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A Viable System for Micropayments?
KalvinB asks: "According to The Case for Micropayments, Nielson makes the case that subscriptions fence you in because you either pay nothing and get nothing or pay a large fee. I'm curious as to why a large fee is the only option. Perhaps in 1998 bandwidth was as expensive as gold but five years later I propose A Viable System for Micropayments and how to implement it. The cost can easily be calculated either arbitrarily or by determining the amount of bandwidth the average user uses per month or year. I'm curious as to how viable you think this system is and if you have any ideas for improvement. Mainly in calculating cost and accepting payments. I think the biggest obstacle to micropayments is a complete misunderstanding of the term 'micro.' In the article it's talking about paying several dollars per page at some sites. By my calculations that file better be 5GB or more. It's greed, I think more than anything, that's limiting it's acceptance. Sites don't want to charge a reasonable fee and people think their ISP bill is an all access pass to the Internet. The idea of actually paying for products they use and paying more than the product was produced for is suddenly lost when they go online."
www.fastpay.co.uk
To send money to people, it's £0.30 a payment, payed by the sender and you can send upto £100 ($150).
thank God the internet isn't a human right.
I recently went to the site of some neat (bizarre?) screensavers for OS X called LOOPS, and noticed that they are now using PayPal to charge a very small fee ($1.50) to be able to download the very large savers. I think this is a reasonable system. I have been a PayPal fan for awhile, though...
Free the web...free the internet...I pay enough for the bandwidth to be on the web, never mind paying to use sites. Its bad enought that just doing a search these days turns up more sites that want to sell you a book or sometihng with the information your looking for...than sites that actually dispense the information.
Power Corrupts,Absolute Power Corrupts Absolutely, leaving one person(group)in charge is absolutely corrupt.
As I see it, TV might be a decently analagous system. People pay for their cable bill, or in this case, their ISP bill. They then get content.
:)
Who provides the content?
The cable company, through both ads and charging for the service.
Since the ISP is the one benifitting from the content on the internet, one (self-preserving) way of keeping that content fresh would be to "give back" in some way.
Unfortunately, due to the nature of the 'net, this would add overhead to those "good" ISPs which want to contribute, allowing ISPs that want to give just basic service to run at a lower cost with lower overhead.
The other problem with this is that it promotes content that benifits the ISP -- somewhat analagous to how TV has been taken over by large corperate moguls, allowing only corperate consumers to have a voice except in very small areas (public access, for instance).
It's fortunate that the Internet can't be controlled in the same way as TV, but with webhosting bills and domain registration bills that quickly add up, I can see many people who run sites as a hobby eventually giving it up since it's an unnecessary monetary drain.
Perhaps that's how "good" ISPs could give back -- support the lowly webmaster with some cool content that's been overwhelmed... say, by a slashdotting...
Dragging people kicking and screaming into reality since 1996.
I think a better name for a micropayment would be "a tip." Or maybe a tip is a type of micropayment. I have a friend who provides small web utilities and rather than make people sign up for these them, he gives them away for free to see if people would use them. I'm sure people would understand instantly what tipping meant if he added it to his utilities, but the same people would probably stratch their head when presented a micropayment dialog.
A programmer is a machine for converting coffee into code.
That does sound interesting, but for larger scale check out Clickshare (http://www.clickshare.com). They have quite a robust system that allows payments as low as you want. The system is mostly being used as a way integrate subscription access control and billing without much change to your existing site, but it works fine for article sale and whatnot.
:)
:)
It isn't really a viable solution for places that wouldn't have a total charge to the user of over a few dollars. Basically no Credit Card system would be due to the charges involved from the cc companies. But clickshare can conglomerate a user's charges and only run them every couple of days or say, once a month.
It's quite ingenious, as it allows you to set up pricing tables and such for different pages or sets of pages. Best of all runs on linux or windows servers and requires no client side code or javascript (not sure about cookies).
There is a lot more to clickshare, like allowing sites to sell stuff without having to register users. Also sites that do register users can make money off of their users purchasing at other sites. Check out the website if you are interested. clickshare
Also, Paypal does have a subscription feature, many sites use this, for example, hotornot does, but I am not sure how they integrate their usernames w/ billing. You'd have to ask them
DISCLAIMER: I used to work for clickshare
http://monkeyserver.com --- weeeeee
Characteristics that cause micropayment methods to fail:
Business people are self-destructive. Every one seems to dream of making a billion dollars overnight.
Technical people aren't business people.
Why not charge people's credit cards a minimum fee like $10? Then you could refund the balance in case someone did not spend it all and wanted to close an account. The account could keep track of the amount and reason that micro-debits were made. This has the advantage that you hold the money while the purchases are being decided.
However, we're not charged (usually) for browsing at a brick and mortar store, so why should we be charged for browsing through a web page of the same content?
We're not talking about charging for any and all web pages. Say there's an review on a new product: it took someone time to write the article, and it costs bandwidth to transmit. You are given the choice of either paying $0.02 to read it right away, or waiting a week and reading it for free. Or perhaps you get the first page free so you can decide whether you want to pay for it. This way people who are really interested can read it right away, and the author gets paid for thier effort. (And don't go saying "I can go to other sites", etc., this is an example.)
Or perhaps an article is available for free, but you want a hard copy. The author could have produced a slick PDF file that you can download of a couple of cents. You could always print out the HTML, but for a penny or two you could support the site in a small way.
This could also held mitigate the Slashdot effect: for small sites the first couple of paragraphcs of a story could be publicly available. The readers who really want to get to the rest of the story pay a little to help offset the author's/server's cost in being nailed.
An overwhelming majority of the transactions online are credit card. If you open a merchant account and get setup for credit card authentication, you'll find out why micropayments on the web STILL don't work. First, if you're average transation is less than $20, they take more money. Instead of paying 2% of your income in CC fees, it will go up to 3%. Given that micropayments are usally targeted for markets with very small margins, this is not acceptable and the powers that be, don't care. But don't forget to add insult to injury. Telephone sales are charged more for CC authentication b/c there's more trouble with those transactions. But if there's trouble with telephone, the internet must be twice as troublesome, thus a yet higher charge. For micropayments, or just for keeping the average joe form doing business, the costs are to high for the CC companies to be bothered with the business of the serfs. If they were more cooperative and helpful for non-profits, I'd be more understanding.
None the less, work out all the other issues, and you'll still have this one to work through. The idea of a syndicate has been mentioned, and that's one great approach - one charge, many members. I just don't have hope that any of these ideas will gain critial mass.
Democrats and Republicans only disagree about how to enslave you
This is why micropayments make some sense. However, as you have pointed out, micropayments are definitely more of a PITA (pain in the ass) for simple webbrowsing ("3 cents a page view? Fuck this!") than I think most people would be willing to stand.
I think the ideal solution would be a compromise - content syndication, flat monthly membership for access to a wide variety of web content where the content providers get a proportional share to the amount of raw usage of their actual "members-only" content. Premium content would be labelled as such, and would cause micropayment-style charges to accrue to your content syndicate account.
I actually think the other key selling point here would be the ability to control your own information. It's not too hard to imagine (and I have sketched out a framework for doing this) the content syndicate as a trusted organization that allows billing and personal information handling to be handled by third party "trust repositories" (sort of like the equivalent of setting up a VISA card account with a member bank that offers VISA cards) so that the content syndicate itself can't screw you over, and there can be competition on multiple levels.
This is the kind of thing that the Open Source community should get behind - go beyond making a simple alternative to Passport (the DotGNU folks and some others are working on things like this), and support a framework that actually innovates when it comes to rewarding content providers fairly and empowering web consumers... okay that sounds like marketing tripe, but hopefully you see the value in a proposal like this. Now please go ahead and flame away at my proposal.
"People are unlikely to share videos because they don't want to admit to the world that they are into it."
It used to be taboo a few years ago, but today that's not an issue anymore. It's become generally accepted that everybody has browsed porn on the web at one point or another, whether it be intentional or not. Heck, I remember suggesting to my dad that we trade bookmarks once. Heh my step-mom didn't like that convo at all.
I don't think the sharing of videos is much of an issue here. The fact of the matter is that with the bandwidth caps in place, it isn't worth sharing videos if they provide them at a decent price. I'd *happily* buy episodes of Deep Space Nine if I could download them from a server that's reliable. The only reason I have to search for content shared by individuals today is that I have no other way to obtain it. That's why the Mystery Science Theater 3000 Digital Archive Project is up and running w/o legal troubles. The show was cancelled and is not in reruns. (At least not the first 6 seasons) Only a handful of them are available on VHS/DVD, so what do we do? Let it die?
Give me the ability to buy these on a per-episode basis and you'll make money. I won't care of it's available to be shared.
Was this article written by a thirteen year-old? All this does is show you how to configure apache to make people type in usernames to browse your site, and then suggest that you charge the people who are using it. Well, the porn industry (and everyone else) has been doing this for years! The difficulty in setting up a micropayment scheme is not in configuring apache and writing visual basic scripts, but in making the payment mechanism convenient and non-intrusive. Also, there is a difficult social problem in convincing people to pay for web content. None of that is covered here, and that's what's needed in order to have a viable micropayment system.
.htaccess. At least use those same controls to limit access to the crazily-named one.T F-8&q=apache+log+analyzer)
Anyway, here are some obvious problems with what is there, even:
- Why change the name of the htaccess file? Apache by default makes sure that nobody can download a file called
- It's a really bad idea to use Visual Basic's deterministic Rnd function to generate passwords. (!)
- It's easy to use xcmd or bash or perl to make htpasswd read from a file, just like his program does.
- No programs around that analyze apache logs?? Holy crap, are you serious?? (http://www.google.com/search?hl=en&ie=UTF-8&oe=U
I like this system!!!
,I don't like the idea (personally) of having to pay to view web sites, but from a business point of view, this sounds good! The people that play my games do EVERYTHING they can to block the advertisements that we put on our site. We don't charge them to use the site, but viewing the banner ads is apparently too much to ask.
... although I think you'll see bandwidth prices bottom out since no one will be using the 'net then :)
I could actually make a few dollars from the games m friends and I developed at www.coldfirestudios.com.
This idea has serious potential!!
No
I don't like the idea of having to charge people to play my games, but if the "whole internet" moved in that direction, then it may not be a bad idea
HallmarkOrnaments.Com
I appreciate that the author has taken the time to explain how apache can be configured to support restricting access to content , but the scheme he's proposed is a subscription model not a micropayment system - ..."I propose a simpler system; a small yearly fee (less than $10USD) which works out to a micropayment per day" . By this logic a magazine subscription is a micropayment system as well because your subscription fee is amortized over the term of the subscription agreement.
Also the authors conjecture that the real problem facing the acceptance of micropayments is the greed of site operators probably derives from his assumption that the sole cost of delivering content is bandwidth costs. This isn't correct for most sites that are providing content worth paying for. Salaries tend to be a much more prominent aspect of costs than bandwidth. Actually sites that offer truly high value content tend to have a relatively small audience and therefore minimal bandwidth costs.
Maintaining individual subscriptions to everything I like and want to pay for on the internet is unworkable. I specifically don't sign up for thing often not because of the price, but because of the aditional overhead of managing yet another subscription (which card did I use, when do they bill me, how much, is it auto-renewed, etc...)
The current situtation is something like being forced to subscribe to every cable channel you watch individually. It would not be workable, as each channel has a radically different value to each individual. It's the same way with web sites. For example, byte.com just went subscription. I read it only for Jerry Pournelle. Now Pournelle is an interesting guy, but paying $12/yr for his column alone just isn't worth it (I don't care about any of the other columnists). Similarly, Imagine if every cable channel cost $10/year, and you had to subscribe individually, and each station handled it's own billing seperately. Sure, I like the Food channel, and might occassionally watch it, but is it worth $10/year? (TNN might be, for the ST:TNG marathons alone).
This is why your cable provider serves as a content aggregater, mediating the different values each customer places each component of it's content. As long as costumers are satisfied with the whole package, for the price they are paying, it doesn't matter if one is an HBO freak or the other is a CNN freak. They balance each other out and both HBO and CNN can pay their bills.
This is why ISPs need to become more like cable companies. They should offer packages which provide pre-paid subscriptions to various high value, or value added content. I could sign up for the news-nut package and get WSJ online, CNN streaming coverage, etc... and it all just goes on my DSL bill. Add in high quality (and add free) internet radio and streaming video and I'd be a happy camper.
This model would work, and I predict it will be the way it works in the future.
-josh
Maybe no one else feel that way, but I have a problem with gamespot/filespy(whatever the other one with member access is called), etc... And the problem is that they do NOT seem to provide ORIGINAL content. I do not feel that I should pay gamespot to download a game demo! I think that the creator of the game should pay gamespot and have it posted freely if they have any interest in selling the game to me...
We pay when we get flogged by pop-ups. I pay for my connection. It's the same gripe I have about going to a movie theatre, paying $8.50 for a ticket, then being plastered with Coke and Nokia and car ads before the previews. And yes, previews ARE ads, but at least they are something we WANT to see, since most of the time they are exclusive, pre-TV release ads. I would have no problem with those ads if they took several $$ off the price of my ticket.
If I have to pay to access sites that I am already paying to have the ability to connect to, that also is ridiculous.
However, this was supposed to be a discussion about micropayments, not a rant, so if micropayments are a must, the solution is easy. Do the same thing that EZPass (and other) tollbooths do. Have a $30 account credited. When you use that up, another $30 is automatically charged. EZPass would never work if each time you went through the tollbooth it charged your credit card $1.
done.
Examples of stuff that is worth paying a small one time fee for:
- Cheat codes. You might not want to pay for that, but I know enough people who'd pay $1 to get a code to pass that pesky level on their playstation game... especially if it didn't involve giving out credit card details to questionable sites.
- Templates... if a template would save me a hour of coding, I'd readily pay $1 for it.
- Shareware. Instead of charging $10 to those people that decide they want to use it, charge everyone $0.50 for the download. If they think it's rubbish, they're out $0.50 which is nothing to cry over.
- You said templates... but there's a bunch of stuff out there waiting to be picked up and used. Artwork for websites especially. These days you need to pay a licencing fee for a whole set or buy a CD even if it's just one button you want to use. So, most people just steal the artwork, but if they could pay $1 for just the one button, perhaps they'd do so.
- Reviews. And I mean real reviews, not the stuff sponsored by game companies that are nothing but veiled ads. People subscribe to game magazines, I don't think it's too far-fetched for people to pull reviews from a site for a fee, if they know the reviews to be good.
- Pr0n. 'Nuff said.
And finally an example of an instance where people already pay for smallish and seemingly worthless item: ring tones. No one, not even the guys running the ringtone sites, expected this to take off as fast as it did. They're being downloaded by the thousands.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
After lurking around reading this thread, I need to throw in my $.02 (micropayment of an opinion).
Most analogies are that the micropayment or subscription is paying for access to the content itself. Its been well established that except for porn, there isn't much else on the internet that a large audience would pay for. Probably true. But, change the way you look at things... its not about the content... its about the delivery of content.
Much like a subscription to a magazine, are you paying for the content, or how the content is delivered? Think of it in terms of the delivery. The magazine is giving you the content for free, but you're paying for it to be delivered on pages bound together and distributed to your mailbox.
Like a magazine, I'm working on setting up a subscription based service for my growing website. I'm not charging for content... I'm charging for delivery. My idea is to provide free access to all of my content online, BUT... the value is in the delivery. I've discovered that people are willing to pay for custom content delivery via channels such as email, PDA, etc.
So, when I publish an article on my website, if you're a subscriber, the article will be dropped directly into your inbox. Bam... value via delivery, not content. Sometimes, the article will arrive to the subscriber's email prior to being published on the site.
Yes virginia, there is value in content delivery... people need to stay informed. Its easier to stay informed when the content is being delivered directly to the recipients, rather than the recipients having to go to the source.
Get it?
Skiers and Riders -- http://www.snowjournal.com
So wait a minute, I have to pay the telco for my connection, the site for their bandwidth, and I have to pay for the bandwidth the Advertisers take up with popup ads and banners too? I don't even WANT to see the ads! They can't force me to look at something and then charge me for it!
Kintanon
Check out JoshJitsu.info for Brazilian Ji
Another "ask slashdot" that we all could have done without.
Maybe we need a new category - or maybe we could have a poll every day, and only the winner gets to "ask slashdot".
I have a different take on micro-payments that I think will work better than prior attempts. Voluntary micro-payments, or donations.
I've set up a site called the Nickel Exchange to make this work. Our initial focus is on the donate-for-content model, but instead of having a large minimum donation, you can donate as little as a nickel. There is an API available so it is extensible.
I think we've got an innovative approach to clearing these donations, as well, which is explained in greater detail here.
There was also an article posted to kuro5hin with lots of comments/feedback.
Another big downside of micropayments is that the cost of accounting, billing, and collecting can easily exceed the cost of providing the service. That's been true of off-peak-hour telephony for years. Off-peak cellular rates reflect this.
Worse, once you put in a payment system, the amount of user attention required to use it is high. Users will fear (with reason, given the history of slamming, cramming, and 900 number overcharging) that they will be ripped off.
Only two non-porno web sites really succeed as pay sites - Consumers Union and the Wall Street Journal. Both are operated by organizations with very good reputations and long histories.
Well, I think a sub cent fee per page viewed would be a good idea, so long as it was quick and easy.
.5c each. .5c for each page. .5c per page
I'd like to suggest a method whereby your ISP pays your surfing bill and then bills you back. It could work something like this.
1) Browse to foo.com
2) Site "foo.com" sends back a warning that pages are priced at
3) You agree by digitally signing
4) Your signing tells your ISP to record pages you visit at foo.com and pay foo.com
5) your ISP tells foo.com that it will pay
6) foo.com trusts your ISP and serves web pages to you.
7) you receive a bill from your ISP.
This method has the advantage of allowing anonymous access to pay sites as the ISP is acting as your agent, OK your ISP knows what sites you've visited, but they know that anyway.
You can't win Darth. If you mod me down, I shall become more powerful than you could possibly imagine
I say that micropayments are a horrible idea and have no chance of working, and there are significant problems that are only cursorily addressed. Clay Shirky said in the case against micropayments that "Why does it matter that users hate micropayments? Because users are the ones with the money, and micropayments do not take user preferences into account. In particular, users want predictable and simple pricing. Micropayments, meanwhile, waste the users' mental effort in order to conserve cheap resources, by creating many tiny, unpredictable transactions. Micropayments thus create in the mind of the user both anxiety and confusion, characteristics that users have not heretofore been known to actively seek out." I find this to be a distant 4th or 5th place reason. I came up with a good list of problems with micropayments that I wrote to the good people that wrote the original article. ... This type of model is FAR more economically, socially, politically, ethically, and technologically complicated. (than the article led the reader to believe)
1) PRIVACY issues. Paying means tracking, tracking will NEVER be acceptable. (this is the thermal exhaust port on this Death Star of a model)
2) Resonance to free sites on PRINCIPLE, causing large sites to drive off loyal users.
3) The subsidization of web properties by brick-and-mortar or other media outlets (CNN.com, Bank of America, Music Concerts, etc)
4) Ther lack of QUALITY content, and paying for information that you dont want, or was not worth your paying.
5) Technological security and fraud. Find me an encryption scheme that is flawless and that the industry and government can agree on.
6) International nature of Internet. Would be illegal in some countries under uniform transaction laws, (content disclosure, per-transaction approval, and privacy) currency exchange, and cultural roadblocks (VERY SIGNIFICANT)
7) Third world inequality. A penny may not be much when you make 50k per year, but what about a Hatian making 600 USD that has access to a computer? This could promote SEVERE social inequity across impoverished nations.
8) User shift back to free/no media. This type of model could very easily drive users off the internet. ISP fees are exorbitant as they are, ($20/month is a lot of money to the poor, to many minority groups, and to students. These are the groups that stand to benefit the most from the Internet.) computers are overpriced (compared to what they COULD cost i.e. MS Xbox is a fully functional high end Pentium 3 computer that can be sold under 300 USD with a minimal loss that will be recouped in licenesing fees)
9) Would destroy existing advertising base on web (more successful than you let on)
10) Would require massive upgrades to existing server and client software, and render all previous packages obsolete. Server software upgrade costs alone would be MASSIVE.
I think the following quote from another user summarized it best
"Incredibly dumb article. Not worth the 5 cents it would have cost me to read it. Casual browsing would plummet. Maybe the phone number and map providers would do well, but I think [small website] might not. I figure it's casual readers who come here to read about [specialized information] not people who are going to pay. I also question the logic that we need penny-per-page to keep the phone number and map providers afloat... they seem to be doing fine."
thats it
People who think they know everything really piss off those of us that actually do.