Clay Shirky got a lot of attention last year for his essay on why micropayments don't work - focusing mainly on the addition of "mental transaction costs" as an additional cost above and beyond the monetary micropayment cost. Not everyone has agreed (especially those involved with micropayment companies). Vin Crosbie has now chimed in to explain why Shirky is wrong about micropayments by saying that the mental transactions of micropayments don't always need to stop the transaction. As an example, he points out that people pay for water, telephone calls and electricity in micropayment fashion and never seem too bothered by it. This is true - but what's missing is that in all three cases these are both necessities and there are (or, in the case of telephone, were) no other options for providers. When there's no competition, you can charge and people will accept it - especially if it's a basic necessity. However, when competition does come about, the pricing starts to drop, and the idea of additional fees-per-transaction start to go away. Witness what is happening with the telephone industry. With the rise of VoIP systems, almost all telecom companies in the US are now offering some sort of flat-rate deal where there are no micropayments for each transaction. In the case of undifferentiated content, where there are plenty of other content providers online (with the possible exception of very specialized content), it will be very difficult to charge any form of micropayment.
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