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."

Comments

micropayments market- paypal?

[5n3ak3rp1mp]

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...

for larger scale try Clickshare

[monkeyserver.com]

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 :)

Micropayments don't work b/c of credit cards

[ChaosMt]

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.

Re:Syndication

[Fnkmaster]

Agreed, I have proposed several times a plan to get content providers together under a common subscription-plan. Cooperation of the major ISPs isn't even a requirement, though it would certainly increase adoption. All that's needed is a willingness on the part of the content providers to agree that their share of the common syndication profits needs to be proportional to the amount of usage they get. This is, I think, the biggest roadblock. Most content providers will probably argue that the quality of their content is better, or that their content costs more to produce than others content. Thus, viewing their content should cost more. Now you've just converted an economic negotiation between the browser/content consumer and the content provider (i.e. if you want to view our content, sign up for our flat-priced monthly service, or use our micropayment system or whatever) into a negotiation between the syndicator/content conglomerate and each content provider. You are unlikely to produce a system in which each participant feels like it's a fair enough deal that they want to participate unless there is some sort of economic decision-making on the part of the consumer.

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. :)

What the hell?

[Tom7]

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.

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 .htaccess. At least use those same controls to limit access to the crazily-named one.
- 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=UT F-8&q=apache+log+analyzer)

The only via model is something like cable

[joshv]

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

EZPass micropayment system

[aardwulf]

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.

Re:Pay Sites

[JaredOfEuropa]

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.

Its not about the content, its about delivery

[cr@ckwhore]

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?