Are Micropayments Making a Comeback? As a means to pay online content, micropayments are being discussed again. Micropayments don’t have a track record. Here are some recent articles on the topic:
- Black Star Rising
- Michael Kinsley: You Can’t Buy News by the Slice – NYTimes.com
- Why small payments won’t save publishers Clay Shirky
- Don’t Dodge on The Next Big Thing. The difference between FREE AND 1 Cent?
- Scott Rosenberg’s Wordyard >> Blog Archive >> Isaacson’s pitch for micropayments
Even though I may not agree with every argument, I am here to support the skeptics. The idea is not something I disagree with. It is actually quite unfortunate that we don’t have better ways to monetize value-added content. However, micropayments are not a viable option.
Are Micropayments Making a Comeback?
This discussion has many threads. I will try to separate some of them here.
The iTunes Music Store (ITMS), is presented as an example for a micropayments scheme. It’s not something I believe in. One, the amount involved ($1 give-or-take) is more in the realm I refer to as “midi payments.” Micropayments are more like a penny, nickel or dime. It is what I would pay to read a newspaper column or magazine article. Songs are different than short-written pieces. We have heard them all before, and we are buying them because they sound good again.
The problem with transaction costs. Clay Shirky is one of the many who have raised the objection to micropayments. Technology can help reduce some of these transaction costs (the actual cost of gear, bandwidth, and so forth). technology can reduce transaction costs and make it easier to pay. The buyer must still make many individual purchases. When it comes to purchasing things, there is a wide gap between cheap and expensive (even very inexpensive).
Subscriptions don’t always work. However, it is not clear to me that there are other options to nickel-and-diming (to borrow Sharky’s phrase). Rhapsody and other subscription-based music services aren’t very popular. Although I enjoy it, it is not my favorite. I think the Wall Street Journal is an exception that brings very specific value to those who are willing to pay.
Micropayments don’t work in today’s Web environment as well as they did during the dot-com boom. This is partly because people are used to getting free news and other content from the Web. Even though there are many duplicate news sources, and that often relies on major news agencies for source material, there is more news. Linking and search are fundamental drivers of traffic. Subscription-only content will always be behind a paywall, so anything behind it will have a significant traffic hit. This not only makes the content less relevant, but it also reduces ad revenues.
Micropayments are back in fashion, but not because of technological changes or consumer behavior. The alternatives have also largely failed. Online advertising is ubiquitous, it does bring in revenue. However, the revenue seems to be more suited to blogs that produce quick-hit posts rather than traditional news organizations with editors and investigative reporters.
I can’t predict which model/models will be most popular with newspapers and their successors, how that industry will develop, or what we may all give up as a collective because we don’t want to pay for certain things. Micropayments are an appealing idea, but it doesn’t work in all cases.
