We've discussed multiple times why micropayments are overhyped for content online. Despite being told repeatedly by companies in the space that this time will be different, it looks like one such company (Peppercoin - which has been one of the loudest defenders of the "age of micropayments") is already discovering they need to adjust their business model. The cool thing about the way Peppercoin works is that it basically aggregates a bunch of purchases and creates a "representative sample" to lower the transaction fee paid to the credit card provider. The problem with using Peppercoin for internet content is the fact that most people don't want to pay for content -- especially when there are other options and the mental transaction costs are high. However, that doesn't change the fact that Peppercoin reduces credit card fees -- which is useful if only applied to a market where people already are willing to pay for things. So, that appears to be where Peppercoin is headed: away from internet transactions (though, they still claim that this will be a big space) and towards real world situations where tiny transactions rule, such as arcades.
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