Australian Internet Porn Filter Cracked By Kid; Politicians Get The Wrong Message

Have Micropayments Succeeded Long After They Were Dead And Buried?

from the let's-not-rush-to-judgment dept

Mon, Aug 27th 2007 8:32am — Mike Masnick

In the wake of yet another highly touted "micropayment" startup going away, the NY Times is challenging the notion that micropayments will never succeed, specifically pointing to things like iTunes, AdSense and iStockPhoto as examples to the contrary. The article, not surprisingly, references Clay Shirky's explanation for why micropayments don't work, and then suggests they do. There are just a few problems with the argument however. First of all, AdSense isn't about micropayments, no matter how hard the article tries to stretch the definition. Then, neither iTunes nor iStockPhoto are true micropayments in the classic sense of what we were promised (fractions of cents, and so forth). Rather, both are standard normal "payments." There's nothing particularly micro about either (again, unless you stretch the definition). Also, in both cases, the services provided better overall service than alternatives. There was a lot of additional value in using those services, which is what helped them find initial success. However, there are still plenty of folks who find it easier to not deal with the mental transaction costs and the additional burdens provided by things like Apple's DRM and prefer to go free. It remains to be seen if these small (not micro) transaction offerings really do have long-term staying power. As new models evolve -- especially in the music space -- things like iTunes may not be quite as dominant as some believe.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: micropayments
Companies: apple, peppercoin

11 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Jeff Greco, 27 Aug 2007 @ 8:58am

Between stages
We're currently between stages of micropayments - Amazon's new Flexible Payments Service is a killer new platform to handle it, and I expect to see lots of such implementations in the near future.
[ link to this | view in thread ]
Paul, 27 Aug 2007 @ 9:28am

Micro Payments I Want To See
I want to pay a few cents for each page of a book I read.

That way if I decide half way through it I don't want to finish it then I only had to pay for what I read!
[ link to this | view in thread ]
GoblinJuice, 27 Aug 2007 @ 9:38am

You've gotta understand, tho, that if you actually buy the NY Times (and, of course, the cup of Starbucks coffee that costs $5 and tastes like someone's ass wash), then .99 for a song is a micropayment. =)
[ link to this | view in thread ]
Joshua, 27 Aug 2007 @ 9:58am

I always thought of micropayments as payments too small to be worth the cost of a credit card transaction. In this case a $.99 song *would* be a micropayment.

Microsoft's Xbox Live Marketplace also would be a good candidate for a system where micropayments work (keeping in line the definition of being too small to be worth the transaction fee).

Your definition of micropayments being things like fractions of a cent makes little sense to me. What could you buy with half of a penny that would be worth the trouble to charge for? Defined like that, micropayments are silly in and of themselves and it matters very little if there is a good implementation of it. No one would bother making one.
[ link to this | view in thread ]
Anonymous Coward, 27 Aug 2007 @ 10:34am

[Micropayment] The movie, "Office Space" contains a great definition (and example) of what a micro-cent is and how micro-cents can add-up to some big bucks over time if left unnoticed... or a decimal is out of place.
[ link to this | view in thread ]
Michael Long, 27 Aug 2007 @ 10:42am

Web pages
@ Joshua - What if TechDirt charged a half-cent for every article page view? For you, then, TD might cost 30-40 cents a month to read. Probably something you'd be willing to pay, since 30 cents isn't much money in the scheme of things.

But if TD has a million visitors, then 30 cents per person adds up to be $300,000 a month for them. Not an inconsequential revenue stream. Cut it to a quarter-cent per page to make it even easier on your pocketbook, and that's still $1.8 million a year. Could make a good blog a working full-time proposition for a lot of people.

And maybe paying for a page on a site means that it's not covered in banner ads and other Flash rich-media junk. I'd pay for that.
[ link to this | view in thread ]
Michael Long, 27 Aug 2007 @ 10:44am

iTunes
"As new models evolve -- especially in the music space -- things like iTunes may not be quite as dominant as some believe."

Which assumes that iTunes stays the same and won't evolve with the times... as it's already done. Know what they say about assumptions, don't you?
[ link to this | view in thread ]
Hulser, 27 Aug 2007 @ 11:20am

From the linked article...
"There is a certain amount of anxiety involved in any decision to buy, no matter how small," Mr. Shirky wrote in 2000.

This is what it comes down to for me. Even if I'm only being charged a very small amount of money each time I open a micropayment-enabled web page, there'd be a part of my brain saying "That just cost you money!" Because it's now free, opening a web page doesn't require a mental evaluation of whether I think its content will be worth it the cost. That's why I like my monthly fee for my ISP. I might be able to pay less if my access were itemized, but I honestly don't want to deal with that.

Besides, can you imagine comments like this? "Your crappy TechDirt post wasn't worth .001 cents! I want my money back!" ;-)
[ link to this | view in thread ]
Joshua, 27 Aug 2007 @ 12:14pm

Re: Web pages
$.30 a month means that to be usefull to TD I would have to have an account with them for quite a few months just to make it profitable after credit card transaction fees. The only way to do that would be to make sure I stick around for months at a time.

Making me stick around so that I can pay off the cost that would be incurred by me paying them would either require a contract with them or a hell of alot of trust on their part that loyal readers will visit enough pages to cover the great number of people who would see the page only a few times a month.

So then that leaves me, the consumer, 4 choices:
1) I can enter an agreement to stick around for long enough to become profitable.
2) I can sign up and then stop viewing before it would be profitable to charge me anything, thus passing the cost on to TD's loyal readers.
3) I can sign up and view enough to make them a profit, in the mean time subsidizing those that don't view enough pages to be profitable.
4) I can just say the hell with it, it's not worth it.

Guess which I would pick?
[ link to this | view in thread ]
Crosbie Fitch (profile), 28 Aug 2007 @ 1:48pm

Micropayments work when the payer WANTS to pay
Micropayments work when the payer WANTS to pay and the payee is happy to accept such payments.

When you have a million payers and one payee, then you have micropayments.

You also need goods that can be perfectly reproduced a million fold at insignificant cost to payee and payers.

It's obvious, it just hasn't all been put together yet.

1) We have digital goods that can be perfectly reproduced a million fold.
2) We have a billion online users of the Internet.
3) We have a billion creators of digital goods each of whom might be persuaded to accept $1,000 even from a thousand payers at a dollar a piece.
4) We have a billion people many of whom can think of a few things they'd gladly pay a dollar for.

What you can't do is microcharge for copies of published works. Well, you can try, but you won't get very far.

Micropayments have a future. Microcharging is the flawed impostor that discredited it.
[ link to this | view in thread ]
Linden Larouche, 8 Sep 2007 @ 10:28pm

Micropayments can work
Interesting article: I love TD: and I'd probably pay to continue reading it if required. But at the risk of being harshly flamed, I submit there is one place micro-payments are working now :: SecondLife :: Yes, I know SL has many, many problems but there is a real economy there- even after a run on the bank, closed casinos and a pending ID/Age verification scheme almost nobody trusts. The designers, script writers, animators and escorts still seem to be micromanaging micro profits with micro-payments. The concept of m$ isn't flawed, the model and proof of concept hasn't been fully developed or embraced. In the early 90's we had BBS's (bulletin board systems); Now we have the internet. Innovations usually depend on more than just an interesting idea to become revolutionary and TIME is always a factor.
[ link to this | view in thread ]