Micropayments - It Is Time

http://www.alexwilhelm.com/alex_wilhelm/2009/02/mircopayments-is-it-time.html

by warkaiser • 17 years ago

7 16 17 years ago

People need to get over free.

pbrown• 17 years ago

Just wanted to throw something out there as food for thought/discussion starter.

In my opinion, the current argument that people demand free content and will not pay seems to me to be a lot like early Internet (even pre-internet BBS) users who said the Internet wasn't the place for business. That obviously has proven wrong. I think the "people will not pay when they can find it free" theory will prove to be wrong too.

ja2ke2• 17 years ago

I think there is plenty of proof that people will pay for things on the internet. However, micropayments, especially "1 cent to read a blog," etc, are worthless. Content is not worth a penny and the hassle of a microtransaction. Your content is either worth at least one or two hundred times as much (aka a buck or two), or it's worth nothing and should be posted for free. (Or you should be otherwise bundling your content up into large enough chunks or highlighted portions that the payment is worth your customer's time to make.)

Price as barrier to entry is less of a concern than people think. The real issue for customers is the presence of a new container of content which must be paid for. It's getting over the barrier of actually paying that's an issue. If you have something of value, and make the barrier of entry to unlock the content via payment extremely low, people will pay for it.*

The "If your content isn't going to be free it had better be DAMN CHEAP!!!" mentality comes from the very loud, very wrong Slashdot-types who said the iPod would fail because it wasn't $89 and iTunes Music Store songs weren't gonna sell unless they were $0.15 each. They seemed to do fairly well. People are used to capitalism. A good price -- when paired with a good, desirable and confidently presented product -- indicates quality.+

If you tell your customer that you think your blog post is worth a penny, or that your newspaper is worth 5 cents, (plus the time it would take to actually pay for the product) why on earth is a customer going to think there is any merit to your content?

* Even a pre-signed in one-click "deduct a $0.05 from my microtransaction purse" is a barrier to entry. It's a small one, but you're still asking people to commit to buying something.

+ Obviously by "a good price" I mean a price which isn't so stupidly high that everyone has decided you're ripping them off, or a price so low that you are presenting your product as below-par, a knockoff, or otherwise worthless.

warkaiser2• 17 years ago

Yeah, I see what you are saying. But what if it was an automated system? No click purchasing to trusted websites where you knew the rates?

silencio2• 17 years ago

just asking out of curiosity: wouldn't $1 still qualify as a micropayment as well, i.e. a charge easily consumed by processing fees alone? as much as half of $1 easily goes to fees until you aggregate-charge the buyer (if that is even feasible).. and even amazon fps and paypal fee schedules are not that cheap.

I do remember someone bringing up how Apple does micropayments (a la iTunes Store) and Apple charges once or twice in the beginning and then aggregate-charges the rest anywhere from the same day to a few days later. Most places interested in micropayments don't have that kind of luxury of users who will store credit card numbers and buy things on a regular basis..

mattmaroon4• 17 years ago

Yeah, it's been time for them for 10 years. Those and fuel cells in cars. It's a race to see which one humanity realizes is pointless first.

alecco2• 17 years ago

If there wasn't a financial cartel blocking new players with regulation it would probably be very easy to [implement] and in many different ways.

Fuel cell cars and many other technological attempts at fixing a major problem get a minuscule crumble of the pie. Perhaps the waste is mostly on mainstream media and reader/watcher time. Who cares, that was time and resources lost.

Now my attempt at a red-herring: those particle accelerators sure waste money for some meaningless questions.

mattmaroon4• 17 years ago

Isn't it more the government in their attempts to prevent money laundering that makes micropayments too painful?

zspade• 17 years ago

What has been described here really isn't all the different from what much of the online community has been railing against with net neutrality - content providers controlling content distribution by price per use. Really if a blog cost you 1 cent to read and a news article 5 cents then who is price controlling this?

You mentioned it would need to work across several platforms, but there needs to be an organization or company in charge assign prices, collect money, redistribute it, and take a little (or a lot) off the top for their services. In old or 'real world' business models this would be akin to a publisher, label, or other content provider. This is the exact thing that the internet has inherently undermined in many ways by making content distribution available to the individual.

Don't get me wrong, in many ways micro payments are enticing, but a completely new business model will have to emerge for them to work on the internet. I don't have a better suggestion, but then if anyone did you wouldn't be writing a speculative entry on the matter.

mblakele• 17 years ago

I like free content very much. Still... maybe we already have micropayments, but they aren't evenly distributed yet.

The current generation of gaming consoles does something close to micropayments and scrip at the same time, through their online shopping points. They solve the transaction cost problem by making you buy $20 worth of points at a time (I bought 15 Nintendo points for World of Goo, and then blew the change on an impulse buy - a copy of Opera). Points also solve the resistance problem, by having a captive audience of users who want what they offer.

The next step might be to allow game review sites to accept Nintendo/Sony/XBox points for access to content, demos, trailers, etc. At the same time, that would tie them more closely to the console manufacturers. More mainstream channels could follow as they see fit.

silencio2• 17 years ago

> They solve the transaction cost problem by making you buy $20 worth of points at a time...

The transaction fees on a one time purchase of $20 is cheaper than on 15+5 or $1 20 times or even $0.05 400 times. The problem then is if the users would pay that much in advance, or if you can wait until that much as accumulated until you charge them for it. Then again there are services like tipjoy that manage that for you.

warkaiser2• 17 years ago

Thats the way that I see it. You get charged at the end of the month or whatever.

mattmaroon4• 17 years ago

PayPal does this, and allows for easy micropayments, and to my knowledge nobody is making much off of it.

Micropayments - It Is Time

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