by Mike Masnick
Mon, Jan 19th 2009 8:38pm
There's been a lot of hand-wringing in the paper journalism world lately about business models, so it's no surprise that bad ideas for business models are springing up again. Specifically, some are beginning to wonder if micropayments could work. As Clay Shirky notes in the article, any time people bring up micropayments as a solution, it's a hail mary pass -- a last ditch effort by someone who has no other ideas. Now, every time we bring up micropayments, we get some pushback, but no micropayment system has ever been shown to consistently work on a large scale -- especially when it comes to news. People will. undoubtedly point to iTunes or even the iPhone app store as micropayment examples to the contrary, but both of those pale when compared to free music and free apps in terms of volume -- and considering the business models we've seen adopted that don't rely on those sorts of payment structures it's difficult to believe that such systems will really be dominant over the long haul. They work in the short term, mainly due to the convenience factor -- but they're a stop gap -- not a true strategy to deal with digital economics. Micropayments add in an element of unnecessary friction -- which represents an economic inefficiency. They may work for some time, but eventually someone comes up with better business models that get rid of that inefficiency.
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