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Fame, Fortune and Micropayments
adharma writes "Clay Shirky is at it again. Addressed previously, his new article discussess the failures of Micropayments and the joys of free content."
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Honestly, I can live without most things. Sure, I listen to music, and I watch DVDs, and I play video games, but only while they're free. (I mooch from my friends) Were these friends to suddenly become unavailable, I would do without.
Same goes for web content. I enjoy slashdot, but I'd give it up in a second before I'd spend one red cent.
GeekNights!
Late Night Radio for Geeks!
...500 pages long with 3 zillion transactions. *Thats* why it'd fail ;)
What is the point of the internet?
I honestly can't think of a single web site where people would be willing to spend $0.005 to view a page.
It's hard for thee to kick against the pricks.
Give up man. You will never get money out of Microsoft.
And I will never read this article....
Everyone with half a brain realized this years ago, no matter how many hype articles there was in the media. Micropayments is great for companies, and a pain in the ass for consumers..
e-cash? Shut up. We got credit cards, paypal and we dont want more accounts and stuff to keep track of.
Will code a sig generator for food
The mere fact that the article reports on two different systems highlights an enormous problem in the world of micropayments: competition creates more problems that it solves! The beauty of a micropayment system is that one doesn't have to keep an account with a single provider, and oftentimes these providers are small enough so that an account would be senseless anyway; the issue created, however, is that consumers moving from one provider to the next are going to need a common ground for payment between them. Although this is what a micropayment service is supposed to be, a flourishing of different micropayment systems will mean consumers will have to stick to one and be limited in where they can spend, or go through the hassle (and probably expense) of creating accounts with many, partially defeating the original purpose. What do I see happening?
1. A single system gains the monopoly, and micropayments start to actually look worthwhile. OR
2. Consumers just continue to resort to big name information providers which they create accounts with, maintaining the status quo.
If the e-coins system I was a member of earlier in theis decade is any indication, I see the latter as the much more likely of the two evils to occur...
The RIAA said nothing is really free! There are poor people starving in China because I didn't buy the Macarena song.
I think that it wont work unless you do have a LARRRRRRGE flow of traffic that can support it, such as Slashdot, but even there, most of the structure has been already implimented, and though i dont have /.'s figures, I bet is only coveres just bearly what it costs to run the place.
oh and *cough* content *cough*
Why do you think Paypal has gone to such lengths to build up a huge userbase? They're positioning themselves to be the micropayment processor. You deposit money in your Paypal account and avoid nasty CC processing charges.
Do without? Or become a hypocrite?
There are things I would pay a penny for (0.01p) (I thought we have pennies, and the US has cents, but we seem to be swapping the words) that I won't take out a subscription for, and things that I am happy to subscribe to such as The Independent newspaper. I found Jakob Nielsen's Alertbox articles moderately persuasive, including the suggested interface for feding back to the user the rate at which virtual coppers were leaving the virtual purse. I remember a broker explaining to me that people won't pay for information, and therefore the busines model for the company being set up was of a walled garden...I thought he was wrong then. You won't have heard of the company, it sank.
He barely mentions music and movies, but Hollywood is eager to charge us per vieweing, rather than a pay-once watch/listen forever deal. Pay-per view and Video on demand are a current example. Of course, as long as DVDs and CDs remain mainstream, we won't have to worry about paying 10 cents every time we listen to the "Macarena".
He's sunk his teeth into a clever sounding argument here, and he won't let go, but it doesn't make sense. It is potentially true that the web has brought the price of info down to nothing, but that doesn't mean it's because micropayments fail.
Perhpas it /is/ the content being offered thats making micropayment fail, just not the way the article is describing.
Instead of charging 25c for EVERY game you have, why not charge a flat fee of maybe 1.50-2 and you can access everything for an hour/day or until you close your browser.
Why does every website want to go with the monthly fees? This stuff is on the internet the place where pretty much anything can happen instantly, why do all subscription type services involve so much time?
Expierence has shown that whenever people start trying to charge for content that people will find other sources which are free. We have become use to information being free and feel (wether rightly or wrongly) that it should be
My $0.000002
Rus
Cheap UK and US VPS
but with micropayments, maybe it could be. DSL costs what, $50/month? Web hosting costs what, $5/month? Most computers could easily host 10 websites a month, and with micropayments the people paying for the hosting wouldn't have to commit to long term contracts. Just pay by the day, and have an automated script move you over if your provider goes down.
You can create a really good web page that's popular, but *you* have to pay for the bandwidth.
The problem would solve itself if the bandwidth was paid entirely for by the end which is downloading the data, rather than serving it. Then the ISPs would have to pay to download from sites, and payments to sites would become part of a customer's ISP bill.
Free is good... or is it?
One of the great things about the internet is that anyone can publish, no matter how small and insignificant they are. One of the really bad things about the internet is that anyone can publish, no matter how loony and horrendusly wrong they are.
As he points out in the article, one of the reasons why people thought that micropayments would work was filtering. But as Google does that for free, all you need to do to make your pages popular is to get lots of people linking to you... or if you're devious, link to yourself. It don't matter how wrong you are, or how crazy your conspiracytheori is - on the web, you and I carry as much weight as the next guy over.
Sure, papers like the NY times requires registration (thus they ain't complely free, even if you don't hand over money), but at the same time they do provide information you can trust a bit more... and that is worth someting - at least to me.
Free speech and free beer is two different thigns... but if we keep demanging that all the stuff on the web should be free as in beer, we also get all the loonies practising their free speech, adding way to much noise to the signal.
Everything in the world is controlled by a small, evil group to which, unfortunately, no one you know belongs.
...and have been so since 1993. And probably will be so in 2013. :)
Honey, I shrunk the Cygwin
Sure. I'll be contacting him shortly about hosting some sites... since he's figured out how to do it for free, regardless of the bandwidth usage. In the end, someone pays. You may or may not do it directly, which /. is a good example of, but you do pay.
Tomorrow will be cancelled due to lack of interest
This guy is bang on in many points. Even a free registration is annoying, I stopped reading New York Times when they fixed the archive.nytimes.com hole. Fileplanet? I have to register to wait in line for 3 hours to download a patch? Micropayments are even more of a hassle. I liked the way the author described the way people evaluate purchase decisions, and he's right: I wouldn't pay for a newspaper that charged by the article, or word. Penny Arcade, RPGWW, Poisoned Minds, GU Comics and others tend to have a gift for any donation. They're the ones that clean up. I wonder how successful that method works for sites that aren't webcomics. LiveJournal and /. seem to be doing well.
I'd have to disagree that micropayments won't work; I think micropayments do have potential, though establishing the system may take some work.
Given the choice between, say, downloading a song off Grokster for free, or paying a dime to download it directly from the artist's web site, it's true that many people will choose to grab it for free. But if the version off the web page is known good while the one on Kazaa may have glitches, that ten cents may not seem to be such a big deal. The good feeling one gets in "donating" to an artist one likes helps as well.
The bugaboo in micropayments isn't whether people will do it; it's in getting such a system emplaced. What good is being able to pay someone a nickel over the net if you've got to buy $9 worth of nickels first, with an extra buck for a transaction fee?
I suspect what we need is a "killer app". For instance, someone selling a nice, useful tangible service and ONLY accepting this micropayment as currency. An entity doing so would also need to bear the cost of sustaining this electronic currency.
Shirky makes good points -- I think the real problem with micropayments is that you have to counteract the momentum of a closed wallet.
People are frugal -- especially online. I pay for the occaisonal shareware, and I subscribe to the occaisonal service. Like Shirky mentions, I can easily determine the value of spending $20 to support a software author I like. When I see enough value, I open my wallet.
When it comes to $0.25 for a comic strip, though, we have no point of reference when it comes to value. We're buying something of "fractional" value; 1/365th of a yearly subscription, or 1/2 a laugh, for example. Is a comic really worth 5 cents a frame? If I'm doing it for moral reasons -- to support the author -- will he even notice the $0.25? What exactly is a good deal for $0.25, anyhow?
When it comes to something buying something with such fractional value, it's simply not worth consumers' time to make that buying the decision. It's definitely not enough to counteract the momentum of a closed wallet.
It all goes downhill from first post
(Gah, I hate it when I post in HTML formatted mode instead of POT. /me trouts self.)
/. seem to be doing well.
This guy is bang on in many points. Even a free registration is annoying, I stopped reading New York Times when they fixed the archive.nytimes.com hole. Fileplanet? I have to register to wait in line for 3 hours to download a patch?
Micropayments are even more of a hassle. I liked the way the author described the way people evaluate purchase decisions, and he's right: I wouldn't pay for a newspaper that charged by the article, or word.
Penny Arcade, RPGWW, Poisoned Minds, GU Comics and others tend to have a gift for any donation. They're the ones that clean up. I wonder how successful that method works for sites that aren't webcomics. LiveJournal and
An observant person (don't seem to be a lot around here) will have noticed that one of the few pay-for-access web sites that actually have customers is the one owned by the Wall Street Journal. Not a coincidence that it caters to people who have deep pockets -- or like to pretend that they do. Clearly the bucks are there if you have something people want at a price they can afford.
These "micropayments don't work" rants all fall down because they ignore a fairly conspicuous fact: micropayments not only work, but have been in use for a very long time. Do you have to buy a subscription to read a newspaper? No, you drop a quarter in the machine and you take one. (Or a buck for the WSJ.)
But wait! That's different! You don't get to pick out individual articles and just pay for those. But that's a technical issue. It isn't practical to build a machine that would do that. The smallest unit that is practical is an entire newspaper.
Somehow, nobody's managed to carry this idea over to the web. Perhaps this is technical and economic too: payment systems are too hard to implement, computers you can read in bed are still a marginal item, etc. But I suspect there's also a conflict with established interests. (Doesn't it bother anybody that not a single online newspaper has experimented with micropayments, even though they're all desperate for revenue?) Owners of "intellectual property" are very nervous about distributing it in electronic form. (Hence ebooks that cost more to buy than hard copy books.) And existing financial institutions can't be infatuated with payment systems that would compete with their lucrative credit card businesses.
ISPs should pay for content, and then the ISP member could choose what they wanted to view. For example, if you subscribed to earthlink, earthlink would let their members choose 40 different sites they could view out of a huge selection. This would solve the micro-pay problem because I rarely visit new sites. I just have a certain number I make the rounds in. That way content providers get paid via the ISP, and members get to pick 40 or so sites ala carte.
And please, you would never willingly "do without". If your "friends" became "suddenly unavailable" - an experience that I'm sure you're quite familiar with - you would immediately go looking for other "friends" to take their place in providing you as much as you can take.
Honestly, whatever became of the idea of contributing? Of carrying your share of the load? Are there really so many people all the way down the producer-consumer axis - so far that you can't even see the relationship between the two?
...please send me nine cents.
For a view from the other-side (that of the independent content provider) check out Scott Mccloud's response to Shirky's latest essay.
I've got to disagree with you. We don't pay utility companies in micropayments, we pay them a rate for their service.
We're not buying a one minute conversation from our phone company -- we're buying a rate that covers an entire conversation. The cost of an entire conversation is where we make our value judgement.
We're not buying 1 kWH of electricty from our electric company -- we're buying a rate that covers our entire month of TV watching, etc. The cost of the entire month is where we make our value judgement.
It all goes downhill from first post
The web shows the same pareto distribution that Frank & Cook discuss, with a few sites getting a huge number of hits and the vast majority getting just a few.
However, Shirky may still be right that the proliferation of free content will prevent even wildly popular sites from turning their fame into fortune. It's also possible that the continued emphasis on blockbusters is a flawed business model that causes publishers/producers to overlook vast markets for a greater variety of content. It's the unwillingness to see beyond the huge profits of a Britney Spears or Madonna album that leads the music industry to pursue shortsighted strategies of squelching online access to music.
foldplay your photos won't know what hit them.
The author uses two pretty low-quality examples. Just as people are loathe to pay $20 shareware for software worth about $5, the two examples (.10 for PowerPoint slides) don't sound worth it either. When valuable content comes priced at or below their value--that's when Micropayments have a chance to succeed. Not when people continue to follow the paradigm of overcharging customers, just on a smaller scale now.
.25 will be more telling than this article.
I thought McCloud's comic was well worth the 25 cents and BitPass was pretty easy to use. I might experiment with it on a future project of my own--alongside free content.
I don't remember exactly what separates a "micropayment" from a "small payment," but consider the apparent success of iTunes. I've talked to a lot of people who are amazed at how easy it is to click and buy--at $.99 even--and they're more willing to spend than they thought they were. Can people find these same songs for free? Probably. But they're paying for how much more convenient the paid service is to them than the free version.
I'd love to see how well or how poorly McCloud has done with his comic. Here's someone who has demonstrated his value to the consumer in the past with both free and priced content. I think finding out if people were willing to follow HIM from free to
If with respect to DVDs, CDs and video games everyone adopted your attitude, you would have to do without them because they would not be available.
This is the classic free rider problem (see also Wikipedia).
Only Women Bleed (Sex, Sharia remix)
If I can buy pre-paid BitPass cards without a credit card, with a similar level of convenience, then we have a winner.
Either that, or anything targeted at teenagers will never be able to charge.
What we call folk wisdom is often no more than a kind of expedient stupidity.-Edward Abbey
[100% ISO 646 Compliant]
SVM, ERGO MONSTRO.
I've had some hands-on experience with this. Sure enough it's easy to, say, make a smallish website with a community forum. Most people are willing to actually pay money to be visible; the motivations for this are a discussion in and of itself. Something like $10/mo is the norm; after all this is the cost of a few quick meals. Not something you'd miss too much.
But then supposing your site gets really massive and begins to outstrip that seemingly infinite 10Gb/mo transfer limit (or however much it is). So many sites either start charging or put bloody huge and popup type ads in place, the logic there being "the more annoying and inescapable you make it, the more people will be interested" -- at least, this is what passes for logic in your average marketing department anyway.
That's where the problem lies. I've actually found a system that does seem to work quite well and will continue to work if a lot of people use it -- reselling. At the moment I'm in the process of scaling up the operation to a $100/mo dedicated server with 700GB/mo of bandwidth. Of that I only use about 150 but let's say we allocate 350 of that for me as room to grow. Now you take the other 350 and divide it by ten. 35GB each. Similarly, split the 40GB hard disk into two; 20GB for the OS and your main site and then ten 2GB pieces. Now resell these resources and hey presto you've got a sustainable model that makes everyone happy (and even lets you get away with being hosted for free, at the expense of acting as tech support for ten people -- I make it clear that while I'll reset passwords and set up POP3 boxes and domains etc I'm not going to teach people how to write HTML or use an FTP client. But then again neither does any other hosting provider)
I have a fair bit of confidence in this method. That it works for me is no small part of that, but also it's a lot more psychologically acceptable way of asking for support. If people pay $10/mo to support your site they're going to become extremely picky about whether or not they're getting their bang for their buck. If you offer hosting though, many people want to run blogs and the like. $10/mo may get you 3GB of disk from a commercial provider or maybe an extra 5GB of traffic due to the economies of their operation's scale but considering a lot of people aren't going to go right up to their limit anyway they're not going to mind if they're helping their favourite site out. Of course, they'll expect good service from you as far as webhosting goes but that's a much more mechanical and predictable procedure than keeping the site interesting. That and considering you're probably not running your operation for profit, your reseller slices will quite likely have a very competitive price too.
Sorry if this isn't too coherent, it's coming up to 1am here. Does anyone else agree with me? Like I said it works for me but I dunno if it's a viable model in general or I just got lucky with the people at my site (well ok not mine, I help run it)
I have a really substantial, insightful post for this discussion, however, before you can read it you must PayPal me 10 cents at the address in my profile. Thanks!
I moderately enjoy DVDs, video games, and the web. They are not, however, integral to my life and/or well-being. My friends enjoy them more than I, to the point that they feel it worthwhile to pay for these things. I have better things on which to spend my money.
;^)
Wine. Books. Good food. I buy and share them. Most everything else I can do without
GeekNights!
Late Night Radio for Geeks!
That's because "everyone" lacks the presence of IP phones. If everyone had sip phones in their homes and could call anywhere essentially free, would they still use the clunky old RJ11 boxes? Look at cellphones: I have a cousin up north who has cellphones for himself and his wife. They don't even bother with landlines anymore, and they call down here and talk all they like because, within very high limits, the phone bill remains the same price. This fits exactly within the argument presented in the article.
The other side to that is the harder someone makes it to get their info, the more effort activists will put into eroding that artifical value. Perfect example: MP3s. The harder the crackdown on people who share MP3s, the more concerted the efforts (by some people) become to sustain the practice. And these aren't even micropayment transactions yet, but essentially "free" right from the start - in fact, the activists are essentially paying for the opportunity (obtaining CDs to rip and bandwidth to post) to provide free material. Apple may claim to have sold "Millions of songs" but how many Billions of "songs" do you think are download each year from kazaa, usenet, and other services?
Another example: at least one porn site I know put all their content inside java applets (I know this because I know the company that tried to make a business of selling the backend software). The only way to see their content was to pay for the site and then suffer through the horrendous navigation tools supplied by the applet. To make things even harder for the viewer to find a back door, each image was actually assembled in the viewer from a collection of tiles, so even if you located the database of images, you were still left with hundreds of randomly named pieces to reassemble - a giant jigsaw puzzle of the electronic variety.
So, various cores of individuals made it their mission to subscribe, take screencaps of each image, and post them to usenet. This had the double effect of advertising for the sites and making the sites essentially worthless; even subscribers to a site found it more worthwhile to collect the usenet posts than to suffer the "legitimate" distribution model, and so this "service" was (mercifully) driven out of business - along with the sites stupid enough to adopt their misguided ethics.
one problem I see with micropayments is crowd psychology. if someone's car breaks down on a deserted road, it's quite likely someone will stop to help them. If the same car is on a busy highway, it's actually less likely ... because all the driver's by figure someone else will be stopping any time now. The end result is, sadly, it takes longer for someone to pull over and help said person, or said person has to fend for themselves.
How does this apply to micropayments ... well since something is on the net, people assume "someone else" is going to pay for it, so why the heck should I? If I can't get it for free at the source, heck, sooner or later someone will copy / paste it on /. or summarize it in their blog and I'll get access to it. So I think the end result is, stuff gets pilfered and nobody pays for it because of this crowd mentality.
Lastly I think it boggles the minds of some, but a lot of free content I find to be more interesting and entertaining than the paid stuff. And people do produce lots of neat stuff FOR NO MONEY. Don't ask me why, they just do.
I got more cheap entertainment from the Star Wars Kid than Scott McCloud's latest comic, that's for darned sure.
- seamless integration with web-browsing experience
- trusted intermediary handling the payments
i think that google is perefectly situated at the moment to use its widespread goodwill for this purpose. the micropayment system could be integrated into the google toolbar. users would prepay a certain amount to google that would reside in their account (google would keep a commission, say 10%). the balance on your account would be listed right on the toolbar, and whenever you visited a site requesting a micropayment, a message would appear on the toolbar (not an annoying dialog box) providing you with the following options: 1) never pay micropayments on this site 2) pay this site this time but ask me again next time 3) always pay micropayments for this site (unless the publisher changes the price required).the amounts being charged would always be displayed, as would the running balance of your account.
The ideas presented here should be obvious to anyone who frequents news sites which have decided to put up full-page advertising, or webcomics which are too slow updating their daily strip. The result is always the same; find an alternative that's not so annoying. It's good to see these concepts explained so eloquently. Now if only the RIAA will figure it out.
The fact that digital content can be distributed for no additional cost...
Any content source, or wannbe journo, that thinks distribution is free is in denial (not a river in Egypt).
The biggest cost of distribution is MARKETING. Ask Coca-cola. Up to now the business model for most news content, for example, has ridden on the huge growth of the net = lots of free publicity and free content to build the market and get people used tot he idea of using the net.
Well,nopw that you are used to it, you can get used to paying for it too.
Now the market is saturated, sites will start to charge, but to charge they have to MARKET their benefits because they are now trying to take market share from each other. The business model works that way, because their competitors are doing the same thing.
I own an online news site and I believe that micropayments could work if they were applied globally and simultaneously, as in the case of Apple's i-tunes. The entire news industry is waiting for such a system.
The market will return to the way it was before the net. You will pay for music, you will pay for news. Enjoy the free ride for now -- it won't last much longer.
The rule is simple, but so many people try to argue around paying ( or charging ) for anything.
If you try to charge for something creatively generated...be it software, art, music or whatever, someone somewhere will pull out the Elsworth Toohey method of attack and claim your brainchild should be public domain.
Conversely, too many people think they can charge astronomical prices for minimal or poor content. I like Scott McCloud's work, but 25 cents seems like a lot per comic strip. So, if 25 cents is too much, would people pay 5 cents? 10 cents?
Mr. Shirky's arguments have the taint of someone who desperately wants to prove that you can't charge for anything that doesn't come with a big business label on it. Otherwise, give it away, it belongs to everyone.
His arguments have some merit regarding micropayments and their effect of making consumers choose, but his general tact is that micropayments won't work because people are used to getting it for free ( and that distibution costs nothing to artists ) is making use of informal logic. If Jerry Seinfeld produced new 30 second episodes of Seinfeld and charged people $2 to view it, I'm not so sure people wouldn't flock to ante up. I'd probably pay to read Scott Kurtz'z PVP ( www.pvponline.com ). I've enjoyed reading it, usually every day. It's far superior to most of the comics in the daily newspaper, and I pay for those.
The simple truth is, we all have limited funds, so yes, if someone charges for something, we will have to be discriminating with our dollars. But, if the person is producing
something worth buying, then pay them. The artist is always getting 'free distribution' as Mr. Shirky seems to believe. Creating a comic is no different on concept than writing great software or producing great music. It takes more than time, it often takes actual education, materials, research, etc. If someone wants to give away their art for free, wonderful. But if someone wants to charge, it's understandable.
I totally agree. If Apple, or Microsoft, can make a global payment gateway for content, in the same way that Apple made i-tunes, then we will have the killer app./ Any, yes, your blog will sign up too.
...try Pico-Pay
This is a unique micropayment system which uses advertisers, not web-users, to pay for content. We believe that it is more cost effective to the advertiser than banner ads, and yet less intrusive and far more anonymous to the web-user, than other payment methods.
All it costs the web-user is time, typically only a minute or two, while it gives the content provider real money for every access to their content.
Back in the mid 80's, long before the World Wide Web, Case Western University in Cleveland, Ohio started a free dial-up Bulletin Board System, paid for by the University and donations from local businesses. Soon, it was so popular that their budget just wasn't enough to pay for the expansion that the system so badly needed.
So they figured out how much it cost to run the system and divided that by the number of users. The number they came up with was quite small -- literally a few cents per user per month -- no profit, just enough to cover the actual cost. Certainly no one would be opposed to paying such a small amount.
Then they discovered a problem. The cost of creating, operating and maintaining some sort of payment collection system was greater than the amount of money they were trying to collect. And that's the fundamental flaw in micropayments.
By the time you build a system that's fast, reliable, secure, can handle thousands (or tens of thousands) of transactions a day, and has a settlements system so the proper people get paid the proper amount, the cost per transaction of running that system is more than the micropayments themselves.
In other words, every time somebody pays you 10 cents to view your online comic strip, it costs you 15 cents to process the transaction. So you're losing money, and what's the point of that?
I am not a big fan of micropayments, but I do think that we need a kind of digital cash. I don't consider PayPal or any of its direct competitors suitable.
Unfortunately the guys who came up with the implementations of digital cash (and therefore own the patents) have been dreadfully pathetic at getting it going in the real world.
You won't see micropayments, etc. go anywhere until those patents expire. Then I wouldn't be too surprised to see something useful come around with hope of getting adopted on a large (i.e. useful) scale. And I look forward to it.
I read the counterpoint, in which Scott McCloud dismisses the economic problem of transactional cost, and demonstrates his misunderstanding of the economic concept of substitutable good, in both cases because he misses the fundamental economic concept of marginal cost.
This is most obvious when Mr. McCloud argues that art is not a commodity. Yes, but that doesn't change the fact that it's a substitutable good subject to the laws of marginal cost. This is one of the proven, observable facts of economics consistently misunderstood by those in the arts, usually using examples like his Hail to the Thief/Hootie and the Blowfish example.
There are, economically speaking, vast numbers of people out there where the marginal value to them of "Product A" is greater than that of "Product B". However, they'll still go with "B" over "A" if the costs of A exceed the marginal value A has over B. It doesn't matter whether the question is Coke vs. Pepsi, NYT vs. Wall Street Journal, Linux vs. Windows, or Monet vs. Michaelangelo, people will pick their ideal world second choice over their ideal world preference if the marginal costs exceed their marginal value.
Furthermore, this cost is not just in price. The decision whether to spend money or not always imposes a "cost", described as a "transactional cost", which Shirky pointed out. This cost in terms of micropayments may not be any higher than in supermarkets, as McCloud claims. It's still a marginal cost over the no-transaction-needed cost of free, and will convince people to leave for free content on its own, in addition to the marginal penalty of the actual charged price.
The only question is if the quality of your work is consistently high enough that the sub-group willing to pay for it is big enough that the free competition doesn't stop you from having a successful buisness model. In this case micropayments could work, if there was no other payment alternative. But there is -- the subscription model, where you have only one transaction a time period, and unlimited access during that time.
The result is that micropayments will only work as a buisness model in a tiny layer between free and subscription, and only if the payments and associated transaction costs of the micropayments combined have a user-percieved cost lower than a cheap subscription. Shirky clearly doesn't think that there's enough space there, and McCloud's arguments do nothing to address it.
Well, my friend Dave Copeland posted a couple of musings to RedPaper. Someone even decided to plunk down the $0.15! If you don't believe me, check it out for yourselves here. And who says micropayments can't work!
What bloggers, online comic strip authors, etc. need is a system set up like Adult Pass or SexKey. (No links, use google find it when you're at home, not work.)
Like the telco model mentioned earlier, you join, pay a low monthly fee and all member sites get a cut. You don't get an itemized bill, but that may not even be worth thinking about. SexKey just has to make sure that it's cash flow is positive, and that member sites are getting their requisite amounts of payback depending on membership class.
No mental transaction cost... you can't think about that kind of thing when you've got you're mashing your joystick.
^_^;;;;
Fuck Beta. Fuck Dice
The author seems to think micro-payments are doomed to fail because it is not macro-payments that are deflecting customers -- it's the mental action of deciding whether or not to buy something.
I can see his point in the short-term. If a site I read regularly suddenly switches to micro-payments, I have to decide if I think the site is "worth it" anymore. I might very well stop visiting it all together. If you force any significant number of people to make a decision -- any decision -- you'll end up with people on both sides of the fence.
Likewise I agree with the author that, if I was bored and randomly surfing a list of micro-payment-enabled content, I would have to subject each offering to an uncomfortable level of scrutiny that may turn me off from clicking the "Buy" button.
But these two scenarios are not what micro-payments are trying to address. Micro-payments really shine when the decision to buy has already been made.
The large percentage of all things bought are premeditated. It's not often that someone drives by an auto dealer and decides on the spur of the moment that he's going to buy a car. People do not go to a book store and just wander aimlessly and sometimes accidentally buy a book.
If a person goes shopping, it is with the intention to buy.
So now lets look at the more likely scenario of a micro-payments shopper. Say a young boy longs to find some entertaining reading material. He's already decided that he's willing to pay for it. So he goes on line to sort out his options. He finds a comic book store, but it's in the next town, a half-hour drive away. He discovers he can subscribe to his favorite comic, but that's expensive, and it will take the comic book company forever to ship it to him. There are some free comics on the web, but he's read all of those, and some of them are of questionable quality. Then he comes upon a comic that can be purchased with micro-payments. Let's look at the questions this boy is going to ask himself:
- Which is the best value?
- Which gives me the quickest gratification?
- Which is the least amount of hassle?
- Which looks the most interesting?
Notice how whether to buy or not was never a question asked? Notice how micro-payments encourage a positive response to three of the above four questions? If you manage to batPeople will only balk at being asked to buy something if they are not shopping to begin with. And it's a fact of business that it's hard to get people who are not shopping to make impulse purchases. But micro-payments should not be misconstrued as being designed to attract the impulse buyer. While their low cost does give them a foot in this door, micro-payments will really only come into their own when used to sell goods that the public is looking to buy.
--
Ultimately, the value of something downloaded from the web has less to do with the dollar cost than with the value of your time. To make a non-internet comparison, consider the pros and cons of DIY home repairs: you might think that it's always preferable to fix your own plumbing rather than pay someone else $50/hour to do it for you. But what if you were getting out your tools and your boss called to offer you an overtime shift at $100/hour? Suddenly the cost of NOT hiring the plumber is higher than the cost of hiring the plumber.
The point made above is quite correct -- convenience has a value, and getting something for $0 doesn't make it "free" if you have to waste valuable time finding it.
Indeed, whether it's web sites or OSS software, the average consumer/producer ratio tends to be very high (if not, the producer will probably want free-riders, so it is not relevent to this problem), so everyone only have to contribute a very small amount to balance the system.
By the way, I don't like calling people "parasites" just because you understand his posts in a more radical way.
There has always been a vanity publishing market for creators who are more interested in deseminating their work than profits. But, their numbers have been limited by the cost of publication.
So, in a sense, the internet is just micropayments applied to the vanity publishing market, the cost of publishing brought so low that everyone can vanity publish.
"Mr. Shirky graduated from Yale College with a degree in art"
Taking economics lessons from a guy with an *art* degree is like getting abstinence lessons from Madonna.
There are several musical artists who self publish via mp3.com that I'd send a tip to if it was just a matter of CLICK.
For instance, I find it amazing that a label has not signed up the The Birthday Massacre
Writing a check and mailing it makes it prohibitive in terms of real accounting overhead (shipping and handling)
-- 3 events that reshaped the world in the 20th century: WW1, WW2, and WWW
By way of setting up a straw man, Shirky asks: "Would you pay 25 cents to view a VR panorama of the Matterhorn?" As if one's personal preference for Matterhorn photography had anything to do with the success or failure of micropayments.
Make no mistake; like ALL business ventures, some people will fail with micropayments. Some will fail because they didn't know how to market their product, or because they set their prices too high or too low. But so what? That's endemic to capitalism, not just micropayments. Just because Crystal Pepsi failed doesn't mean capitalism itself is a failure. Engaging in these kind of arguments is a beginner's mistake, and most of Shirky's thoughts on micropayments surprisingly and unfortunately exhibit this same kind of sloppy thinking.
His "mental transaction costs" argument, for example, is predicated on users being forced to engage in one or two cent transactions every time they want to view a page. But most micro advocates have abandoned this line of thought. The idea of charging a penny-per-page is history. What they want in the 21st century is the ability to sell their products -- songs and webcomics, mostly -- at a fair price. And micropayments enable them to do that. Shirky endlessly flogs the dead horse penny-a-page model, but conveniently ignores the 99-cents-a-song model that's made iTunes Music Store such a success.
Scott McCloud himself writes that 1,354 readers bought Part One of "The Right Number" at 25 cents a pop. Considering that he was the very first BitPass seller ever, and that everyone who wanted to see his comic had to go through the effort of signing up for BitPass, that's remarkable, and worth talking about. It certainly flies in the face of Shirky's assertion that consumers on the internet are so lazy and indiscriminate in their tastes that they'll bolt to free content at the first opportunity. Scott's readers had to not only pay, but go through the effort of risking $3 signing up for a new, untested service. Scott's experience demonstrates that failure to get people to pay for your product has everything to do with your relationship to your audience and nothing to do with micropayments. But Shirky ignores it all the same.
Finally, Shirky's views on micropayments completely fail to address the idea that micropayments can work with other forms of payment, such as subscriptions or bundling, instead of replacing them. Buying content ala carte may be the step that convinces you to subscribe to a site, for example. Micropayments aren't an either/or, they're an and. One more choice, not one less. And of course, micropayments can work exceptionally well alongside free content. Any public television pledge drive shows this principle in action; even small tchotchkes can induce many people to donate. Any thoughtful analysis of the future of micropayments ought to examine this phenomenon, but Shirky doesn't.
In some ways, it's nice to see that Shirky hasn't changed his tune. At least he's willing to go down with the ship. But his analysis is -- by any standard -- unbelievably shallow. As the market for micropayment content increases, it will be interesting to see how he tries to spin reality.
He who refuses to do arithmetic is doomed to talk nonsense.
moron
Come on, stop rationalizing. You can spend a lot of money on stuff that's worthless, and you can find valuable stuff picking through other people's garbage. But on average, there's a relationship between how much something costs and whether or not it doesn't suck. Supply and demand, yada yada yada. If there were more money to be made creating quality web content, there'd be more quality web content.
This system does not count as "micropayment"!!!
In fact, it costs $3.00. The reason for this comes from our credit card system, which really doesn't allow for transactions that small. You get charged a transaction fee by an amount depending on the merchant agreement and that eliminates your micropayment profit margin. And you always pay a percentage of volume, further eroding your profits. So you cannot use the CC system directly for your micropayments. So you need to develop another payment system to bootstrap over the minimum hassel of a credit card transaction which far exceeds a typical micropayment. For this reason, they introduce the "gift card" (call it what you want) which has a minimum transaction amount appropriate to our Credit Card system.
So in actuality, any of these micropayment systems really present the customer with the choice, "Would you buy into a micropayment system for $3.00?" Almost every one I know would answer no to that question. I certainly never would, no matter how funny the comic strip. Very few people will pay $3.00 for $0.25 cents worth of material, no matter what the promise of "future content" will hold. And for things over $3.00 in value, the Current Credit card system works just fine.
This situation cannot get abrogated by anyone other than the Credit Card companies themselves. If they open up their systems for reasonable micropayment, it may work, albeit under the preasures indicated by the article due to the marginal cost of the items.
The only other alternative I can think of would involve the ISP. If the user could say "Have my ISP charge me .25 at the end of the month.", I think micropayments would have a much stronger footing. Even in this situation though, having googled for a piece of information and comming up with a free site and a micropay site, I choose the free site. If I don't get what I need out of free sites, a rarity in this day and age and less likely in the future, then I will choose the pay site.
Given the fundimental problem with the Credit Card issue, and the even more fundimental problem of the fact that to humans "free is just plain different from pay" I just don't see any future for micropayments. I wish every one who clicked on my sites gave me $0.25 and everyone else wishes everything cost nothing at all. That gap cannot get bridged and to missunderstand why can only come from a fundimental misunderstanding of human nature.
"If with respect to DVDs, CDs and video games everyone adopted your attitude, you would have to do without them because they would not be available."
I don't think you understand. It is not a "problem", because it is not worth any price at all to me to fund them on the free market. What's the problem? Yet, we will not fail to fund what we must.
I have never in my life purchased a cassette.
I have never in my life purchased an audio CD.
I have purchased only one DVD (2001: A Space Oddessy), and that was with my first DVD drive just to see it work.
Except when I was in school, I have never purchased a book.
I do not and have never subscribed to a magazine.
The last movie I saw in a theater was the re-release of the original Star Wars trilogy.
I have never rented a movie.
I very rarely watch television, and when I do, it is usually only PBS; I can live without that and not give it a second thought.
I very rarely listen to the radio, and when I do, it is usually my local NPR affiliate; I can live without that and not give it a second thought.
Oh, "you dirty, freeloading copyright violator!," you might be thinking. No, I do not violate copyrights. I have no infringing materials in my possession.
How can one get by without such things, that is, unless one lives in a run-down cabin in Montana?
There is an enormous quantity of classic literature made available electronically by educational institutions and non-profit organizations.
Dialogue with real people.
Brick-and-mortar libraries offer a truly wonderful environment and a tremendous wealth of information. You'll also find in them some delightful individuals and opportunities.
"Tape trading" of freely distributable live performances of music of all sorts.
On the road again. Going places where you've never been. Making music with your friends. How do you think my great-great-great-grandparents entertained themselves? With the help of neighbors and family they built an addition to the farm house (which still stands today) with a high ceiling, a good solid dancing floor, plenty of room for a chair and a fiddle, and whole lot of foot-tapping and hand-clapping. The fiddle squeaked, the voices were off-key, but albeit anything they knew how to have as good a time or better than anyone these days will find at a "concert".
Contrary to what you might suggest, most or all of these sources will not disappear even I fail to directly support them on the free market. They either cost little to nothing to distribute and are made available "because it is the right thing to do" or are funded (indirectly by me and other tax payers) as a public good.
The thirst of human beings for knowledge of their past and present, and their capacity for intelligent discourse and the sharing of creative expression within communities will not disappear.
This is why we, through our government, endorse and further scientific achievement, and artistic and literary expression.
We must make a priority of expanding this funding, not by fiat, but by further creating in the hearts of the people a will and passion to better themselves and their future, that they will not fail to pay and to sacrifice what is necessary for the betterment of the whole.
.sig Realistic fines for copyright in
The success of micropayments will not be determined by whether of not people like to get things for free. Its success will depend on finding an entrypoint where successful entrepreneurs start getting rich using micropayments. The partcular verticle niche that launches the micropayment industry will not be any that you've discusses. Someone will invent the niche. www.futureofmoneysummit.com
I'd say the real issue here is how you are billed for your micropayments. In the case of bitpass, you have to pre-pay with a credit card. Now unto it's self, pre pay isn't a bad idea, however the exicution stinks. The only real insdustry where pre-pay works is the phone card industry. However, if people couldn't pick one up anywhere in exchange for chash, check, or charge that industry wouldn't exisit.
I wouldn't mind if I had $20 in "internet cash" that I could by premium content with, aslong as it was easy to get. Bitpass's system, however, is not easy enough.
The other similar example is pay-per-veiw movies. This works because I can deside at any moment I want to watch something, and in a couple of remote clicks I've got it. I also don't have to worry about paying for it until my cable bill comes. However this only works cause I already have a relationship with the cable company.
I personaly feel micropayments are not doomed to falure, however it's going to take a large company to make it happen. Online money would ahve to be as standard as paper money, all sites accepting the same type. It would also have to be as easy to get as paper money, aka ATM's, and just as easy to spend, aka no slow credit card proccessing.
"Failure is not an option, it's part of the standard package"
Consider a "micropayment" system that DOES work, and that system is EZpass. How that works is a little bit different. They charge your Credit Card $25.00, and use that money to set up an account for you within their system.
Thereafter, they bill your account with the $25 dollars in it, even if the amount is only a dime (but you can imagine that amount could be made even smaller for a true micropayment system).
Since the amount is simply deducted from your "tab", there's no real processing fee like you get with the "real" CC companies.
When you've used up the $25 in your account, then EZPass bills your credit card for another $25, and the process begins anew.
That's how micropayments should work -- any other system will have too many transactions flying between tiny vendors and monolithic credit card firms.
And hey, Clay, whatever happened to Site Specific? I've still got the cactus from the opening party on 21st Street...
If telephones are outlawed, then only outlaws will have telephones.
So, I am suggesting that anonymous e-money might be what really makes e-money take off. On the other hand, most web-sites' first interest is getting me into their database; anoymous e-money will only happen because consumers want to be anonymous, not because the web-sites/.coms favor it.
I am not sure why I find it so offensive but I don't like the idea of people building a database about my habits, but some of the aspects are:
"When the going gets weird, the weird turn pro" -- HST
I have always felt that privacy is something the individual does by keeping his/her private affairs private. Anonymous e-money would help.
Another reason I don't like getting into a lot of databases is that the more info there is floating around out there about someone, the more chance there is that some 'clever' analyst will discover 'correlations' that inappropriately result in the person receiving free room and board in Cuba.
"When the going gets weird, the weird turn pro" -- HST
Actually, your idea blending GOOGLEs ubiqity, and the browsers TB casual availability ... just might work !
People will pick their ideal world second choice over their ideal world preference if the marginal costs exceed their marginal value.
While this is true as far as it goes, it's essentially a tautology, and it isn't an argument against micropayments.
I'm sure you realize the problem you describe isn't unique to micropayments. You can get generic macaroni & cheese for a few cents less than Kraft. And while some do, most feel that spending that extra few cents for a brand they have a relationship with is worth it. In other words, the brand adds value. It's not just macaroni & cheese, either; the phenomenon works all the way up to thousand dollar Gucci purses and beyond. Branding is arguably the most powerful economic force in the world, but in Shirky's analysis, it doesn't even exist.
Whether it's selling pasta, purses, or online content, the key to success is differentiating your product enough to make it a nonsubstitable good. Scott McCloud seems to have done that. Nearly 1400 people felt that he offered value they couldn't find at free sites, in direct contradiction of Shirky's theories. There's no reason to think that differentiation is any less possible on the Web than it is in the real world.
As for subscriptions: The model that makes sense for you will depend on what your goals are, what you're selling, and your ability to market your product. Free makes sense for some; micropayments/advertising/subscriptions makes sense for others. Micropayments are just another tool, and they can be used in concert with both free content and subscriptions. Micropayments add possibilities, they don't subtract them.
At any rate, I suspect micropayments are here to stay. They're neither panacea nor poison; just another tool that we'll see being used more and more often.
He who refuses to do arithmetic is doomed to talk nonsense.
Analog publishing generates per-unit costs -- each book or magazine requires a certain amount of paper and ink, and creates storage and transportation costs. Digital publishing doesn't.
Absolute twaddle.
putting the power to publish directly into their hands does not make them publishers
Yes it does. The very act of "publishing" makes one, by definition, a publisher.
Now, however, a single individual can serve an audience in the hundreds of thousands, as a hobby, with nary a publisher in sight.
Right up to the moment when they get their bandwidth bill, at which point they will chomp a cigar and say "HOW THE FUCK ARE WE GOING TO PAY FOR THIS?" Ta-dah! Publisher.
the willingness to accept one thing as a substitute for another.
Yeah? Call me when I can substitute fame for food, rent and electricity.
free content is growing in both amount and quality -- is what's actually happening.
Fine, and the best you're ever going to get is half an author, half a performer, half a developer, because they'll all need day jobs, and their craft will suffer for it. That fact is more inescapable than the constant beating of the "we want it for free" drum. (And for the love of green leaves, have we heard about enough of that shit yet?)
If you want it for free, you'll get exactly what you pay for, and not a bit more. You'll receive the work of either half an author or an amateur, and you'll have nothing better than that to look forward to, ever.
There will for fuck's sure be no spoon, no Helm's Deep, no Hulk and no Episode III; not even the written versions. The amount of sheer effort required to develop something creatively, and complete it is something that is beyond the imagining of most of the "we want it free" people. The amount of work required is astonishing, even for something as "easy" as a short story.
Someone who works that hard should be rewarded for their effort if people appreciate their work. They shouldn't be expected to invest the work first and then find that some half-assed theory about infinite economies means that they have to sell everything they own to buy groceries.
Virtually EVERYTHING YOU LIKE is the result of some FUCKING HARD WORK by HUMAN BEINGS WHO NEED TO EAT.
Got it?
Business isn't willing to pay for products, innovation and careers, so we get brands, mortgage commercials and layoffs.
However, if there were micropayment information, and say once a week, it pops up a box which asks me to pay a little something, voluntarily, I would for the best articles. Well, actually, if /.ers themselves could include payment information in their comments, I'd even drop them something for an insightful comment.
Employee of Inrupt, Project Release Manager and Community Manager for Solid
I don't think $0.25 is too much for a long comic - but I can't read this new The Right Number because it's in Flash format. Gaaah!
The Euro which is in our future I hope (I'm in the UK - which is either part of Europe that speaks mainly English, or the original 4 States, to be decided) is another decimal currency and uses cents, although they seem to be written as a singular 1 Euro 25 cent I suppose back in the times before the disagreement the penny was in use but then would have been the 1d derived from the Roman Denarius. There were 240 of those to the Pound, Librum hence the funny L of and once upon a distant time the value of a pound (about half a kilogram) of Silver. So penny is "right" and cent is a divergence, but obviously comes from either copying the French who were exporting revolution and their decimal currency - centimes, now given up for Euros with no great anguish that I can see - or as a simple consequence of devising your own decimal currency. I remember a time a while back, quite a few years, when the exchange rate was $2.40 : 1-00 and thus a cent was worth a penny. Now the Euro is conveniently close to the dollar.
It seems the crux of his argument is that the web has led to such a cornucopia of free content that the "mental transaction cost" (i.e. effort you spend agonizing over your purchasing decision) alone makes paid content too expensive, no matter how low the nominal price is.
There are a number of flaws with this reasoning, but the most serious one to me is that it neglects the observable network effects that govern things like micropayment. Right now there is nothing even close to a universally accepted and broadly used micropayment system. So it's definitely true that in many cases, as a content creator, I have the choice between being free or being totally ignored.
The lack of a popular micropayment system is therefore a sort of self-fulfilling prophesy. As long as it doesn't exist, there will be a lot of free content and thus less reason to pay for content. But these types of systems have a "magical" way of suddenly achieving critical mass and taking over the world. Consider the Internet itself: it's been around for decades but usage only exploded when it reached a certain threshold a few years ago.
I believe that at some point some kind of incredibly easy-to-use micropayment system will suddenly hit critical mass, and all at once there'll be a whole lot less free content to choose from (incidently a very positive effect as far as I'm concerned, since I believe a little bit of capitalism will vastly improve the overall web experience). Things won't be free anymore, but they'll be a lot more variety (especially with regard to specialized content) and higher quality. Is this a surprise? Creative people have to eat too, so obviously they'll be more motivated if they can actually make web content their primary money-earning activity.
And I don't believe that people will balk at spending less-than-a-dollar prices for individual bits of content anymore than they beat their brow at the cash register before picking up a copy of the National Enquirer or Cosmo, reading it on the bus on the way home and then tossing it.
Peer Pressure
I'd been meaning to visit McCloud's site and sign up....
too funny. as usual, someone disagrees with a conservatives point of view, and it becomes a personal attack instead of a debate about actual issues.
Thank you for proving the point. You make it entirely too easy to be right.
Tequila: It's not just for breakfast anymore!
<FLAMEBAIT> ;-)
How do I know SlashDot readers are liberal? They all want something for nothing; as is evidenced by much of this discussion.
</FLAMEBAIT>
Shame on Google.
hahahahaha. Let's update the philosophy texts to call it the "Free Rider Quandry." We have to spare the free rider's feelings, after all.
Now before I get modded down, I be to remind whoever might read this that what I am saying is FACT. - bogaboga
The very language of our institutions serves to impose and enforce a hierarchy of social classes in which the conservative male remains dominant politically and "morally". Oh how his world is about to change!
There is absolutely nothing wrong with benefiting at the expense of those better off than yourself.
Attempting to bind others to some sort of unspoken social contract is oppressive and underhandedly coercive.
If it is a public good, let's fund it together, up front, and effectively through taxation and the reallocation of our public wealth.
If not, and if you really want to keep it just for yourself, stop trying to make it out to be "honor" or "manners", and come out and say it; just say that you want it all for yourself and are unwilling to share, "because I deserve it". You don't deserve it.
These sorts of "unspoken" social and political contracts are nothing but the means of the powerful and the wealthy to impose and enforce a hierarchy of social classes in which they are seated at the top, politically and "morally".
How does it feel to be a pawn? Wake up. You are being used.
.sig Realistic fines for copyright in