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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."
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.
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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.
"Sic Semper Tyrannosaurus Rex."
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
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...
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.
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
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.
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.
It was linked in the prior Micropayments article (3 friggin' years ago!), but I still think this page describes a fantastic system.
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..
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.
ShortFormBlog: Writing a little. Saying a lot.
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.
SCO employee? Check out the bounty
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
Work Safe Porn
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.
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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.
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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)
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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.
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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.
Gates' Law: Every 18 months, the speed of software halves.
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."