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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."
P2P would come to a shuddering and screeching halt if people had to pay for what they uploaded to others.
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...
I always worry about pay-as-you-go plans. It introduces randomness into something that, for me, needs to be budgeted for. "Oops, I left that ping running over night..." and the such. Kind of like my car lease (which I'll never do again since I love driving) - I always had to watch the miles...
I think that it will also introduce higher costs/byte because you are really paying for every byte. Where as in a pay-one-price model, sometimes you are the hog and others pay for you and sometimes you aren't.
In any case, neither is perfect, but a fixed price is the way for me.
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.
I currently pay for the use of FilePlanets exclusive servers. They charge 6.95 a month (less than the cost of a movie, or 2 video game rentals) and you get access to 100+k/s downloads. You can, however, use their public servers and wait in line for free.
Gamespot also offers members only access, as well as free parts to their sites.
When sites offer stuff I am willing to pay for, I will pay for it. 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?
In other words, if you are offering a service online, and you feel that I need to pay to use that, by all means charge me something fair (anything over 2-3 dollars a month for simple browsing is rediculous), but remember, most people are only going to pay for a few sites a month if we're using a pay to browse system, and most will go looking for the same thing on a free site, and you lose a customer.
After all, gamespot and IGN offer basically the same stuff, yet everytime I go to IGN they want me to pay, and as a result, I do not browse there.
Thats my rant, YMMV.
This is my sig. Its pathetic.
... is the right way to address this, not micropayments (which will never be economically viable without a syndicate-style clearinghouse that insulates the participants from contact with actual financial institutions).
Paying $50/year to subscribe to a site sounds like a lot of money, because it is. But if I could pay $100/year for ad-free access to all of my favorite sites on an a la carte basis, it'd sound like a bargain. That's where commercial Web content will have to go eventually. I can't imagine any alternatives that will meet the needs of both consumers and site operators in the long term.
It'd be nice if one or more of the major ISPs would offer a pilot program along these lines. Not necessarily MSN or TW/AOL; even someone like Speakeasy could make a credible effort at syndicating content for their members, IMHO.
Dahlmann tightly grips the knife, which he may have no idea how to use, and steps out into the plain.
They'd have to have some damn good and unique content if they expect people to pay for it. The current models probably come from people who know little about the internet, other than the fact that you might be able to make money with it.
I hope it doesn't go the way of mobile ring tones though; at one point they were free and practically overnight every free site was shutdown and the only sites available started charging for it. Overcharging to be more precise...yup, it's greed.
Exactly how is this a viable system for micropayments? What the author has done is provided a how-to for using HTACCCESS to restrict user access on Apache web sites.
There's no mention of how to actually collect the micropayments, just mystical hand waving about rocks and hard places.
This article could have used just a little more substance...
"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."
.AVI's for a reasonable price, they'd find themselves making quick/easy cash.
Um no, the problem is not that people don't want to pay for products. The problem is that there's little to no value in most content on the web to pay for. Let me put that in even simpler terms: The web has virtually no content that's worth paying for. It has nothing to do with the idea that everything on the net is free.
Don't believe me? Then explain to me how porn is able to thrive? Porn is delivered for free in generous servings, yet people still whip their credit cards out and buy stuff. Why? Because the net provides what they want. Imagery/Video + the privacy of their own home.
I'm shocked that the MPAA/Broadcast hasn't looked at how successful porn has been on the web and not realized the potential earnings they could make with their content. If they sold copies of TV shows using DivX
Anyway, my point is simply that the demand is there, it's the supply that's missing. It's not the other way around like the author is suggesting.
One thing I don't want is to pull out my credit for every site. I don't mind paying a few cents to view a web page, I just don't want the hassle of going through the payment steps. If someone had a system where I pay $10 to some micropayment corp, then I could view Salon, slashdot etc and they would just deduct the cost from my account. That would be great.
http://www.windmeadow.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
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.
I run a couple of information sites. I found that selling a product releated to the information helps defray my costs. I haven't gotten where I can support my family and myself, but I do have a nice set of co-located servers and it helps pay for Christmas as well.
-- Many men would appreciate a woman's mind more if they could fondle it
An all-or-nothing pay-scheme works, but it's called a bookstore. Secondly, I have a problem with pay-as-you-go pricing, because typically, on the internet, I'm never sure where I'm going.
To clarify, in my view, an ISP charges you for general access to hardware, i. e. the cost to view a web-site in say Australia is the same cost you would pay to see content at usatoday. The micro- or macro-pay schemes don't eleminiate a hardware charge, so I would essentially pay MORE for LESS. The real problem is the 'AOL Mindset', that once I pay this connect charge I have the internet to myself, unless a site requires a credit-card (ahem). Look at Salon.com, it's obvious that no one site has a lock on insight and editorial content (well, maybe slashdot), but with all the freely available content on the net, it's hard to put up a door charge.
"This isn't a study in computer science, its a study in human behavior"
This is just subscriptions. But the author thinks people don't like paying subscriptions, so he decided to call his subscription a micropayment-equivalent.
From a large corporation, I'd call this scummy and dishonest. From a person, I'll simply call it dishonest.
The point with micropayments is that I can visit a pay site once in a year, and only pay 3cents for that individual visit. (With, of course, a transaciton cost of about $2 on that 3cent bill.)
KalvinB's system is good only for long-term site users. Which admittedly is what a site wants, but it would be nice if he were honest enough to say that's what he's doing.
I will admit, the idea of subscriptions that only pay bandwidth costs is a reasonable thing to do. But it isn't a replacement for advertisements. It is a companion to them, to make the advertiser willing to pay more. You have the same deal with a subscription to newspapers... Your cost for a subscription to the New York Times or Washington Post just about covers the raw costs for the paper - the processed wood pulp - only. All other costs of running the business - salaries, equipment, general overhead - are paid by advertising.
You are paying for the privelege of allowing the paper to sell access to "people that are willing to spend money" while yourself getting access to good quality news coverage.
If you get something that's worthwhile to you, that's fine. But don't think KalvinB's thing has anything to do with micropayments.
This is my sig. There are many like it but this one is... Oops. Frank, I've got your sig again! Where's mine?
"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."
You know, its thinking like this that have made the world full of greed and corporate robbery and gouging.
Yes, there is some content out there that should be charged for - and it already is charged for. Then there is content that should not be charged for - and its not.
"premium content" as some site like to call it (i.e. CNN) is just that. Content that is available upon subscription to that service.
When the article states "people think their ISP bill is an all access pass to the Internet" thats dangerously close to the MPAA and RIAA thinking that. The thing is that some people just need to get lost when they want to charge for every thing under the sun.
I am all for people and companies making money - but please, you dont need to charge for every god awful word you write or post on the net. Get over yourself. Your content probably isnt even worth 10 cents.
Value of content is something that seriously needs to be adressed here. The value of an item is based on its desirability to others - the more desirable the item the more its value.
Defining desirability is much more difficult. For example - I do read CNN.com, I rarely watch CNN on TV, and I never would consider paying for CNN's premium content. Whenever there is a story that is in the premium only section, I dont see it - and I have no problem with that. If CNN decides to charge for *all* content on cnn.com - I just simply wont read it. so I guess their content is as desirable as they may think.
now - back to the all access pass idea. OF COURSE I think that way. I pay more for internet access than I do cable TV. I have some hundred plus station on my att digital cable (hate at&t) and I pay a lump fee to see all of them. I dont pay for "Premium CNN" via cable. Why would I consider paying for it online?
anyway - all these fools that think they are going to somehow revolutionize (read enslave) the internet and make us pay for every click of the mouse should just take their greedy asses and screw off.
We certainly dont want the internet to become modeled after the cable tv media structure.
"It's greed, I think more than anything, that's limiting it's acceptance..."
Greed? Heaven forbid that content providers should expect people to pay for the content and not just the bandwidth!
Writers and artists like getting paid for their work, not to mention the costs of the computers, networking equipment, sysadmins, network engineers, security techies, and so on. None of those people work cheap, because even in a bear market, there is still a huge demand for people who can keep the computers running.
People think that the internet as a medium somehow cuts out the expensive middleman simply because there is not storefront; all the internet really does is switch to a different middleman, and that middleman is not necessarily cheaper or more efficient right now. Micropayments is a stupid system, because charging people in tiny amounts will never really generate the revenue needed to cover the incredible costs of online media.
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
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
Why must everybody make this sort of silly comparison?
Okay, I'll field this. People make these sort of silly comparisons because in their own minds they are equivelant. Obviously to you they aren't but for many people such a comparison as the one above is completely valid.
--- I do not moderate.
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
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
I hate to flame, but there's nothing on this page worth reading. It's full of text on how to set up an Apache server, followed by:
Collecting Payments
This where you find yourself between a rock and a hard place.
If you're going to post an article about micropayments, you're going to have to make the micropayments and the associated economics the lead of the article, not the tail. Important questions unasked:
* A system for refunds
* A system for letting people reload pages
* A way to get people to trust your payment system (i.e. what if I pay my $10 and you go out of business)
* The cost of doing this business
* Dealing with forgeries
I've never before complained about an article on Slashdot, but this is truly a waste of time.
Clay Shirky has written this excellent article against micropayments. His case is that users prefer Aggregation, Subscription or Subsidy as alternatives to continuously making decisions about content.
Assuming that small sites will not have enough worthy content to go the subscription route and that subsidy (i.e. advertising) is increasingly running dry, the only realistic option is Aggregation. I think that non-exclusive, subscription-based networks of affiliated sites are a much more realistic answer. If, e.g. my OSDN subscription would get me access to premium /., Freshmeat, SF, etc. content I would be much more likely to buy it. What if though an indy site could buy itself (with a % of user usage) into the OSDN network? Presto! profit for OSDN, convenience for its subscribers and potential revenue for small-fry websites.
Please, steal this idea now.you then *own* the magazine. You can store it, read it years later, cut it up and decorate your room with it, burn it for heat, whatever. Hell, in many magzines the ads themselves are actually valuable "content" worth both reading and saving.
If you buy the right magazines you can even store them for a while and then resell them for a profit better than what you'll get by putting your money in CD's.
A magzine isn't just "content." It's a *thing.* And it's yours. And it may well even be an *investment.*
There are damned few web pages even worth the saving.
Now look at newspapers, and format perhaps more akin to web pages than a magazine. $0.50 will buy you almost more "content" than you can absorb on a daily basis.
Tell me, how muchs is each *story* worth in a newspaper? Rather less than a penny. And you can *still* roll the paper up and use it as an aritficial log afterwards, or mulch your garden with it.
If the web really wishes to compete with print on delivering "content" on a commercial basis than it has to do so by offering better value at a *lower* price.
Having a *thing* is part of the value of print. The "content" of a web page is nearly worthless, the cost of delivering it is irrellevant to that.
KFG
I doubt that google could afford subscriptions to every web site to spider their content ...
.... it MIGHT make spamming cost prohibitive!!!!
:)
But even better, this would DEFINATELY stop those annoying email bots from collecting email addresses from web pages!!!!
This may not be the best answer to making web sites profitable, but may have indirectly found a way to keep people like Ralsky (the famous email spammer)from refreshing his spam email lists!!!
This just might be a good idea
HURRAY FOR MICROPAYMENTS!!! - they saved my mailbox!
(but made it too expensive for me to read email too)
HallmarkOrnaments.Com
This is going to sound crass, but the biggest single reason that I know micropayments aren't ready yet is that the porn people haven't figured them out yet.
When I think about content online that I'm willing to pay some amount of money to access, porn makes it onto the list. Some other no-doubt worthy sites don't.
I don't want to pay $10 a month to access exclusive adult content. I want to pay $1 (or maybe only $.25 - some sites have "try free for a day, just givde us your Visa number" but that's a well-known scam anyway) and just get to the handfull of images/movies/whatever I visited the site to get. Basic economics... and it could be applied anywhere.
But the porn people have the most desired content online. They know it. They could make it happen. Either they have chosen not to, or they haven't gotten it to work yet (and I'll admit that I've not found a site that's tried), which tells me that either the interest isn't there or it's just not workable.
So, all I can say to the people screaming about micropayments is, if the porno sites aren't doing it, the rest of the web won't either. When they get around to needing to grow their market again, they'll make it happen, and suddenly the idea will be more palatable to everyone.
Comments?
-- I wanna decide who lives and who dies - Crow T. Robot, MST3K
The only place that I might be enticed to micropay for anything is compelling content, especially knowing that money is going into the hand of the aritst/writer/creator that provides it, and the payment is reasobable.
But paying for the amount of bandwith I use? Perposterous! We already pay way to much for broadband access as it is, and most of us have had our bandwitdth seriously capped in the last year. And in large part this expensive capped service exists because we lacks serious competition in broadband.
Compare our prices to Asia and it will make you weep:
Japan: $11/month gets you 11 megabits/sec
Korea: $25/month gets you 100 megabits/sec!
And these are flat rates!
**The capacity and growth of actual bandwith has far exceeded the exponential of processor speed. The current pricing structure in the US is Greed, pure and simple from Dinosaurs trying to hold onto power by enforcing artificial scarcity.
I highly recomment everyone read Support Telcoms Fast Failure
Planet P Blog - Liberty with Technology.
www.enthea.org
Let's return to the way the Internet used to be: a collection of peers. Let me post my site without having to piss off Comcast. Let Rob post Slashdot with impunity. If there is content on the web that is worth money, chances are it is because someone, somewhere cannot host it by hanging it off their cable modem.
Let everyone be a publisher. Clearly, TCP/IP is set up for it. The nebulous 'they' have brute forced a client-server mindset on what is the original peer-to-peer network mechanism. I'd pay an extra $10/month or whatever the costs are for my bandwidth to publish what I want, how I want, where I want.
Such heretical statements from a person with an MBA you may be wondering? Yup. But I'm the same guy with an MBA who wondered how all these Internet startups got so much VC funding for having business plans that made the Underpants Gnomes look like Warren Buffet.
There's not much money in selling services. Yes, the US economy is mostly a service based economy. But how long will that last when, for example, customer service is being outsourced to companies in India?
The term 'profit' to an economist means money over and above what a fair market would provide. That's not to say there is no financial profit. Financial profit lets the entrepreneur eat and have a house. Economic profit lets you hire Emeril LeGasse as your personal chef and live in a house built by Bob Vila. What prevents economic profit? Information about the buyer and seller. Low transaction costs. That's why small sites can get by. The owners can eat and provide bandwidth. But they aren't going to be Bill Gates. That's fine. They aren't supposed to be (neither is Bill Gates, but that's another story:)
But as others have pointed out in this thread, my fellow MBA's are looking to become overnight millionaires. Until they give up that tact, it won't happen.
I dare you to mod up this garbled mess.
Jesus was all right but his disciples were thick and ordinary. -John Lennon
Free the web...free the internet...
I'm convinced that people like yourself really don't care at all about freedom, but rather preserving the Internet and your comfortable little cocoon. If you DID care about freedom, then you would respect one's freedom to run thier website they see fit.
It was easy to respect one's freedom, when thier only other option was subscription, because you know most people won't buy subscriptions, therefore most websites won't be subscription based.
Micropayments, on the other hand, really threaten you, because you know most people won't mind paying $.05 (or some other price) for a dirty cartoon, and that would require you to pay $.05 for the cartoon.
Admit it to yourself, you really don't care about people's freedom, you're just a cheapskate hanging on the coattails of this "Free the Internet" movement.
If you REALLY cared about people's freedom, you would respect people's freedom to ask (NOT DEMAND, NOT LEGISLATE, NOT MONOPOLIZE, NOT COMMUNIZE) for compensation.
It's only the cornerstone idea of the most successful economic system to have been implemented.
I don't know about you, but I can't think of many other ideas which has done as much to promote freedom and improve the quality of life, other than science (not technology, the dicipline).
"Communism is like having one [local] phone company " - Lenny Bruce
I will try not to single out the person who wrote this article..
But it is interesting to witness the decline of the internet. Recall if you can, though we are probably all too young to have witnessed, that the advent of both television and radio where to revolutionize Society and Culture in the world bringing about a Renaissance the likes of which have never been witnessed.
The reality is we have way too many commercials on both Radio and Television (and the Internet?). Additionally, the only content you can find is that which is targeted to the highest spending demographical entitiy in the Society.
There is no cultural revolution. This is a continued example of how the internet will, like all it's predecessors, become nothing more than a petri dish of cultures that are dutifully harvested of whatever monies may come.
Examine carefully the history of Radio and Television before the FCC locked everything down and before the FM spectrum was owned by only a few companies.... This is a repeat of the same.
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.
A friend of mine owned a store a while back, and I once asked him why he wouldn't accept credit cards for some purchases. Basically, it costs the vendor money to process a credit card. In his case, he wouldn't take a card for a purchase under $10 because the processing fee ate up too much of his already thin margin, nd it was still uncomfortable for him to do so for purchases under $20.
That right there is the barrier that is preventing micropayments from working. You aren't going to charge me $.03 to look at a page when it costs you $.50 to process the transaction, and I'm not going to pay $.53 just to view one stinking page.
The only way I see micropayments working is someone like Visa buys into it and restructures fees to make micropayments viable, and I don't see that happening any time soon.
Under capitalism man exploits man. Under communism it's the other way around.
There is a certain attitude, as the original poster noted, that everything on the net should be free. But that's not the main problem.
The problem is that for the average person, the vast majority of what's on the web isn't worth paying for. It doesn't matter how easy it is to pay for, or how reasonable the cost is. There's just no demand for it.
Think of the web as the world's largest bookstore. I -- or anyone else -- might spend a couple of hours at the local Barnes and Noble browsing, but I don't buy everything I look at, and generally don't buy anything on the average visit. Now and then, I see something worth shelling out for, and I buy it. Brick and mortar retailers know this and understand that it's part of the game, and they don't sit around at night thinking up schemes for a per-book browsing fee. If they did, hardly anyone would ever come into the store, much less buy anything. For some reason -- perhaps the total lack of business knowledge that has afflicted online ventures from the beginning -- website producers just don't get this.
On the average day, I visit a couple dozen sites, including Slashdot, Freshmeat, CNN, Google, EurekAlert, various King Features and UFS comics, the New Online Books Page, a couple of hometown newspapers, etc. How many of these would I pay for if I had to? None of them. If I knew that the only way for them to stay online was for people like me to pay for them, I still wouldn't pay for them.
It's not that these aren't mostly fine sites, but the calculation being made here isn't their intrinsic value but rather the opportunity cost. If Site X was the only source of entertainment in my life, I'd surely pay a fair (maybe even unfair) price for it, but I have to ask myself -- would I rather get a book, a CD, rent a movie, spend a weekend at the beach, buy a camcorder, buy dinner, fix the car, etc., instead of subscribing to (or buying individual page views from) a website? In a word, no.
It's not just me, either, to judge from the state of the web content business. For the vast majority of people, the main value of the web lies in the fact that the content is free and convenient. Take that away, and very few people will be willing to pay for anything at all, and very few of them will do more than they do with the paper equivalent -- maybe subscribe to a newspaper, and maybe a couple of magazines. The sad and perhaps shocking truth is that the web just isn't very entertaining compared to traditional media.
Proud member of the Weirdo-American community.
Because they are not a bank, I also would not trust PayPal with a lot of money.
However, for small payments (which I'll arbitrarily set at $100 or less) they are fantastic. You can put money in the account, and just drain it that way (which is exactly what another poster was asking for). Even better, tie it to a throwaway bank account that you just keep a few hundred in and then drain money out of that.
I still like PayPal, I used to do a lot of online used book sales and they were perfect for that. I think they could be a great player in the micropayment space if they play it right.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The problem is that for the average person, the vast majority of what's on the web isn't worth paying for. It doesn't matter how easy it is to pay for, or how reasonable the cost is. There's just no demand for it.
I find that an illogical position. There is hardly anything that is "not worth paying for" in a pure sense. As Jacob Neilson points out, you "pay" for an article on CNN with your time. It is only "free" if you value your tie at $0.00. Most people do not. And then you are also paying with bandwidth. If it was truly the fact that Web content was valueless, nobody would use the Web. But they do. Therefore there is some financial price that is small enough to be lost in the noise of the other costs. e.g. Who would complain if after a month of normal surfing they had an extra $1.00 tacked on to their bill but had never seen a banner ad during that period? A buck for a month without banners and popups on all of my favorite sites? I'd probably opt-in for that!
But the problem has always been: "How do we exact that extremely low cost with an equally small hassle to the user and yet give the user the sense that they are in control?" And there is the associated problem that the Web is a massively decentralized system so there are huge technical deployment issues.
If Site X was the only source of entertainment in my life, I'd surely pay a fair (maybe even unfair) price for it, but I have to ask myself -- would I rather get a book, a CD, rent a movie, spend a weekend at the beach, buy a camcorder, buy dinner, fix the car, etc., instead of subscribing to (or buying individual page views from) a website? In a word, no.
It isn't a question of "website subscription" versus "buy a CD". That presumes that the prices are equal. The appropriate question is whether a hundred website pages are worth a print magazin. Or a thousand. Or ten thousand. Or a million. Or a billion. If the answer is really that a billion web page views are not worth the price of a print magazine to you then I don't know why you waste your time on the web at all.
It's not just me, either, to judge from the state of the web content business. For the vast majority of people, the main value of the web lies in the fact that the content is free and convenient. Take that away, and very few people will be willing to pay for anything at all, and very few of them will do more than they do with the paper equivalent -- maybe subscribe to a newspaper, and maybe a couple of magazines.
The whole point of micropayments is that you don't think of it as being like a subscription to a newspaper or a couple of magazines.
In summary, despite what you say, the question of pay-to-play content on the Web _does_ come back to "how cheap", "how easy" and "how much do I trust the process." If a micropayment scheme could answer those three questions right (a big _if_) then yes, it _would_ be viable in competition with other media. It's basic economics that even if the Web is not as entertaining as other media (another big "if"), it can win if it is sufficiently cheaper and easier. You haven't explained why you think the laws of economics do not apply in this case.
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
Utopian micropayment predictions always seem to ignore the basic desire to maximize profits. They predict a utopia where vast amounts of content are available with automatic payments so tiny that nobody will be bothered. But why would any author/provider leave all that money on the table? Why would they not increase prices to what the market will bear?
Today there is a lot of "content" available for free, or for "free registration". That would change. Virtually anything worthwhile that exists today for free would almost certainly go to micropayments. Lots of worthless content would also go to micropayments, because even a small amount of money from occasional readers would be better than nothing. Shopping sites and some purely non-commercial sites would likely be the only places left that cared more about getting lots of viewer (paying nothing) than a smaller number of viewers (paying "micro" amounts).
But would also truely high quality content appear? Maybe, but micropayments would have to be a pretty successful business opportunity before substantial new investments get made (other than re-purposing content authored for other media). Even then, the drive to maximize profits would be the primary driver. One way to maximize profits might be to produce something truely great and hope that a lot of people find it. Another might be to produce LOTS of mediocre content (as cheaply as possible) and make small returns on each piece. Another might be to put a large portion of the resources into "marketing" the content (getting paid hits) as opposed to the development of the content itself.
Luckily, micropayments appear to be unworkable for the forseeable future (people love flat fees and hate metered services, financial transactions cost too much to process, and financial institutions are also driven to maximize profits and burden the transaction as much as the market will bear). If all these problems ever get worked out, I believe we'll all be looking back on the glory days of the World Wide Web, when one could easily surf around and find lots of info about almost anything.
PJRC: Electronic Projects, 8051 Microcontroller Tools
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".
The real problem with micropayments is supplier fraud: they use teasers (ie, google hits) to make you think they have what you want, you get it and it isn't what you want. Yet they collect the micropayment for the hit.
Then there is the problem of salami-slicing: micropayments encourage vendors to break up any actually useful info into as many little bits as they can possibly get away with. You hit the first bit, find it useful (make a micropayment), go fetch the next bit, make another micropayment, and so on. With micropayments, the incentive to create comprehensive web pages, pages that present the needed info succintly and showing the proper relationships amoung the elements of the data, would disappear.
Finally, we need the ability to browse around, looking for what it needed, before payments are made; paying only the hits that actually prove useful. Micropayments fail this test big-time.
Forgive me, this may take a bit. And I do sincerely wish to commend you for thinking through your proposal. However, I wish to share some things from my experience that you may find helpful if you wish to pursue this idea.
I run the IT development wing of a medium size software and services company. I don't have a formal background in financial or managerial accounting, but I've acquired some knowledge in my years, and you would not believe how much I do while acting as the watchdog that ensures our systems (and processes) will not become potential sources of customer fraud. And that means that all our systems (and business models) are built with an eye towards passing a financial audit without raising concern.
Why am I saying this? Because as engineers we sometimes forget that the technical answer to a solution isn't enough; especially the moment you begin taking money from someone as quid pro quo for a service or product you are offering.
When you start accepting money from customers, you must think carefully about the fact that chances are very good that someone has handled a transaction like this before--and been hauled into court for it--or likely will handle a transaction like this in the future and later get hauled into court. Because of that, there are a great number of laws that exist governing how we do business, and there are the Generally Accepted Accounting Principles (GAAP) that provide guidance to businesses regarding the documentation and processes they should have in place to ensure they can properly state their business performance but also demonstrate that they are neither the victims nor perpetrators of fraud.
Almost there, bear with me. So, a micropayment system for bandwidth usage--because bandwidth is such a fungible resource--must have a mechanism that is precise and defensible in a court of law, and it must pass the muster of the CPAs who will eventually come check your books so that you can stay in business. That means:
1) You have to demonstrate you are charging exactly what you said you would charge, calculated the way you said you would. Are you ready to assert your mechanism will always give the right answer, when speaking to a customer (or accountant) who may understand what Apache is?
2) Unless you state clearly why you are not doing so (i.e., you have different services to offer), each customer must be charged the same price for the same thing. Are you sure your system won't accidentally overcharge one customer and undercharge another? What if you customer's compared notes?
3) What if a customer asks you to justify the bill? How would you do that? And if an accountant, 12 months later, asked you to justify the charge to a customer for a specific week of service, what documentation or digital trail would you provide that would precisely show why the charge was what it was?
I could probably go on, causing great boredom to most of Slashdot and you, I'm sure, but I just wish to point out that micropayments are fine, but the systems required to support them are very complex *because* of the requirements like the ones I've listed above. And thus very expensive, with more twists and turns than you've elucidated on a single page.
Again, my commendation to you for proposing an idea for Slashdot to, well, slash. But I couldn't let another post go up detailing a business or technical idea that is still too ungerminated too yet succeed. Best wishes!
The point that seems to be being missed here is that paying anything for the web is a fundamental shift regarding what the web is about, and continuing with it could lead to disasterous results.
The most obvious result is that the ability to put information up on the web for others to access FOR FREE will go poof. Pick and choose your own reason:
- ISPs increasing their bandwidth or hosting charge, because their clients are now getting payments for their pages and thus have more money;
- ISP hosting agreements based on a share of the micropayments recieved;
- Copy protection becoming standard on web pages to prevent free reposting of charged-for material; protection including a measure that bars viewing of unprotected content to prevent cracking; tools for creating viewable content too expensive for free creators or not for sale to non-businesses because they "can't be trusted";
- Linking becoming a commercial deal, in which free users can't participate because sites will pay linkers to hide links to the free competition;
- Search engines likewise charging a fee for users AND making money for sending them preferentially to charged content.
And then, of course, the web dies very quickly. Because if you can't reasonably display stuff for free, nobody can read your stuff without paying. But they don't want to buy a cat in a bag (especially not after the inevitable initial race of $1-to-view lots-of-bogus-keywords pages)- so they go off to a site they already know. No new site can get started, because nobody wants to be the guy who takes the risk of the first hit, and that isn't going to change because it's just peachy as far as all those sites are concerned and the ISPs aren't bothered either. Search engines die because nobody searches anymore.
In other words, it's the PageRank Effect writ large and with money. Heck, next thing, those sites will start to offer to save the user the price of their internet connection by providing one themselves, for accessing their site only, that's bunded with their micropayments. Congratulations, we have just rolled back to BBSs.
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.