Three years ago, I remember people were still frequently discussing micropayments. Micropayments are, as you may gather, very small payments which are too small to even justify costs such as credit card processing.
Several companies have tried to implement micropayments as a system for online paid content, as opposed to subscription-driven methods, but most of these ulimately fail.
In 1998, Jakob Nielsen predicted that micropayments were they way forward, as opposed to advertising or subscriptions, in his essay ‘The Case for Micropayments‘ but he obviously made a misjudgment and the advent of broadband internet saw many of his arguments (such as removing the need for advertising would speed websites up significantally, which would actually save businesses money) become significantally weeker.
In 2002, he came to the realisation that ‘we are not going to get true micropayments’ but we may get ‘services that rely on user payments’ with bigger payments. His latter prediction was partially right, as the likes of online music sites successfully utilise payments of up to about £1 fairly successfully, but £1 is much bigger than what a micropayment is.
Nearly three years after Jakob’s essay, a wiser chap called Clay Shirky published ‘The Case Against Micropayments’ which stated that ‘the short answer for why micropayments fail’ was ‘users hate them’ as it leads to anxiety and hesitation. Shirky was right, as they didn’t take off and still have not taken off.
Micropayments are not economical to administer. If each page online cost 1 cent to view, how much of that cent would be spent on administration? Like any payment system, you require staff, hardware, a processing system and perhaps most important time and effort. Would a small site’s webmaster be willing to put the system into place, making his website slower as it would have to call an external site, if he were to only earn about $0.0025 per page? I think not.
Another point: do users or businesses want to pay? I wouldn’t. I can easily read 5 small web pages a minute, and I would hate to be paying 5 cents a minute or $3 an hour. I think relevant advertising is the best form of monetisation as it gives users a choice whilst still giving them access, is economic for webmasters and advertisers, and it can help the user.
Micropayments don’t work and in my opinion nor does any paid content. 99% of the time, there’s a free alternative to any paid content. I hate it, though, when I can’t get access to some content – and sometimes paying isn’t even an option – such as journals hosted on JSTOR.
While I agree that it’s been an uphill battle, it still needs to happen — and the exchange fees charged by credit cards are one of the main obstacles to making it work financially. Ted Leonsis’s company Revolution Money is doing the best in this category right now, and I hope more people catch on to using it, to support the business.
BTW, the service can also be used just like PayPal, but without incurring any fees to the receiver (seller).
For more info, Google “revolution money” micropayments
and use the link at http://trone.net/revmo to sign up.
[...] boom. One notable failure was Salon. There are countless others, and a lot of discussion about micropayments and their problems. While I think that mixing advertising and content can lead to a conflict of interest, it has [...]
I recently read the book “Rainbows End”, and in it is portrayed a future where micro-payments are common for almost everything you do, in relation to the digital world… Thankfully I doubt this will ever become the norm. The book was written a few years back, during the time when micropayments were starting to be tried out by various online companies. Thankfully, for the most part, all attempts have completely failed, or did poorly.
Users HATE micropayments, plain and simple, and it is impossible to create a micropayment system that they like, due to the nature of such a thing. Doesn’t matter if content providers assume such a thing is necessary, when it comes down to it, micropayments are the result of greediness and capitalism run-a-muck.
It has nothing to do with the content creators liking it or not, the users will have the end say in this. And simply put, they wont participate in systems that use micropayments, microtransactions, or any other system that charges you frequent small fees for useless digital junk. Digital information is intangible, and extremely temporary. And such a payment system is EXTREMELY incompatible with digital freedoms, not just because users like free stuff… But because implementing a system of micropayments requires restricting the users freedoms, strict security, and often prevents the user from participating in creating their own stuff, or customizing.
The question is not should we use such a system or not… The REAL issue here, is that we need to start fixing the online money problem at the SOURCE… Which is broken due to the way service providers currently charge their users. ISPs over charge for internet, and limit bandwidth in ways which are simply not necessary at this point.
Broadband internet these days are getting much faster and cheaper too. :;~
broadband internet these days are dirt cheap, there are more and more broadband companies offering cheap service too”-.