Have Micropayments Succeeded Long After They Were Dead And Buried?

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

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.

Filed Under:
Companies: apple, peppercoin

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “Have Micropayments Succeeded Long After They Were Dead And Buried?”

Subscribe: RSS Leave a comment
Joshua says:

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.

Michael Long says:

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.

Joshua says:

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?

Hulser says:

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!” 😉

Crosbie Fitch (profile) says:

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.

Linden Larouche says:

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.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...