Slashdot Mirror
The March Towards Micropayments
MattW writes "It's been well over a year since Ron Rivest's company Peppercoin was introduced on Slashdot. Now, the AP is reporting that Peppercoin 2.0 is here. Peppercoin's website indicates that version 2.0 pays merchants exactly what they charged, instead of with cryptographically signed tokens which may or may not sum out to exactly the expected charges. This looks like the technology that will enable credit card acceptance in vending machines and video games, but may not solve the need for truly "micro" payments, like paying $.005 for a page view."
The acceptance, or maturity, of a technology can not occur without there being a desire or perceived need for it by the consumer. If there is no need, infinite supply (as is theoretically possible with such a thing as digital services) is meaningless, as people will still not use it.
.01 or so for every slashdot article which someone gets before the rush/premium members.
That said: what's the desire, or demand, for micropayments in general? I can see how they would appeal for use in vending machines or game payments, but for per-view payments online?
The largest, and potentially only, source of income I can see for such a product would be through the porn industry. That way they might be able to more easily be able to meter out their 'service' in a commodity type fashion: "You 'used' X megs, so we charged you for that much" - as opposed to the blank service fee model, where the customer might frequently cancel the $5/month subscription, as "they didn't use it" *cough* and there'd be little/no incentive to pay for it.
Personally, I would stop going to most sites I currently visit if I had to pay for them. I already pay for internet access; why would I want to, or should I have to, pay for something which is currently free? "Premium" service on sites, however, might benefit - it would be easier to do a per-view billing model, again. For instance, on slashdot: charge $
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
Micropayment, macropayment, blah, blah, blah. Some things are worth paying for, others are not. Until and unless MC and Visa get into the act, these things are unlikely to bear much fruit. Some, yes. Enough to get all giddy about? Hardly.
What is the problem this is trying to solve? Why not group together (as a somewhat poor example) all of the OSDN content sites. You then pay, say, $5 for a certain number of page views across the entire spectrum. Each view is tallied and attributed to the appropriate site. Similarly, you can have organizations of news publications, technical publications (I'm thinking game and/or computer mags), entertainment of various sorts.
Look, as always, the porn industry is ahead of the game. Get one of those memberships to twenty different sites. They don't bill you by the page view, they let you hit all the sites. Look, if porn ain't looking at it, it's not going to work.
Finally, who the hell wants to type in a 16 digit credit card number, 4+ digit expiration, name, address, etc, etc, to view a web comic?
Oh, you can just buy 'points' and redeem them at various sites? What's flooz.com up to these days?
Jesus was all right but his disciples were thick and ordinary. -John Lennon
I don't think will work on a grand scale. It's technically feasable and probably would work great if everyone's mind-set was different. However, I think most people will instantly find them annoying and feel they are being "nickeled and dimed". I would rather sign up for an unlimited service on a monthly charge than a micro-payment based system. Even if under micro-payments I would spend say $3 - $5 / mo and unlimited would be $10-$15. Then I wouldn't feel the need to be jewish with what I'm doing and could do it at my leasure.
I'm wondering if this psychological aspect has been concidered or not.
Ah, which ignores the two biggest obstacles to using micropayments:
a)People HATE getting nickled and dimed- hence the very origin of the term!
b)For websites and the like, people will simply seek out free content which is available in quantity. Bob starts charging micropayments for his webcomic. Bob witnesses most of his readers disappearing into the woodwork. Jane, Sally, and Joe notice little bumps in their traffic logs.
People just can't seem to wrap their heads around the fact that some stuff just isn't considered by the public worth paying for, at any price.
Oh, not to mention, the micropayment guys seem to like charging as much or more than the credit card companies, the money is not very accessible, and so on.
Please help metamoderate.
Clay Shirky makes a strong case why micropayments haven't taken off, and probably won't in the forseeable future. In short, the difference between "free" and "only $0.005" is much larger than only half a cent - it's a change in the mindset of the reader. The article also references more academic papers describing the weaknesses of micropayments.
Ubi dubium ibi libertas: Where there is doubt, there is freedom.
Do we really want to go towards a cashless society. I agree this micropayment system is far from it but this system will lead to the owners of VISA to have an awesome amount of power. Imagine , what would happen in a cahsless society where Visa get a percent of every transaction taking place.
quis custodiet ipsos custodes
The problem with micropayments is the "micro". Payments are payments.
I consult for an organization with a billing system that sends out bills for as little as $0.01 and as much as $5-6 million for a quarter. If the app supported it, they could probaly bill to the tenth of a penny if need be. The system doesn't care.
The only difference between MasterCard and a micropayment system is scale and profit. Given a scalable global system, an transaction is a transaction. Each transaction has a distinct cost associated with it, which is really not relevant to the value of the transaction. The cost of a $15,000 transaction is nearly the same as a $0.015 transaction.
And therein lies the problem. In order to make micropayments affordable, you need to drop highly profitable fees on small transactions... plus your customers will start to question your high fees on larger transactions.
The banking system makes far too much on "macropayments" to scuttle the whole thing to accomodate small payments.
Conformity is the jailer of freedom and enemy of growth. -JFK
From the article: The cost reduction is possible, he said, because of a patent-pending method of lumping together individual transactions into one transaction to reduce the cost to the merchant.
Are they applying for a patent for adding several numbers together? I have prior art! Specifically, I added several numbers together while in Rivest's class! (Did he steal this from me?)
Paying doesn't necessarily mean "transfer of money", it can also mean giving some content back. YMMV.
Micropayments = Microvisits
I'm sorry but if your business strategy requires collecting $0.005 per page visit you don't have a business strategy. Sure $0.005 is nothing but in order to play that you have to register, log in, etc... I'd rather spend those few seconds finding an alternative free site or if that doesn't exist flat out stealing your content from whatever on easily found source is hosting it. It's the principle of it. Offer something of real value and people will pay for it. Do nothing and try to skim off as much as possible without people noticing.. don't expect me to blink as I shoot that one down.
There is always the issue that something can go wrong in between you and the merchant that can make that 1 view paid for content just disapear never to be seen again, eating your credit and not getting your content. I'm trying to strike up the similarity of like, putting your money into a vending machine and not getting what your paid for when the chocolate bar gets stuck.
Its hardly a wallet breaking scenario, but it is annoying and reduces a persons confidence in using such a system. If people are willing to use such a system with those risks its fine, but I hope that there is going to be additional effort in ensuring that these small transactions are done reliably.
The cost reduction is possible, he said, because of a patent-pending method of lumping together individual transactions into one transaction to reduce the cost to the merchant.
Correct me if I'm wrong, but doesn't iTunes Music Store already do this? I've sometimes bought a song and then bought another one a day later and had them show up on the same invoice (and the same resulting credit card charge). Doesn't seem like a big innovation... and doesn't Amazon do the same thing with 1-Click also? (which Apple licensed) So now we could have two companies with silly useless patents for pretty much the same thing - with any luck they'll spend millions in litigation and end up appropriately punished for their patent-mongering.
I don't see how useful this would be in arcades anyway - most of the newer ones (Jillian's, Gameworks, et al) already have their own micropayment systems in the form of stored-value cards. Maybe in free-standing video games, but those are getting less and less common these days, and your neighborhood pizza parlor isn't going to have room for a cockpit-sized racing simulator anyway (or even a DDR game for that matter) - nobody's paying $1 to play a round of retro Pac-Man these days.
"The cost reduction is possible, he said, because of a patent-pending method of lumping together individual transactions into one transaction to reduce the cost to the merchant."
How in the world is that patentable? Apple has been doing that with iTunes since the beginning. Google also doesn't handout checks for AdSense until you have $100.00 or more accumulated.
People have also mentioned Wal-Mart dropping a charge from their credit card because it was such a small amount that lingered for too long.
This company is patenting something companies have done for a very long time and then calling their product 2.0. Pretending this is going to translate from video games (anyone who's worked or played in an arcade knows how fast quarters fly completely obvlivious to how much has been spent) to the web is just ignorant. Nobody is going to be sitting on a web-site dropping "quarters" for hours. There's not enough "excitement" to distract visitors from how much they're spending.
It's a whole different paradigm from playing games at an arcade.
Ben
Work Safe Porn
Basically two memes need to be injected into the mainstream psyche before we can win the hearts and minds of the interwank surfer:
Meme 1) A marketing scheme needs to be formulated wherein persons utilizing micropayments are portrayed as being young, fit, sexually active and desirable. At the same time, persons outside this class (fat/ugly/old/antisocial etc) should be portrayed as against the micropayment paradigm.
Meme 2) Any resistence encountered to Meme 1 (above), or against the micropayment infrastructure in general, should be dealt with by establishing another marketing scheme in which those persons against micropayments are linked to terrorism, or perhaps in some other way portrayed as unamerican--against "family values", an atheist or homosexual, etc.
Careful application of these memes will insure the success of the micropayment infrastructure. Such a strategy has worked countless times in the past to promote ideas that seemed undesirable at the outset.
If the idea of selling ringtones had been posted here on Slashdot, I am pretty sure we would hear the same arguments : "won't work, no one will pay money for something like this"
Selling ringtones has turned into a multi-million dollar market.
The Internet as most of us have come to know it, is constantly changing (big news). So do our consuming habbits (really now?). After all, we are creatures subjected to evolution.
While the aeroplan was being invented, the common person had the same argumentation: who will want to fly?
Or befor cable was introduced, many of the common folk suggested, it would be impossible to get consumers to pay for something, they are already getting for free.
I am not willing to subscribe to a site, though I would be willing to pay to view certain articles/content. Now not every article will be worth while to pay for, and this is the point where a business plan comes in. Enough said....
FOr micropayment to gain wide acceptance, there needs to be an integration within the browsers. I researched that for a while because my website has some value but not enough to warrant pulling a CC out. Imagine if you get to a site and you have a little icon on your task bar that start flashing a bit for attention. You pass your mouse above and it asks: "do you agree to pay 0.005$ per page while you visit this site ?" With an optional cgi being called back on the site in case you aswer yes. And somewhere within the browser options lie the CC reference (or paypal or whatever). It would make it convenient to use, which is the main things missing from all current micropayment choices. The time it takes to enter registation, value, references, etc... is not worth 0.005$.
Non-Linux Penguins ?
Micropayments are a solution to a non-existent problem. The advocates of micropayments say, "That won't stop us! Let's create a problem for it to solve!"
No, no, no. It makes a lot more sense to bundle products than to try to sell them for such mincemeat. As a vendor I would never want to sell someone something for even $0.05, let alone $0.005... it would cost more to even *think* about followup on bogus/stolen credit card numbers than to give the stuff away free to begin with.
Sorry, Norma, some things are simply not profitable and some things are not worth breaking into tiny pieces. Give them away then sell them the good stuff for some real pocket pony.
Micropayments is one of those subjects that is a good litmus test of whether somebody is a business-savvy geek or just a hopeless geek.
If anything we should be supporting legislation to Ban the Penny, not divide it even further!
The difference between the physical world and the internet is immense.
In the physical world, just moving a sheet of paper from your headquarters to a store where someone might buy it is going to cost you quite a few cents. And in addition, even if you manage nearly-free distribution nation-wide, you are missing out on BILLIONS of people who might be interested.
So, the internet drops distribution costs to almost nothing (hence the $0.005/page), and it gives you a much bigger audience, from which the cost can be dispersed, so each individual can pay less over-all.
Indeed. The old methods work for some people. However, the world isn't on-size fits all. Most TV is ad-supported as well, but not ALL of it. The fact that one method is working for many people does not mean that nothing better should ever be worked on.
Now, I should suffix this by saying that I am not a fan of micro-payments. I fear the day when most of the internet has been converted into pay-as-you-go. With ads, nothing has to be locked-away, kept secret, etc, so the internet has become a huge repository of information. Once a good number of sites support themselves by not giving you access until you pay (even a trivial ammount) search engines will die, and the web will be practically useless as an information repository, a method of research, etc. It will all turn into one big wherehouse, where everything is a closed-box product. I know people expect payments to work like they do on
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
This is a significant problem - especially if micropayment systems are made as easy to implement as, say, the google adwords system.
Johnny Bee - the world famous 15 year old mixmaster - opens a site offering MP3s of his latest crappy homebrew mixes for a micropayment of 10c. His site serves out of his DSL and fails to serve 50% of the MP3s requested.
I'm also a kid. I like Johnny Bee. Well - I found him on Google and throught it was cool to rap about muthafuckas in the context of a spelling bee. I just clicked 'download for 10c' so I could shock my parents with my taste in music. I'm stupid. The download fails. I click the link again. I click refresh. I click the link again. Ad infinitum.
Oops - I just spent 20 dollars on fuck all! Bummer.
No its pretty unreasonable. The reason people first bought Atari systems was because they didn't have to put in a quarter for each play. Then people realized that computers could play the same games, but also get lots of other important things done.
So why should anyone expect a person owning a PC to pay for each play of a video game. We optimized that out long ago.
And I have not found too many places where you can actually buy music online. most allow you to rent it in their custom formats. Just a fancy DIVX without a timeout.