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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.
The RIAA said nothing is really free! There are poor people starving in China because I didn't buy the Macarena song.
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'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.
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
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
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.
For a view from the other-side (that of the independent content provider) check out Scott Mccloud's response to Shirky's latest essay.
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
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.