other things) so angered Martin Luther that he wrote his "Ninety-Five Theses" in 1517 and nailed them to the door of a church in Wittenberg, Germany. The Theses were, in turn, reproduced on printing presses and widely distributed, which helped to bring about the Protestant Reformation, which in turn broke the hold that the Catholic Church had over Europe, and eventually, caused the Church to end the practice of selling indulgences.

The introduction of Gutenberg's printing press was an early, excellent example of the fact that it's impossible to predict the true impact of a discontinuous innovation when it's first introduced. Gutenberg thought that his printing press would make money for himself and the Church, but it instead led to revolutionary changes throughout European society that still resonate today.

When the Internet became a commercial reality in the mid-1990s, established media saw it as a sideline at best, but certainly no threat to their primary businesses, be they newspapers, magazines, music, books, television or movies. What they didn't foresee was the radical impact that the Internet would have on all of their businesses. In the case of newspapers and magazines, the Internet cannibalized their audiences and sources of income, replacing paid content with free services. Record companies nearly collapsed before they came to an uneasy truce with online distributors. Broadcast and cable networks found their shows scattered all over the Internet and worked desperately to get distribution back under their control.

Now, established media companies are grasping at apps as perhaps the last chance to keep their historical business models alive. They can sell apps, as well as subscriptions to the content made available by apps. That strategy works so long as apps are the only way to get to the content that people want to access, but it's a strategy with a limited future.

Earlier this week, Google released a new version of its mobile website for YouTube, written in HTML5 and far superior to the YouTube app supplied by Apple. It takes two clicks to put the YouTube site on the iPhone home screen, and from that point on, it's indistinguishable from an app. Eventually, all the content that's available on the Web will be available via HTML5, at which point the walled garden of apps will no longer provide any protection for established media companies. Apps may postpone the day of reckoning for media companies, but they won't eliminate it.

Open Source Content: The next wave in content creation

Over the last few weeks, I've read Dan Ariely's "The Upside of Irrationality," Daniel K. Pink's "Drive", and I'm finishing Clay Shirky's "Cognitive Surplus." The three books cover much of the same ground and refer to much of the same research in behavioral economics, and I'll be referring to them quite a bit in future posts, as their concepts impact a variety of fields.

One by one, old media industries have been reshaped by technological changes: When music could be copied perfectly and shared at no cost with anyone around the world, the ability of record companies to control the pricing and distribution of their products collapsed. The music industry is still trying to find viable new business models.

The business of printing words on paper and distributing them daily or weekly to consumers is also collapsing. Note that I didn't say that the newspaper or magazine businesses are collapsing, only the business of distributing ephemeral content on paper. There's tremendous demand for news, analysis and opinion, but it's being fulfilled by websites, blogs and Twitter, all of which can respond instantly to events. Newspapers and magazines will survive if they can develop business models that will enable them to get out of the "words on paper" business and make money online.

The movie and television businesses see the digital steamroller coming and want to defend against it with their own technology: 3D. The cost of producing videos, and now movies, has probably dropped by two orders of magnitude in a decade. 3D, on the other hand, is still (comparatively) expensive and difficult to produce, so only "professionals" need apply. Also, the only commercially viable outlets for 3D are movie theaters; only a relative handful of 3D HDTVs have shipped, and very little programming is available for in-home viewing.

However, 3D won't stop the penetration of online digital media into the home, and it won't prevent the marginalization of "big media." People have made their own independent films for years, but they were limited by two constraints:

1. Filmmaking was expensive, especially if you wanted to make a film that looked good enough to come from a major studio.
2. Distribution was controlled by a handful of distributors owned by the major studios. If you couldn't get one of them to distribute your film, you'd never reach a big audience.

Today, filmmaking isn't free, but it's much less expensive than it used to be. DSLRs and their lenses have dramatically decreased the cost and size of cameras. Desktop editing, special effects, color correction and audio mixing systems can handle all the post-production work. Netflix, Amazon, YouTube and countless other vendors can distribute the production to viewers around the world.

One component can't be eliminated, however, and that's people. The best equipment and software can't produce a movie or television show by itself. That requires talented people. People like (and expect) to get paid, so no matter how much you can reduce the other costs and bypass the big media gatekeepers, you still have human costs. Or do you?

The computer software business has been turned on its head by the open source movement. With open source software, a group of developers comes together to write software, and the resulting software is made available to be used (under specified rules) at no cost. The developers aren't paid, but they get satisfaction from solving a problem for users, recognition from the developer community for their efforts, and experience that they can use to increase their income from their "day job."

Blog writers like myself do this all the time, but it's less common in audio, video and motion pictures. Call it "open source content". The key is that a like-minded group of people come together to produce a musical recording, podcast, video or movie. They don't get paid for it, and their creation will be distributed (under specified rules, such as a Creative Commons license) at no cost.

Open source content can be distributed for revenue, of course. For example, Sony Pictures could agree to distribute a particularly compelling movie made using the open source method. For that reason, before work even begins, the team needs to agree on how any revenues earned from the content will be distributed: Will the funds be distributed equally to every team member? Will the team put a percentage of the funds into a reserve for future productions? Will they contribute all or a portion of the funds to a cause or charity? I can easily see pre-made disbursement agreements along the lines of the Apache License or GNU GPL that become widely accepted, and that everyone on the team can agree to before work begins.

One important distinction here is that these open source content projects aren't intended to replace "day jobs." They provide participants with satisfaction, challenges, experience and recognition, but (in most cases) no financial compensation. If and when the project makes some money, it comes after the project is complete and is a nice bonus for the participants.

People want to make their own videos and movies, but the "old media" environment shuts them out. The DIY (do it yourself) content movement is alive and well--just look at YouTube, which gets 24 hours of video posted every minute of the day, if you have any doubts. By formally applying the concepts of open source software to content, the rules and expectations for participants can be standardized. The big software companies have been unable to stop the open source movement; the big media companies are unlikely to have any more success with open source content.