Micropayments Going Mainstream? Not Yet.

DotEdu writes "Today's NY Times has an interesting article on two new micropayment companies, BitPass and Peppercoin, and the venerable PayPal. More interesting than the companies are the critique: Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell."

Comments

Nothing like a link

[3lb4rt0]

which requires you to sign up to ensure no one RTFA! :D

Re:Nothing like a link

[soapbox]

Loosening Visa/MC/AmEx's grip on e-commerce is a Good Thing, and this might represent a way to yet again improve the flow of services (more likely than goods, since shipping costs remain).

But, anyway, here's the article:

The early days of Internet commerce offered many promises, none of them brighter than the chance for people to set up Web sites and sell inexpensive digital goods like songs, articles and photos.

But most of the pioneering companies that devised transaction systems for low-cost online purchases faded away, dogged not only by the giveaway ethos of the Internet but also by cumbersome technology and fees that ate up the profit on items that often sold for less than a dollar.

Times have changed, though, and electronic micropayment systems may yet be born again. In the past few months, several new companies dedicated to processing small cash transactions on the Web have introduced commercial services, and some older companies, including one inspired by Apple's huge success in selling 99-cent songs at its online music service, have modified their offerings to accommodate some lower-priced sales.

This time around, innovative technology may make the difference for the micropayments market. For example, two highly regarded scientists at the Massachusetts Institute of Technology have founded a company that they say has the technical expertise to let people sell digital content profitably on the Web for prices as low as pennies.

Ronald L. Rivest, the R in the public key encryption system RSA, which he helped invent, and Silvio Micali, whose honors include the 1993 Godel Prize in theoretical computer science, founded Peppercoin (www.peppercoin.com) and introduced it commercially in December. Peppercoin hopes to reduce online merchants' transaction costs substantially, particularly the number of credit card charges they pay. These are typically about 25 cents per sale, said Robert W. Carney, vice president for marketing at Peppercoin.

The company's software uses advanced encryption and mathematical models to avoid charging a seller a fee each time an item is sold. Instead, the system statistically selects a representative sample of the transactions for billing.

For example, the software might randomly select one sale of a $1 song from among 20. It multiplies this one sale by 20 to represent the other 19 sales, and passes along $20 to the seller. But by lumping the sales together, only one transaction fee, not 20, is charged.

"Would you prefer to be paid $1 minus a 25 cent transaction fee each time you make a sale," Dr. Micali asked, "or zero dollars 19 times and $20 minus a 25-cent transaction fee once?"

Algorithms that were developed and refined over the past 20 years are used for the process, Dr. Rivest said. With a large volume of transactions, the errors that derive from the sampling are negligible.

One of the companies Peppercoin has signed up is Smithsonian Folkways Recordings of Washington, which is about to begin offering individual tracks from 33,000 folk recordings for sale electronically. Richard Burgess, director of marketing, said that the organization was comfortable with Peppercoin's complex algorithms. "Probability cuts down on the number of transaction fees," he said, but "there's no probability attached to the purchases - we know who bought what."

Thomas Frey, executive director of the DaVinci Institute, a research organization in Louisville, Colo., recently sponsored a seminar on micropayment systems. While such systems failed in the past, he said, their future now seems brighter. "Having people like Ron Rivest solving problems opens the door for interesting things to happen," he said.

Dr. Frey predicts that one day people might buy low-cost items ranging from ring tones for their cellphones to weapons upgrades for their video games. "They could even buy cool sunglasses and new hairdos for their avatars," he said.

BitPass, another new micropayment company, st

Re:Nothing like a link

[3lb4rt0]

Many thanks for posting.

I'm surprised no-ones used the peppercoin technique before.

Re:Nothing like a link

[Anonymous Coward]

I predict that your post will be modded insightful because you said that you were surprised.

Re:Nothing like a link

[Dilbert_]

Try slashdot/slashdot as user/pass!

Re:Nothing like a link

[3lb4rt0]

I'd be surprised if I get modded anything :D /me loves that bad karma!

PayPal venerable?

[corebreech]

Nice try, but not even close.

My dictionary defines venerable as meaning:

Commanding respect by virtue of age, dignity, character, or position.

PayPal may be old, but it doesn't command any respect whatsoever as far as I'm concerned.

Re:PayPal venerable?

[LostCluster]

PayPal's reputation issues basically got wiped clean when eBay aquired them. Really, what's now called "PayPal" looks a lot more like eBay's BillPoint than the original service.

Re:PayPal venerable?

[DAldredge]

Why do you dislike paypal so much?

I have processed quite a few transactions via paypal and have yet to have any trouble. Just set you paypal account to not accept credit card payments helps quite a bit.

Re:PayPal venerable?

[Anonymous Coward]

"Why do you dislike paypal so much?"

We don't dislike them, we distrust them. There's a difference.

When you're letting someone handle the transfer of your money, it's wise not to choose a company with a long history of making other peoples' money disappear without trace.

Re:PayPal venerable?

[akorvemaker]

Yeah, but the definition you just quoted doesn't say "age, dignity, character, and position." In that definition, any one of those four qualities would make something venerable. By acknowledging PayPal's age, you are supporting the original statement.

Re:PayPal venerable?

[corebreech]

Please read my definition again, not your abbreviated version of it, paying special attention to the part about commanding respect.

Just because you're old, doesn't mean you're respectable.

Re:PayPal venerable?

[LetterJ]

Why do you dislike paypal so much?
<p>
Can't speak for anyone else, but for me, the $12,000 that was stolen from my credit cards and bank accounts that were linked to my Paypal account contributes a little bit. I got it all back, but it took nearly a year and to this day, Paypal flags my name as fraudulent. So, not only was I a victim, but if I ever come near Paypal again, I get accused of being a theif.

Re:PayPal venerable?

[unitron]

"PayPal's reputation issues basically got wiped clean when eBay aquired them."

Yeah, 'cause everybody knows eBay never had any reputation issues.

Re:PayPal venerable?

[Kent Recal]

The insane amount of dollars that eBay runs into the pockets of Meg Whitman and friends is a reputation issue of its own to me.

That's why I never sell stuff on eBay.
I refuse to pay a Meg Whitman tax.

Re:PayPal venerable?

[Anonymous Coward]

You're a moron, then. I always get a good chuckle out of people who complain about how much eBay costs. Show me another venue that offers you as much exposure as eBay does for less than 5X-10X the same cost of sales.

(dead silence)

Yeah, I thought so.

Questions still abound.

[b0r0din]

Peppercoin is still limited, though, things like music downloads, for instance, don't seem to be viable on their payment scheme. They seem to be mainly concerned with content, such as 'pay .01 cents to see this web page.'

Paypal of course offered their own payment scheme for micropayments as well, but they are limited ONLY to music.

Where I'd personally like to see micropayments is in the services department. You can charge 1.00 per transaction to perform a service, and not get raped by the 33% service charge that forces most of these types of service-oriented businesses to use subscriptions.

Re:Questions still abound.

[venicebeach]

It seems like that is exactly what they are doing. From the article:

The company's software uses advanced encryption and mathematical models to avoid charging a seller a fee each time an item is sold. Instead, the system statistically selects a representative sample of the transactions for billing.

For example, the software might randomly select one sale of a $1 song from among 20. It multiplies this one sale by 20 to represent the other 19 sales, and passes along $20 to the seller. But by lumping the sales together, only one transaction fee, not 20, is charged.

"Would you prefer to be paid $1 minus a 25 cent transaction fee each time you make a sale," Dr. Micali asked, "or zero dollars 19 times and $20 minus a 25-cent transaction fee once?"

Re:Questions still abound.

[b0r0din]

They may be reaching for other industries as well. I have been looking for transactions similar to what they were selling, but their site seemed to be mainly associating itself with the idea of selling content per page, as opposed to music or other services. If this is the case, and they allow this, it would be excellent. But paypal still has a monopoly on payment structures. It'll be interesting to see if the micropayment scheme works; if it works well, you can believe I'll be the first person to sign up.

Re:Questions still abound.

[damiangerous]

Peppercorn specifically uses content like music and video in their FAQ as examples, it's perfectly viable. Of course it requires Windows only proprietary software to be installed (for now, anyway), though I guess that doesn't matter to many people.

Re:Questions still abound.

[BoldAC]

Errr... can somebody point me to a site that uses this technology? A google search for "we use Peppercoin" gives me nada.

Honestly, searching google finds me no sites using this technology. I like to see this in action before I start trying it out on my own site.

We originally ran tech-recipes.com to help our family and friends keep up with the unix/solaris/etc hints that we gave them... however, we've been looking for a way to turn this into a profit-making business.

Micropayments would seem nice! A couple of cents per recipe viewed and we would be doing well.

Anybody actually using this technology?

AC

Re:Questions still abound.

[Turing Machine]

With Bitpass, at least, you can go to their site and click on the "Share" tab.

They don't have a HUGE number of clients yet, but it seems to be growing pretty fast.

Re:Questions still abound.

[glenstar]

God help me, since they are a competitor of mine, but MusicRebellion uses Peppercoin. And, we are also looking at Peppercoin for the same reason.

Re:Questions still abound.

[Greg Lindahl]

I'd rather get paid $1 minus 1 penny for every sale. There's no technical reason why statistical sampling needs to be used, and you never know if you're getting gipped or not.

iTunes

[Pyro226]

I don't know if 99 cents costs as a micro (10^-6) payment. But Apple's iTunes Music Store sure seems to be doing well with the system.

I think this is a lesson that micropayments will work if you have an in demand item (like resonably restricted music), but you're never going to make money on your crappy MS-Paint web comic.

Re:iTunes

[CGP314]

What about These guys?

-Colin Gregory Palmer

--
American Weblog in London

Re:iTunes

[Pyro226]

The reason those guys make money is that: 1. Their comic isn't crappy. 2. They don't use MS-Paint And they make their money from a store, they don't charge micropayments for viewing their comics.

Re:Paying for online content?

[freitasm]

It's not stuff in most cases, but intangible goods, like articles, papers, etc. We're not talking about the $5000 IDC papers, but about $.05 John Doe web site selling content. Sometimes the content is even free, but the micropayment is an option to allow users to help keep the site costs down.

I thought of using this on my site Geekzone. The idea of keeping the content free, but being rewarded by happy readers is quite cool. It's being use in on-line comics, e-zines, and sometimes even with tangible goods too.

I have to say that I have Donate Paypal button and some users do act on that - mainly adding messages like "Thanks, your content helped me doing this and that", or "Keep the good work".

This is about knowledge sharing, and helping the people who put these things together and make available.

Another problem w/ Micropayments

[use_compress]

The micro payments system erodes our privacy. With a cc number connected to micro payment id numer connected to every user id in many websites, a lot of web activity will be recorded on your credit card statement as a summary of what your micro payment bill was. Thus, your isp, micropayment company, and your credit card company (and the govenment via patriot act) could see your activity. If you throw it all into a database, anyone who wants to can infer via datamining all sorts of fun information about you.

Re:Another problem w/ Micropayments

[Twisted Mind]

You obiously don't know anything about micropayments.
Go back to the stone-age.

Re:Another problem w/ Micropayments

[WegianWarrior]

While the 'big bad goverment' could - in theory - use a central database of micropayment to track your online movements. On the other hand, just consider how many online users there are out there. Even if you only consider the ones originating from the US, there is still a number to large to keep tracks on, so while the 'big bad goverment' could in theory use this to spy on everybody the amounth of data is just too large to be practical.

I believe, that if your scenario comes to pass, it will be used to see if anyone has payed online for illegal contents - like child-porn or bomb making manuals. And thats somethign they can do today as well, if you use your credit card to buy stuff of the web.

Keep your tinfoil hat off - micropayments arn't the tools of evil, and remember that someone else probaly are offering the stuff you want for free somewhere else on the 'net.

Re:Another problem w/ Micropayments

[corebreech]

Keep your tinfoil hat off...

Spare us your naivete, will you please?

Every single power we've given to the government to date has been abused. Give them more power, and they will abuse that too.

I'm so sick of you fools who always assume that the government is always good and always noble when the facts--to say nothing of current events--clearly indicate otherwise.

We need technologies that work against the aggregration of power, not technologies that will accelerate it.

Re:Another problem w/ Micropayments

[Richard M. Nixon]

While the 'big bad goverment' could - in theory - use a central database of micropayment to track your online movements. On the other hand, just consider how many online users there are out there.

Two things, one is programs like carnivore that sift through tons of content trying to determine who the terrorists are. One would hope that they would have an actual human being investigate to make sure the person is really a terrorist before they are hauled off to Guantanamo Bay. However, we are talking about the same government that has held hundreds of people in custody without charging them with any crime.

Number two: Not everyone that is employed by the government follows all the rules. There are many cases of government employees abusing their powers to spy on people for personal vendettas, or just out of bordom. I'm not even goinng to get into cointelpro.

Number three: (Nobody expects the spanish inquisition) It isn't just the government that likes to spy on people. Advertisers alone try to accumulate as much information on you as possible. Like you say, it is way too much information for human beings to proccess. They just use computer programs to classify you into a specific Lifestyle. But that is not to say that there are not also employees at these companies that would abuse their access for personal reasons.

Most likely the government really isn't out to get you. But that doesn't mean there are people within the government with too much time on their hands. And more likely the problem is going to come from the corporations who are much less accountable that the government.

Re:Another problem w/ Micropayments

[fastenrath]

I'm just working on an identitiy server (PgpID) which will solve that problem and a micropayment system (DEM) to go with the ID server. With PgpID you can have a single identity provider who knows your real email address and credit card number. Everybody else can receive "opaque" addresses, like email addresses which are forwarded to you but don't give away your identity, e.g.: sadf789b78dfg789df@id-provider.com. Since it's all open source everybody can offer the service and you can pick an identity provider you trust.

Re:Another problem w/ Micropayments

[ErikZ]

Privacy is dead. Get over it.

Re:Another problem w/ Micropayments

[YOU LIKEWISE FAIL IT]

If you're worried about nefarious micropayment technologies stealing your privacy, don't use them. However, not everyone is on your crusade.

Spare us your naivete ... Every single power we've given to the government to date has been abused.

And spare us the hyperbole, please. I can't recall horror stories of the United States Geological Survey raging out of control and abusing their powers, or the Treasury maliciously printing money at people. What about the Federal Power to establish Post offices? Ripe for civil rights violations, that one.

I'm so sick of you fools who always assume ... ( blah blah blah )

Honest question - do you talk to people you meet in the street / in the Boardroom / in the coffeeshop like this? If so, do you have any friends at all? If not, why do you do it to people here?

YLFI

Re:Another problem w/ Micropayments

[aminorex]

> Most likely the government really isn't out to get you.

Since the planet is grossly overpopulated,
the people with the guns are eventually going
to figure out that most of the rest of the
people can be safely eliminated, thus
providing a home for their own progeny.

But you really shouldn't tell anybody this,
as it only decreases the chances of their
elimination, and this increases the chances
of your own culling.

Control+Alt+Del...

[Cyno01]

A href="http://www.ctrlaltdel-online.com/">CAD, the webcomic seems to do pretty well for itself, i guess the guy actually makes enough to live off of from advertising and donations.

Re:Control+Alt+Del...

[Anonymous Coward]

Here

CAD

Well DUH

[Anonymous Coward]

Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell.

I guess that was the problem. Nobody thought to produce a viable product.

Viable product?

[charleschuck]

Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell.

Damn, there goes my plan to make cash off my years of collected ascii-art pr0n. :-(

Uhg...

[Anonymous Coward]

Sorry, Fixed. rrr...

~Cyno01

Constant drain = constant pain.

[RyanFenton]

I really don't think that the idea of a 1-click micropayment system would be appealing (to me at least). It doesn't matter how little each payment is - if enough sites start demanding I pay them in an ongong basis to see their content, I would just give them all up. I can't stand the abstract psychologcal thought of each of these inputs that I'd rarely use individually taking their own bite, no matter how small, from my income. I can stomach an up-front cost, a known trade of resources, or even a subscription with an opt-in approach to re-subscribing, but there's something about the the leech-like nature of these micro-payment schemes I have a strong urge to stay away from.

Ryan Fenton

Re:Constant drain = constant pain.

[bgog]

Micro payments don't necessarily imply may small automatic payments as you seem to think. Essentially there is a min payment that the credit card company gets no matter what. It is basically impossible to sell something for 10 cents via a credit card because you'd then pay 25 or 50 cents for the cc transaction.

The micropayment companies provide a way for an individual web site to make small transactions. For example a site that used to only sell 1 year subscriptions could allow you to buy on a per issue basis.

Just my 2 cents. (which I can now give with a micropayment system)

Re:Constant drain = constant pain.

[JaredOfEuropa]

I can stomach an up-front cost, a known trade of resources, or even a subscription

By contrast, I hate subscription sites, especially if I only need access to their info once. Especially since it usually involves credit cards, handing over my personal details and receiving, opening and replying to a confirmation e-mail. I would much prefer to answer a simple dialog "This website charges $0,10 for access to this information. Pay yes/no?". Especially if the payment could be done anonymously.

A potential problem with such payment systems would be the websites that trick you into accepting, then try to feed you the information piecemeal. Pay $0,10 to access the article... and when you accept, it's another $0,20 to see the essential graphs and pictures, and $0,30 to get the conclusion. A bit like the $1 / minute phone services with a voice-response system..... that..... speaks..... really..... slow.... and has menu's of 22 levels deep. Not very honest, but not exactly illegal either.

Re:Constant drain = constant pain.

[Have Blue]

If you want the site's content enough, you'll pay. If you won't pay, it's obviously not worth that much to you. Economics 101. I have no objection to your choosing either option, but don't pretend that there's something fundamentally wrong with charging a fee for web content or that you deserve to get the content for free despite the author's wishes.

Re:Constant drain = constant pain.

[LostCluster]

That's the great problem of pay-for information of all kinds... with no way to preview what you're getting, there's very few people who are willing to pay. Of course, if one-look is all they want, there's no way to construct a preview that doesn't give away the store.

I don't think a one-cent-per-hit model is every going to succeed. I think a much better method to pay the sites you like would be to click on the Google ads or similar on their pages...

Re:Constant drain = constant pain.

[gcaseye6677]

I think most Americans share this opinion. They would much rather pay a flat monthly fee or a one time price for something than to be nickle and dimed constantly. For example, hardly any cell phone companies charge by the minute anymore. You pay for a certain number of minutes to use, and you only pay per minute if you go over. There are many restaurants with an 'all you can eat' buffet, and they are quite popular. At the very least, most restaurants have free drink refills. Bottom line, if you're trying to sell to Americans, you'll make a lot more money taking monthly payments than on a per-use basis. Even Blockbuster now has a plan where you can pay a monthly fee to rent a certain number of movies (monthly recurring charge on your credit card of course).

While this may be popular for certain types of sites, I can't see it becoming too widespread in the U.S. anyway. I agree that it would be nice to be able to pay for one time access to some site that I would not use often enough to subscribe, but if I were going there on a regular basis, I would prefer the subscription model. In addition to the user preference issue, this type of payment system would probably be more vulerable to hacking than the credit card payment systems that most sites use now. At the very least, it may be harder to get customers to trust it enough to use it.

Re:Constant drain = constant pain.

[Anonymous Coward]

The big problem with trying to treat information as any other kind of physical product is that you cannot "give it back" if you are unsatisfied with your purchase. Also, it is often difficult to know what you are getting beforehand and this along with the no refund effect makes for a much more complex problem than those covered in Economics 101.

Re:Constant drain = constant pain.

[prowley]

This same reasoning could be applied to books and magazines. People buy books, they buy magazines.

While I do not relish an internet full of pay only sites, I cannot in all honesty suggest that others should publish content only for free.

Re:Constant drain = constant pain.

[fastenrath]

... a potential problem with such payment systems would be the websites that trick you into accepting, then try to feed you the information piecemeal.

A straight forward solution to your problem is a micropayment system with a built-in user satisfaction survey. If a site has bad habbits like this the user community can use the payment system to reward the site.

The only way I see to establish a customer-friendly payment system like this is to built it as open source and establish a large user group inside the open source community before any major sites adopt the system.

Since the system is open source anybody can play and sooner or later there would be larger shops accepting payments thru this system.

Re:Constant drain = constant pain.

[Anonymous Coward]

A bit like the $1 / minute phone services with a voice-response system..... that..... speaks..... really..... slow.... and has menu's of 22 levels deep.

Sounds like most of the hardware review sites that spread reviews over a dozen or two dozen pages... arguably to reduce bandwidth per page, but more likely because it drives up ad-impressions.

Re:Constant drain = constant pain.

[slim]

I can stomach an up-front cost, a known trade of resources, or even a subscription with an opt-in approach to re-subscribing, but there's something about the the leech-like nature of these micro-payment schemes I have a strong urge to stay away from.

An obvious solution is a tiered charging structure.

For example:

Let's say Which? puts up a one-click micropayment based site, where you get charged for viewing product reviews.

Your first 10 reviews cost 10c each.
11-50 cost 2c each.
51-100 cost 1c each.
After that, they're free.
Items on your credit sheet drop off after some period of time; say a week.

So, you can spend $3.30 maximum, after which you have a week's free access to the site.

Would that keep you happy?

Re:Constant drain = constant pain.

[Anonymous Coward]

I'm so sick of this "for free" argument. I pay my ISP for my entrance pass onto the on-ramp of the Information superhighway. After I make that payment, I'm done paying.

I'm not asking for content "for free", and I never have. All I'm asking for is to pay one bill. If the person who wants to put their content on the 'Net can work out an arrangement with my ISP so their costs can be covered in my bill, great. If they want to cover their costs some other way such as through advertising, wonderful. But if they can't, then the choice is theirs as to whether they want to put it on the 'Net or not. It's not my problem. They're the ones who are being unreasonable (given the inumerable sites and items on the 'Net, it's completely impractical to expect ever that people will pay for each step of their surfing path). They're the ones who want something "for free," if you ask me.

I've made my choice. Paying for Internet access, for me, = = paying for Internet content. I make one payment, and I receive Internet. That's the bargain 20 years ago, and that's the bargain 20 years from now.

Useful product....

[zakezuke]

Virtual gumball machine! Where children can access a rendered image of a traditional gumball machine, place in the virtual coin which will deduct a micro payment from the folks CC, and in just under a week, they get a real gumball delivered by UPS/FedEX.

Gumball.... 25 cents
transaction charge... 35cents
shipping / handling... $5.50 for express delivery per unit

Seeing the horror on the parent's faces when little timmy maxed out their credit cards on gumballs... priceless!

Re:Useful product....

[Anonymous Coward]

Exactly. Just shop in your own neighborhood, the web be damned. It's a place where Banks take the fall for stolen credit card numbers.

Re:Useful product....

[zakezuke]

It's a place where Banks take the fall for stolen credit card numbers.

Really? What's the rule on that anyhow? Like many people... i've been the victum of bogus charges... like movie tickets in winipeg when I live a good 1500 miles from that city. Not big charges mind you, but annoying ones. Easy enough to dispute... never been to Winnipeg, pain in the tookus to get gas 1500 miles away and in an hour buy tickets to a movie in Winipeg.

Do banks take the fall if the store swipes a stolen / bogus credit card, or does the store take the fall?
Do banks take the fall if the store types in the wrong numbers and it goes through, or does the store?

I've been told that mail order outlets take the fall if the CC in question was stolen, but I honestly don't know the rules for physical swiping.

Re:Useful product....

[topham]

Generally the stores take the hit. They would have to prove they had a signed receipt for a swiped card to stand up.

As for tickets in Winnipeg, they were probably ordered online and then picked up. It's quite easy to do that here. (not sure about elsewhere).

Around here we have the problem of freudulent debit card use. They hide a camera or otherwise watch as the customer keys in their pin number when making a purchase. The card gets double swiped (so they get a copy of the data) (or, if they are really good, the patch into the transelect machine itself.)

banking monopoly monster

[Doc Ruby]

Search Google for (paypal class action), and you'll find consumers' desperate attempts to protect ourselves from their online payment monopoly, like the PayPal Warning. If regulators were doing their jobs, PayPal itself would be on a leash. Their acquisition by eBay offers a monstrous power in eCommerce, which the PayPal unit has been steadily abusing. Any meaningful alternative in any online payments would help, whether they get micropayments right or not.

Re:banking monopoly monster

[shubert1966]

I agree with the anti-trust allusions I gleaned from your post. The whole shoddy process of governing online entities is such a tired story.

Perhaps if domain "registrars" were forced to validate registration of domain purchasers who intend to sell products (ahem: .com) online, like, by calling them. At least that would narrow the field of opportunity for badhats; they'd turn to hacking verisign (et. al.).

Perhaps THAT would propel some research dollars into security.

Of course, the other biggie is Time Warner. With multiple fronts of war these days lets not forget the amalgam of Movies, Broadband and VoIP. Three distinct services, two of which were seperately owned only 5 years ago. The babay bells were created from dissembling just one of these services.

There will be no "Service Economy".

Re:banking monopoly monster

[swb]

The problem that paypal and other payment systems have is that they're deliberately grey area entities; they're not banks, so they don't have to be subject to banking regulations, but in many respects they work like banks.

I would use paypal and other systems, but I want to make sure that someone is holding them to heel a little and not letting them get away with a "we reserve the right to fuck you over" policy. I know the history of government regulation isn't perfect in this regard, but I don't know where else to turn to provide a check on bank-like services and systems.

Re:banking monopoly monster

[fastenrath]

Have a look at my DEM micropayment system. It's not yet finished but it will provide an open source micropayment system. Everybody can be a payment provider (or PgpID identity provider) in this system.

A pretty fair article...

[Dan Crash]

It didn't bash or hype micropayments, just described them as useful in certain situations for certain individuals or businesses. Which is the truth. (Although can I just say that I hate the word monetize? As in, "This allows us to monetize our content." I don't want to buy anything from anyone who monetizes. Please, just use "sell".)

Re:A pretty fair article...

[snarkh]

Although can I just say that I hate the word monetize? As in, "This allows us to monetize our content." I don't want to buy anything from anyone who monetizes. Please, just use "sell".

Why, monetize and sell have different connotations. Monetize means that you are converting something into money.

From the Oxford Dict.:
b. To convert (an asset, debt, etc.) into money, to realize the value of (an asset, debt, etc.) as currency; spec. to convert (government debt) to a more liquid form, as by redeeming treasury bills or replacing bonds with bills. Also: to assess in terms of monetary value.

Selling is more ambiguous.
So in your example they don't want to get rid of their content by selling it, rather, they want to find a way to convert it into a source of revenue.

Hurdles involved

[Turing Machine]

From what I've seen of the two, Bitpass is a lot easier to set up on the user end. Peppercoin requires the user to download and install software, while Bitpass doesn't. While you and I might not be too troubled by this, many people are. That's a significant advantage for Bitpass. Also, Bitpass appears to be considerably easier to set up on the server end, though that's just my impression from reading the docs. I haven't actually implemented either yet.

This could change if Peppercoin managed to convince the major browser players to include their software with the browser. Certainly having Rivest onboard will go a long way toward getting some credibility for Peppercoin.

Re:Hurdles involved

[PCM2]

Peppercoin requires the user to download and install software, while Bitpass doesn't. While you and I might not be too troubled by this, many people are.

Wait ... you're saying the Peppercoin software is actually available for Linux only?

Micropayments

[silentbozo]

There's a big problem with micropayments vs. cash or credit. The problem is that most people don't already have micropayment accounts set up with cash available. This tends to inhibit the kind of on-the-spot impulse buy that micropayments are supposed to be good for.

For example, for $.25, users can download a custom ring-tone for their cell phone. If you rig it up so that a user has to go to a website, try out the ring, set up an account either with a credit card or paypal, and THEN debit a resulting micropayment account for the $.25, you're going to get a lot fewer customers than say, charging their cellphone account for the ring.

What about items that are soley online? Let's assume some author or artist (or director) puts out a series online. Every weekly installment costs the user $.25. If you're a die-hard fan, it'd be easier to prepay $5 for 20 episodes, than go to to the trouble of setting up a dedicated micropayment account JUST for the show. Conversely, if you just want to try it out, it'd be smarter to let you download a free episode in order to hook you onto the show, than to try and convince you to jump through the hoops of getting an account just to try the show.

Now, in both scenarios, it wouldn't be a problem if users ALREADY HAD ACCOUNTS with balances. The question is, how do you promote widespread adoption of these accounts, and convince people to keep money in them? Paypal pays interest on their accounts, but I'll be most users initate a transfer to their bank account the moment their Paypal account starts carrying a balance.

The best idea I can think of so far is to treat micropayment balances as play money - similar to gift card balances (I know they're real money, but you can't get that money back out again unless you buy something) or casino chips (where you can get real money back out again, but they're designed to look like play money to get you to spend freely.) With this idea in mind, you need to seed the market somehow. eBay/Paypal is already doing this with their points system, where you can purchase items on eBay and pay with a combination of cash/credit and eBay/Paypal points. Convincing an ISP to issue automatic BitPass accuonts to their customers upon signup, for example, would be another way of seeding the market.

With all this said though, BitPass only recently (just toward the end of December) came off of their beta program. Since the number of merchants using it is still pretty low, it may be much too soon to judge how well BitPass is doing. Personally, I think someone should pick up the eCash idea that PayPal originally was built around - anyone remember that? Beaming crypto-derived credits from one Palm device to another - there are a hell of a lot more handheld devices (phones, PDAs, etc.) now than there were in 1999. They'd be a heck of a lot cheaper to get into circulation than smart cards, especially since DirectTV tends to sue anyone trying to do research into using smart cards in the United States...

Re:Micropayments

[heff]

Your idea sounds very similar to those "flooz" dollars or whatever they were called. They were marketed as "the" net currency and they were giving them out on rosie on donnel and wheel of fortune a few years ago. I have no clue what happened to them.

Re:Micropayments

[silentbozo]

Flooz and Beanz died because they required merchants to purchase Flooz and Beanz reward points at a pretty bad markup. The startup I was working for at the time did extensive research into these types of "loyalty/incentive" reward currencies - as I recall, Flooz make something like 15% off of each sale, and you could only purchase/redeem in lots of like $50-100. As a consequence, instead of being a cash replacement, they became merchant-issued gift certificates, ultimately redeemable only by Flooz. Of course, if Flooz ever went belly up, your points became worthless (which they did.)

The rise of services like PayPal and Billpoint, which gave average merchants the ability to process credit cards, killed more cumbersome loyalty/reward-oriented services like Flooz. No point in having to spend your own money on points that might not be redeemed in your own business, if you could just charge customers directly on their credit/debit card. Netcentives is another company that operated in that same space (they issued reward points that could be exchanged for airline miles, etc.) - they died because all the "old model" companies that they worked with eventually got up to speed with internet-enabled commerce, making their role as a middleman unnecessary.

Re:Micropayments

[fastenrath]

The problem with an ecash approach is that you store real money in a file, which can get lost or can be copied more easily. Even if there's a double spending server preventing the bank from loosing money noboody can guarantee it was the lawful owner who spent the coin. For anonymous e-money I would prefer an approach where backtracking is possible: Every transaction could leave a trail in a peer to peer network. The owner of a virtual coin could use the peer to peer network to prove that there is a transaction which made him or her the owner of that coin while nobody else has to be able to locate (or decode) the transaction information. The peer to peer network would contain a bank account for everybody who uses the system, just not in easily readable form.

Re:Micropayments

[TheRevenant]

You seem to be describing standard issues regarding adoption of a new technology. Your arguments apply equally to a credit card: Why would anyone ever go out and go through the rigmarole of getting a credit card when they could just pay by cash or cheque?

Because the hassle of not having one will eventually outweigh the hassle of getting one...

Re:Micropayments

[Anonymous Coward]

Sign up using Microsoft Passport... Sure, you may hate Microsoft, you may not have an account there, but >100m people would find that convenient.

Easy? way around that.

[DAldredge]

Get a prepaid debit card and/or a gift card that has the mastercard/visa logo like the kind you can get at some malls.

Re:Easy? way around that.

[Anonymous Coward]

Which malls? I've been searching for these point of purchase prepaid cards for a long time, but haven't found any local vendors who carry them

Re:Easy? way around that.

[DAldredge]

I am almost sure that the Simon Properites gift cards will work. If not try your local grocery store service desk, drug stores or 24 hour gas stores.

shirky clay article

[bratboy]

shirky clay has an interesting article on why he thinks that micropayments won't work. the main gist is that it's not a question of technology, but rather that users don't want to have to be constantly making decisions about whether or not to buy something, irrespective of the amount.

Re:shirky clay article

[Turing Machine]

Shirky is thought provoking, but he fails to explain why, if the "mental transaction cost" associated with making small payments is such a show stopper, there are vending machines all over the place.

Re:shirky clay article

[bucky0]

Because:
a) People goto vending machines _far_ fewer times then they'll click an article.

b) Most people don't hang out at vending machines trying something new without reason. A lot of people hang out at websites and do the exact opposite.

To me, if i have 50 cents in my pocket and i'm hungry, I'll eat that nice twix sitting in box B3. There's not much thought that goes into it and I'll only make that descision once or twice a week. However, deciding whether or not I want to fork over 10 cents or a dollar or whatever a particular website is charging to read an article I think may be neat would be annoying since I would do it so much and each time would involve a judgement call.

my 2 cents.

Re:shirky clay article

[Obfiscator]

Would you still have vending machines all over the place if you had to wait for two days to get your candy bar?

Re:shirky clay article

[Anonymous Coward]

Indeed. Slashdot has been periodically running articles about how micropayments will be popular RSN for =years= and it still hasn't happened. For almost as long, I've been posting responses saying micropayments are dead. It's time to let it go, already.

Re:shirky clay article

[Anonymous Coward]

my 2 cents.

You really don't get the micropayments thing do you? We're supposed to give you two cents, not the other way around. You'll be broke in no time if you keep this up.

MOD PARENT DOWN

[Anonymous Coward]

He just copied the article

Re:MOD PARENT DOWN

[Spruce Moose]

Yeah the least he could do is insert some random offensives in there.

My Idea

[buckhead_buddy]

My idea that requires some sort of micro-payment system to be viable is a service that does auto-translation of file formats for you.

Sent the service an AbiWord document and it sends back a real 100% Microsoft Word document in a ZIP file. Instead of thousands of people with their own copies of Microsoft Word, thousands of people use this service occasionally for those rare cases they must have a TRUE file.

The interesting part is when the service changes polarity and everyone starts insisting on receiving files in open source formats. "Write your resume in any word processor you like, but send it to us in XMLRESUME format"

If secure connections get usable for the average joe, then perhaps a non-partisan government could get in on things. Define a standard that anyone could implement for things like tax filings and public bids (or maybe just death notices and zoning changes to start on a local level)

Anyway, it's not a service that can be done without a lot of bandwitdth, good hardware, security, and trust from your customers so it looks like something that has to be funded somehow. Micropayments? I hope something makes this financially feasible.

PayPal treats sellers like crap.

[b0r0din]

If you have a merchant account on PayPal, or before you get one, I would advise going to this site. It discusses the problems with paypal in good detail. I am in the process of setting up a merchant account, and the kinds of things they do are rediculous. There's a class action lawsuit currently against them. They have a great system if you're looking to pay for an item, but if you're selling one, watch out.

Re:PayPal treats sellers like crap.

[stanmann]

speaking of rediculous, check your speeling.

MicroFUD

[Dan Crash]

First, BitPass uses a pre-paid card model, so there's only one charge on your credit card, the charge for buying the card itself. No individual transactions are listed. Your wife isn't going to know you're looking at micropayment pr0n, if that's what you're afraid of.

Second, the internet has no privacy in the first place. There are IP logs and traffic sniffers galore out there. If you want total privacy, stay off the internet and build yourself a cabin in Montana.

Re:MicroFUD

[kfg]

. . . build yourself a cabin in Montana.

I rather like that idea actually. I favor the Bozeman area. Do you have any information about cabin broadband availability in the region?

KFG

Re:MicroFUD

[Wumpus]

You don't move to Montana for the broadband - you move to Montana to become a dental floss tycoon.

Re:MicroFUD

[kfg]

Oh. Damn. Well, that let's me out.

I guess it's Idaho then.

KFG

Cellphones - correct me if I'm wrong

[3lb4rt0]

Aren't ringtones, all cellphone content basically, billed to the service provider who in turn adds the cost onto the callers bill.

The ringtone (etc) provider only has one transaction charge per cellphone company.

I don't mean to evangelize but...

[igrp]

... this is probably why. You also might want to check out this site. Paypal is currently involved in numerous trials worldwide and some of the stuff they're doing is ranging from questionable to ludicrous, and probably downright illegal in some cases.

Re:I don't mean to evangelize but...

[igrp]

Woops, sorry - the first this was actually meant to point to paypalwarning.com.

Sorry about that (I guess I should have used the preview function).

Re:I don't mean to evangelize but...

[Jayfar]

Yes, but paypalwarning.com was last updated over a year ago. Does paypal still suck in the ways outlined there? Are they still forbidden from doing business in Louisiana? Have things improved under ebay's ownership?

Best Link

[Anonymous Coward]

It was linked in the prior Micropayments article (3 friggin' years ago!), but I still think this page describes a fantastic system.

Maybe I'm a little biased..

[Kjella]

...since I finally got over from pay-per-minute to flatline DSL in May (go Norway. Not.) but I simply couldn't imagine having some kind of "metered" content, to say listen to a web radio or per article I read on slashdot.

A flat fee subscription would be just fine though. But there are few sites where there's really enough content to do that. Slashdot is one of them, but slashdot isn't exactly average. iTMS is also a "big" shop in this context, even if the payments are small. Never mind that the purchases there are permanent.

Of course, I may be completely different than the average joe, but I couldn't imagine going back to the hassle of feeling that every "wasted" minute online was costing me money, when I'm really just surfing around or something.

Kjella

Micropayments

[Anonymous Coward]

We used to have micropayments in Czech republic. There were not many people who used it for 'voluntary' payments, but services that delivered 'real' products started appearing. The goverment outlawed this type of service about 1 year ago. Guess why!! (Hint: Bank lobby, although official reason was EU harmonization (IMO the reason in EU is bank lobby anyway)).

You Need More Than Product

[Saeger]

Just having a viable digital product for sale isn't enough; IMO, you also need to earn the respect of those who would support your intangible efforts in a world where it's impossible to enforce artificial scarcity. Without that human relationship between "producer" and "consumer", getting funded will be much much harder.

"Information economics, in the absence of objects, will be based more on relationship than possession." -- John Perry Barlow

--

Re:You Need More Than Product

[Anonymous Coward]

I dont get it. If you really love my art but dont respect me as a person then that makes it okay to rip me off? FSCK that. My art stands alone. vote with your wallet instead of rationalising theft

Re:You Need More Than Product

[Anonymous Coward]

You have lost nothing. It is not a theft, but copyright violation.

Re:Micropayments ... still have to sign up

[adzoox]

"eBay/Paypal is already doing this with their points system, where you can purchase items on eBay and pay with a combination of cash/credit and eBay/Paypal points. Convincing an ISP to issue automatic BitPass accuonts to their customers upon signup, for example, would be another way of seeding the market."

You still have to sign up for the ebay points program AND the points aren't interoperable with the parent gold points program. eBay points was more of a way to aquire your email/contact info than anything else - a way that eBay could circumvent their contact information privacy. (Not an eBay hater, just a reply to this part of your statement)

Micropayments will only work in the manner in which you stated - mass adoption through - automatic signup.

I also think a great way is a rebate program - you contribute to a site that charges micropayments - you are rebated micropayments to use. For instance: Slashdot could charge - then if you contribute by name you are rebated your micropayment. If you are moderated 5+ you are awarded a micropayment.

A pessimist's view

[Snebjorn]

If micropayment system really take off we'll all be finding our inboxes suddenly swamped with a whole new category of spam: sleazy offers for products that claim to give us "free" access to all those mp-based services..

Snebjorn

viable product?

[Anonymous Coward]

"You still need to actually have a viable product that you can sell."

And that viable product is other people's copyrighted music. If the "content industries" think that micropayments are going to make them rich, they're grimly mistaken. Imagine a p2p system where users sell each other full quality CDs for $0.10

The means to charge us a little for everything?

[ParadoxicalPostulate]

All this is well and good, but it makes me wonder.

"It's an easy chance to monetize some things we wouldn't offer for free," he said.

Conversely, would it not be true that this would allow them to monetize some things that they would offer for free?

I mean, as it is, much of the free little "perks" that companies offer for their products are little things - little conveniences. Now, as it is its not too practical for them to charge, but we all know that if the means are available, they will. Hmm...just think on that I suppose.
Technology such as this has many good uses, but it also has the ability to become a nuisance.

Your screwed if you have no credit card..

[thenarftwit]

Wthis all these payment systems, if you have no credit card, that's it..you can't use these systems...what abiut the future, when there will be pressure to add all sorts of extra charges for things like cross-border transactions etc..size of transactions etc time of day etc..

Re:Your screwed if you have no credit card..

[Anonymous Coward]

I wouldn't use a credit card for buying stuff on the web anymore. My credit card number got stolen a number of times and every other person I know had his/her card number stolen. Since then I always prepay by money order or check. It usually delays shipment for two or three days but it's worth it.
"Secure Transactions", yeah right... At one point your number has to get decrypted to plain text to be processed and then it's sitting around on some servers, waiting for a script-kiddie to break in.

iStockPhoto a good example of micropayments

[Stick_Fig]

As someone interested in graphic design along with general nerdery, I think the best example of a micropayment system is the stock photo site iStockPhoto. There seems to be a benefit to the whole idea of micropayments in that realm.. Why pay $50 for a photo when one that cost maybe a dollar works just as well?

It's a pretty smart system, and other companies seem to be building on its success (Adobe offers free iStockPhotos with registration of their Creative Suite).

I think there's a good product there, and I wouldn't mind to see that site succeed, if any.

HUH?

[Anonymous Coward]

or zero dollars 19 times

Doh?

What problem do micropayments solve?

[droleary]

There are a lot of these kinds of technologies that keep getting pushed (and failing) and I have no idea why. It seems like micropayments were thought up to solve the vendor problem of "How can we nickel and dime our customers to death?", but they never explain why the customer should be interested in that. Is the idea to sell stuff so cheap that it has nearly no value? Just give it away, damn it! There are stores with a physical presence that can manage to survive with everything under a dollar, and all these techno-jokers can't figure how how to flip a few bits to accomplish the same without taking a 15% cut? I personally think PayPal will be "good enough" technology for small(ish) payments until a) a system is devised that seriously undercuts it in cost and b) it can be funded from a PayPal account (part of the value in PayPal is that I don't spread credit card info all over the net).

Micropayments are a step backwards..

[wfberg]

Back in the day, micropayments for online content were the norm. Any one remember compuserve? They had a captive audience with accounts, tons of "premium" services including freebies, and it didn't catch on too well.

Even scientific publishers are having more success selling subscriptions (per seat/site license) than pay-per-view. Cable operators are having difficulty making PPV work, as well.

Let's face it; people are cheapskates and publishers are greedy. That's why things are either free or much too expensive.

I gave up on micropayments

[KalvinB]

Instead of trying to nikel and dime visitors I've just gone to low cost subscriptions which get you unlimited access for a time period set by the subscription you pay for. The lowest one can go using PayPal and still be worth it is $1.00. So for $1 I give 7 days unlimited access to the site.

It's simple to set up and with IPN and a couple scripts and a modified htpassword.exe it's mostly automated. I could fully automate it but that just invites hackers. When I first started someone tried various user names for something like 8 hours using a dictionary attack. I had a username that could be found in a dictionary. That was one name he didn't try. I reported him to his ISP and that problem went away.

The entire site is browsable so you know exactly what you're paying for. Some subscription sites have this idea they can hide content behind door number 1 and expect people to pay to see what's there.

If you're selling articles, have one or two opening paragraphs vistors can read. If you're selling pictures, use thumbnails of reasonable size. If you're selling comics, keep some strips for free. Maybe sell access to an archive of comics that are greater than X days (months, years) old.

As for PayPal being evil. Stop using them like a bank. They are not a bank. I move funds out every 20 bucks or so. I've never had a problem with them. They offer a money market deal. I use TD Waterhouse.

If you don't trust them on certain aspects it's very easy to avoid those dangerous waters. Every on-line commerce site has attempts by people to scam their users out of their username and password.

Ben

Re:I gave up on micropayments

[Anonymous Coward]

You are one the legendary people I've heard about who make money from non-porn subscriptions. Amazing. Kudos to you.

I'm a cheap bastard though so I download complete siterips. If I see a "incarusindie_siterip_20040111.rar" I download it. Its my way of saying FSCK you.

Re:Trivia.

[Anonymous Coward]

6) Allow only the uretheal fossa up your anus.

YOU FAIL IT!!

[Anonymous Coward]

n/t

The real reason micrpayment schemes fail.

[heff]

micropayments are a vendor problem.

Until vendors can provide a benefit to consumers that motivates them to use a micropayment system, people aren't going to care about the overhead on their transaction. As far as they're concerned they've already paid the money with their credit card and could care less about how the vendor processes the money.

If the only reason motivating consumers to use micropayments is "so the store I'm doing business with makes more money" it just isnt going to work.

Peppercoin and Bitpass have nothing I want to buy

[dpbsmith]

After reading the Shirky article, and Scott McCloud's rebuttal, in which he rakes Shirky over the coals for criticizing Bitpass based on its state that the time when Shirky looked at it, I took another look at Bitpass, and also at Peppercoin.

My fellow Slashdotters, this is rubbish. There's not a single thing there that I want to buy, not for a quarter, not for a penny, not for a mill, not for a peppercorn.

Nobody forced Bitpass and Peppercoin to put up "Grand Opening" signs and hire brass bands to promote a giant warehouse store with nothing in it to buy but two magazines and three candybars at the checkout line. It makes them look really stupid. If they didn't want people to see them before they were ready, they could have waited to crank up the publicity machine until they were ready.

There's nothing to argue about here (unless you're personally invested in the systems). Bitpass and Peppercoin can prove me wrong any time they want. McCloud implies that Bitpass is the next eBay (by saying that eBay wouldn't have looked any more impressive when it was the same age Bitpass is). Fine, maybe I'll have accounts with both of them in a year. In which case I'll be glad to say I was mistaken.

But as of today, it sure smells like dot-bomb smoke to me.

PayPal made sense practically from day one. I joined PayPal because there was a guy that had a self-published book I wanted to buy--a very good book about the history of Apple--and his website offered me the choice of mailing him a check or signing up for PayPal and using a credit card. Nobody had to talk me into it. I didn't have to engage in theoretical arguments about whether PayPal was a viable system. There was something I wanted to buy. I wanted the convenience of buying by credit card from someone who didn't have a merchant account. I glanced a leery eye at PayPal's terms and conditions, shrugged, and signed up. PayPal has been continuously useful to me every since.

Peppercoin and Bitpass are a joke. Spare me articles about them until there is something worthwhile I can buy with them.

Move along, folks, there's nothing to buy here.

+1 MOD UP

[Anonymous Coward]

I remember this whole discussion -- it was at http://slashdot.org/article.pl?sid=01/02/26/175620 7&mode=thread.

silver bullet

[andy1307]

Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell."

The savings on transaction costs can be the difference between a profit and a loss. For a lot of products, this may be the silver bullet.

Re: Micropayments & BitPass & "seeding the

[shubert1966]

As far as BitPass is concerned; I read a few of the setup docs and was impressed.

Another product in a similar place is Skype [About 5,645,855 downloads]. Although it is free, and other users need to have it installed on their machines also, it is poised to usurp a currently existing paradigm in communications/trade (VoIP)- avoiding cost/price altogether!

TimeWarner is pretty much done building their monopoly: Movies, Broadband, VoIP - all on 1 cable(bill). It's time for the revolutionaries to make or break, I hope they realize just how quickly they need to move in order to cross the chasm into market adoption.

Any Host or full ISP that puts these two concepts in place next week could generate (I'm guesstimating) 50% interest in the VoIP and 25% interest in Micropayments. The various entities involved really should be talking this up and just plain ol' getting it done.

Whether a Host, or ISP, or oneself, BitPass can compete with PayPal ~ gaining mindshare with Hosts, and ISPs, and nationwide Chambers of Commerce is the key "seeding the market".
I'd like to see these Server Add Ons saturate the market and become de facto standards by summer '04.

The competition is already out there. How to organize incoming content(products) for the would-be webseller - that is the app' that needs to be developed to compete with Time Warner (et. al.)

Any title, anytime, anywhere - for free. There will be no "Sevice Economy" ~ only revolution.

Product?

[Lord_Dweomer]

"Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell."

Point 1)You missed the .com days didn't you?

Point 2) Although my guess the trend will soon be to take previously free content, and now charge for it, rather than adding additional premium content *cough*IGN*cough*. See, that way you're offering the same product, but now getting paid more for it (usually, see 1)

Re: I don't know where else to turn

[shubert1966]

Al Gore still hasn't fixed that, has he. Oh yeah, he's trying to fix radio right now.

I dislike giving the government my personal info, and banks as well, yet I still have a PayPal account.

There's a war on, and legislation is so technically challenged that I believe we're just going to have to live with lack of regulations on these behemoths until it all gels.

Of course by then, there'll only be a few of the same old companies doing the serving. And one of these unlucky monopolies will be the fall guy.

blah

[cubicledrone]

blah blah micropayments suck blah blah

What, is this discussion a cron process? Every couple of months we trot out Bitpass, Peppercoin, PayPal, online comics and copyright and criticize them for how "l4me" they are.

The most entertaining part is how willing people are to, in the same thread, proudly proclaim how they will steal anything that is placed online, yet bitch and gripe when spammers steal their bandwidth.

If micropayments truly sucked, PayPal would have gone out of business years ago. Period. End of story.

Now let's have another story about spam! Anyone see the irony? Anyone?

Re:blah

[slim]

If micropayments truly sucked, PayPal would have gone out of business years ago. Period. End of story.

I don't see Paypal as being purely about micropayments. I use paypal for eBay payments (as many people do), and we're certainly talking about sums greater than $10 at a time.

Micropayments to me go as low as a penny at a time, maybe a fraction of a penny.

The reason this is important is that people will spend a penny in a flash without thinking too hard about it, yet if a million people do it, that's $10,000 of revenue. I'm sure you can think of plenty of content-led web sites that could manage very nicely on those kinds of terms if only the infrastructure was available.

If Slashdot points you at an article in the Times, you click through, and it invites you to take out a $5 subscription, you'll probably pass. If it simply tells you that if you continue you'll be debited by a penny, you'd likely shrug and pay the money.

The flipside to this is, you won't spend that penny if it's hassle to do so, so the challenge that micropayment technology has to face up to is to make the payment process incredibly lightweight for the end user, while remaining secure. I need to spend at least $5 before the overhead of authorising a Paypal transaction seems worth the effort.

Credit card for micropayment? no thanks!

[Anonymous Coward]

I've made enough bad experiences having my credit card number stolen when I used it online e.g. paypal, ebay, amazon.
Unless a company accepts prepayment by check or money order I will not use it. Period.

Re:Credit card for micropayment? no thanks!

[Anonymous Coward]

same here. my credit card number got stolen a number of times when i bought stuff on the web and i didn't even use it that often. a couple of my friends also had problems, even with larger companies. now i also prepay by check - it's worth the peace of mind.
did anyone else have similar experiences?

The problems is the payment amounts...

[jelle]

The problem with 'micropayments' is that when web companies try to introduce them, then they seem to think that their customers think that paying a dollar or more for a single article is considered a micropayment...

But what is a micropayment on a CEO or CFO salary is usually not worth the money for the rest of the world. So, many companies who claim to have tried micropayments failed, because they were charging too much.

Other forms are micropayments for email are talked about by people who never heard of mailing lists... Even a cent per email will make a tremendous amount of mailing lists shutdown. And I'm talking about true opt-in mailing lists, not about spam.

YOU LIKEWISE FAIL IT

[corebreech]

I can't recall horror stories of the United States Geological Survey raging out of control and abusing their powers, or the Treasury maliciously printing money at people. What about the Federal Power to establish Post offices? Ripe for civil rights violations, that one.

None of these examples in any way threaten to intrude on privacy or our civil rights.

Check your number and dial again, or ask your mommy for assistance.

Re:YOU LIKEWISE FAIL IT

[Anonymous Coward]

So you would agree that not every single power given to the government has been abused?

Re:YOU LIKEWISE FAIL IT

[corebreech]

Power has many meanings, but the one that's obviously applicable here is the power wielded over the individual.

So no, I do not agree.

The most innovative micropayment system I've seen

[Anonymous Coward]

http://www.pico-pay.com/

It's been around for 4 years and no-one seems to know about it... go figure.

I think its blindingly obvious...

[Anonymous Coward]

that we already have a perfect micropayment system in the form of premium rate sms. More young people have mobiles than credit cards at least here in ireland. Its very easy and its user friendly ie most people wouldnt even realise they are using a micropayment mechanism.

Community currency for online payment?

[fastenrath]

I think the problem with internet payment providers is that nobody really goes beyond using the national currencies. A currency defined by the internet payment system or, even better, a payment system where communities can set up their own currencies would be much better for micropayment.
Buying such a currency for dollar or euro from an internet money exchange could be possible, but would not have to be the usual case. A closed money circulation on the internet could involve content providers, ISPs and loyalty programs (the later returning the money to the enduser). Of course, you have a chicken and egg problem starting the circulation of a new currency. Bernard Lietaer better explains what I mean in this article about
complementary currencies.

could google toolbar make this work?

[way2trivial]

a little box- with a 'click here to pay' on the toolbar-
next to it, a percentage of users who agreed it was a good value for money paid (like page rank)

ex. you go to the NYtimes archive story you want, the page says, 2$ for this article (xxx words) and the toolbar is 'nytimes aware' you look at the google toolbar, see the button "click here to deduct 2$" 84% valued

and as soon as you do click it, there is a 'yes/no' box on the toolbar, and you can add your voice to the %..

do they have the membership & market share on the net to make this work?

Re:could google toolbar make this work?

[Anonymous Coward]

just click on the google cache ;)

Re: I don't know where else to turn

[Doc Ruby]

What is that "Al Gore" nonsequitur supposed to mean? And "there's a war on"? There's always a war on. That's another reason to regulate - some of these corporations are *actively killing people*. There's no ethical or any other constraint than the threat of fines and jail.

iTMS is more like long distance than micropayments

[Imperator]

Dude, iTMS is not a micropayment system. It's analogous to long-distance phone calls (remember when you didn't use your cell phone for those?). You have an existing relationship with a business whereby you can easily make small charges against an account that you pay for in a monthly bill. That doesn't require an intermediary; the customer does business directly with the producer or service provider.

The whole point of micropayments is that you can make lots of little payments to different parties without having to set up billing arrangements with each. This almost requires a business to facilitate; this intermediary will have established relationships with a multitude of customers and a multitude of businesses, so that any customer can easily make a payment to any business.

The proper analogy for micropayments is a credit card system (or currency itself). It is not analogous to a store like iTMS. Note that it's not the cost that prevents iTMS from being a micropayment system; even if every song were literally a millionth of a cent, it would still be a store, not a financial intermediary.

Re: Al Gore & War

[shubert1966]

1. Reference to Al Gore being (un)aware, as a politico, of the Internet and possibly the regulation thereof. Ha! They (politicos) are satisfied that geeks themselves admit they don't know everything internet-related (how to regulate), so now there's no real push to come down on collusions and fraud. Yeah, I think ICANN's a joke along with Verisign and others, but - I digress.

Al Gore is also interested in acquiring a liberal news network of radio stations to compete with the perceived (rightly so) right-wing domination of the airwaves.

2. Yes.
"The guns and the bombs, the rockets and the warships, are all symbols of human failure." -Lyndon B Johnson

I have to say I think I offended someone I agree with, but actually, I'm planning on supporting Kucinich unless he (most likely) doen;t get the Democratic nod - then it's Dean or Kerry -time.

Now this post is completely off-topic.

Sorry. I just wanted you to know I wasn;t a war-hawk. It is important to me that I do not put forth that message.

No

[AmVidia HQ]

Respect is irrelevant. What matters is Paypal is the largest online payment service with the biggest user base, and you WILL offer Paypal as a payment option (if not the only) for your online services. The convenience of your users come first, whether you like it or not.

I say this as a webmaster who have considered various payment services.

Is Bitpass a scam?

[Animats]

Bitpass has many attributes of a scam.

• Basically, they're selling money with credit cards. Credit card merchant accounts don't normally allow you to do that. That's usually considered a cash advance, or loan, for which you have to be a lending regulated institution.
• Bitpass disclaims all possible liability for transactions. Then they state that transactions are anonymous to earners. This makes refunds almost impossible.
• They use "Entrust" SSL certificates, which Entrust says guarantee almost nothing. Verisign at least does some minimal verification.
• Bitpass claims that they're not a merchant, they're not a bank, and they're not an intermediary, in further attempts to avoid liability. Contrast this with iBill, which acts as a reseller and offers customer service and refunds. Bitpass doesn't do that.
• They want 90 days to refund your money if you cancel.
• The disclosures required by California law, the name and actual business address of the business, don't appear before the "enter credit card" page. The info is on the site, but that's not good enough.

Bitpass is either a depository institution, like a bank, or a "check seller", like companies that sell money orders. Either way, they should have the appropriate license and be subject to bank regulations and audits. You can't just go into business handling other people's money without oversight.

iTunes profitability

[bblfish]

This shows very clearly that the cost of a transaction for iTunes could be much lower than generally thought.

Everybody seems to have accepted without blinking the statements made by Apple on the cost of selling iTunes where they conclude that Apple only makes money by selling iPods. But if we think about the algorithms described in the article then it is clear that there is nothing to stop Apple charging customers for multiple transactions instead of just for one. In which case the cost per transaction would drop dramatically. And the profits to Apple of iTunes would be much higher than stated.

At the very least it is clear that Apple has a lot of room to maneuvre to either bring its prices down, or increase its profitability.

Palpal seperates European operations

[throwaway18]

I got an email from paypal a few days ago. I'm 99% certain it's genuine and not a cleverer-than-average attempt to get me to enter my details into a false website.

PayPal, Inc. is pleased to announce that we are preparing to introduce PayPal ( Europe) Ltd., a company incorporated in the United Kingdom, as the service provider for PayPal customers in the European Union.

We anticipate that PayPal (Europe) Ltd. will begin operating in February 2004, subject to receiving authorisation from the Financial Services Authority (FSA) in the UK. Please note, no action will be necessary on your part. You will be a ble to continue using your PayPal account as you do today.

This sounds like a good thing to me. I expect the UK financial regulators will keep them on a tighter leash. "Fair negative mods are being marked fair, moderate to improve the s/n ratio."

Oh crikey, here we go again...

[BritGeek]

I work for one of the large Financial Services companies. In the late nineties, we spent a great deal of effort working on micropayments, trying to determine: a) was there a heavy suppressed demand for micropayments capability, b) was there a business model wherein a reasonable profit could be made, and, if the answer to the previous questions were both yes, c) what was the best technology that could supply the solution. Suffice it to say that we eventually concluded that the answers to the first two questions were No, and No, respectively.

The interesting thing is that I believe that the survival rate of the late nineties companies that offered such services bears out this hypothesis. They are basically all dead. There are a couple of notable exceptions. QPass re-invigorated itself by becoming a wireless services company. (And, it had a model remarkably similar to Peppercoin's, so it will be interesting to see what happens to them...) Seattle-based eCharge died, but was recently re-floated by the VC community as eCharge2 - I wish them luck, but the odds are against them. All the rest seem to have sunk without trace...

Paypal - fine company, but not a micropayments company; instead a P2P payments company. They may be able to make micropayments work, but if they do, it will be on the basis of operating the service as a loss leader...

Implications on search engines

[knweiss]

I'm afraid this would have a very negative effect on the quality of search engines. Their crawlers wouldn't be able to index the (currently free) content anymore. In the end the web would become less useful.

spam & micropayments

[rvr]

What I wonder is if we could tie micropayments to receiving email AND preventing spam. I would go for that, it would work like this:
1. I only receive email from email addresses that I pick.
2. All others have to pay me a micropayment.
This would *really* cut back on spam one would get.

Re:Peppercoin and Bitpass have nothing I want to b

[JohnMunsch]

As someone who has actually viewed some of the content, I can say no, you are wrong.

Here's three things worth the money on BitPass: Geeks In Love, the moving paper model of Cupid, and stock photos from iStockPhoto.

In fact, you made the case beautifully for why people may in fact adopt a micropayment system. "There was something I wanted to buy." That got you over the hump with PayPal and there is no reason why the same won't work with BitPass or Peppercoin. I've not yet looked at what's available with Peppercoin but I can tell you that I've already found things I liked with BitPass and I hope to see a lot more. In fact, I took the time to install the software to sell stuff from my website (it was fairly easy) and I hope to add some things myself for sale.