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.

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.