[Dave Birch] I've always been interested in the potential for micropayments and the idea of a metaphorical "red button" on a keyboard that means "pay the owner of the web page I'm looking at 10 pence" or something similar. There are many times when I've come across an interesting or useful blog post, link to a magazine article or something and I would have happily paid a small amount for more detail, more links, more references. I certainly can't be bothered to type in usernames and passwords, credit card details or to take out subscriptions though. So I have the sense -- despite all of the reservations about micropayments, which I understand fully -- that there is a market out there and a synergistic link between an effective low-value online payment system and a vigorous and innovative sort-of-content but also sort-of-relationship set of businesses on top of it. This view has been a minority view for some time, because the advertising-supported model came to dominate the content space. Yet, as I said last year, that model is not obviously the best solution, nor is it an immutable law of the web:
Therefore, while it is true to say that there is little demand for new micropayment mechanisms to support paid content at this time, I would not rule out a resurgence of interest in more sophisticated micropayment schemes in the future.[From Digital Money Forum: Microebb and microflows]
While watching Jon Stewart's Daily Show the other night, my interest was re-kindled by his interview with Walter Isaacson of the Aspen Institute. Many years ago I used to be one of the lecturers/facilitators for the European branch of that august body, the then Nortel Aspen Institute, so he caught my ear (so to speak) when he started talking about paid content, journalism and the future of news. A quick google revealed that he'd actually written a story about this for Time magazine, in which he referred to the odd paradox of content that has been noted here before.
Thus we have a world in which phone companies have accustomed kids to paying up to 20 cents when they send a text message but it seems technologically and psychologically impossible to get people to pay 10 cents for a magazine, newspaper or newscast[From How to Save Your Newspaper - TIME]
There are some immediate explanations that spring to mind: perhaps people ultimately value communications more than content (which I believe to be true to a great extent) or perhaps the content isn't actually worth 10 cents (which I also believe to be true to some extent, especially since I'm writing this on a train, having finished reading the free newspaper given to make at the station) or perhaps people just won't pay for news but that means nothing for content in general (entirely plausible. But the technological determinist in me is drawn to another explanation: people won't pay 10 cents for stuff on the Internet because they can't, whereas they will spend $2 for a stupid ringtone on their phone because they can. Perhaps the technology is to blame. Isaacson goes on to say just that.
We need something like digital coins or an E-ZPass digital wallet — a one-click system with a really simple interface that will permit impulse purchases of a newspaper, magazine, article, blog or video for a penny, nickel, dime or whatever the creator chooses to charge.[From How to Save Your Newspaper - TIME]
Put the news part of this to one side and ask why don't we have this? It's not like micromint, hashcash, millicent et al didn't work. In fact many of them had very good technology inside them and many of them had some great ideas built in (I always liked the way that millicent, for example, changed the cursor to a "$" sign when you moved the mouse over a link that you would have to pay for). And it's not like no-one has a working micropayment system: on my iPhone I pay for data, for voice, for applications, for text and I make 59p micropayments for music all the time. But can the iTunes example tell us any more? Clay Shirky, who has been consistently sceptical about micropayments asks a very specific question about this:
small payments survive in the absence of a market for other legal options. What’s interesting about ITMS, though, it that it contains other content that illustrates the dilemma of the journalists most sharply: podcasts. Apple has the machinery in place to charge for podcasts. Why don’t they?[From Why Small Payments Won’t Save Publishers « Clay Shirky]
This is a good point, but is Clay right? I already do pay for podcasts -- I support the Conversations Network -- and, oddly, there is a lot of podcast content that I would pay for that is actually free -- some of my favourite podcasts, for example, such as Dan Carlin's Hardcore History or Skeptoid -- despite the existence of a working payment system through my iPhone, so clearly there is another business model emerging as well, one that was sagely summarised many years ago by Esther Dyson as "content is an advertisement for a relationship" and it's the relationship that is going to be monetised, not the content at all. But let's focus on paid content for a moment. Some of the responses to Isaacson's piece have been rather negative, and there's no doubt that the relationship between content, journalism and the net is a complex one.
I'm not saying that problem is insoluble. Just that, as far as I know, no one has solved it yet[From Poynter Online - Romenesko]
We can begin to look for solutions by narrowing down the options. I suppose I start from the general perspective that "proper" news is a good thing and that we ought to have some of it instead of the musing of the celebretariat.
There’s no guarantee that private demand will produce the socially optimal quantity of investigative political reporting.[From A Voucher System for Investigative Reporting - Freakonomics Blog - NYTimes.com]
If a free press is a public good that cannot be satisfied by private demand, then it doesn't matter one way or the other whether we use micropayments or not: we will have to come up with more radical solutions to the problem of news provision (as opposed to the narrower problem of how to save newspapers).
Newspaper readers have never paid for the content (words and photos). What they have paid for is the paper that content is printed on.[From Op-Ed Contributor - You Can’t Sell News by the Slice - NYTimes.com]
So it may well be that news is a very special case of content and that it needs very special solutions. Indeed, I will be chairing a seminar on this topic at the Free University in Brussels on 19th March 2009 (for the Fleet project) and hope to develop my opinions further there.
News aside, then, where can we look to for some ideas for other kinds of content? If we think again about iTunes again, I use iTunes to buy music that I could download for free from the web. Someone with lots of time on their hands and no money might well opt to download an illegal copy of AC/DC's new album rather than buy it on iTunes as I tried to (but couldn't because AC/DC don't make their albums available on iTunes -- so no sale, guys). Would they pay for it if there was a micropayments solution? Probably not. So we can see that one design goal might be for a payments solution that helps people to do what they want to do anyway, rather than one that tries to stop them from doing things that they want to: don't make the micropayment scheme part policeman, part bouncer.
Who could provide a solution? I just can't see how it can be banks: they don't have the cost base to make an alternative viable and they couldn't earn the margins (even on substantial volumes) to make it a worthwhile investment. One thing banks do have is the customers, and the customer interfaces. But other people have these too, and they wouldn't need the depth or complexity that banks have with respect to "traditional" payment schemes. If you buy a pack of gum for 50p and then you don't like it for some reason, you can't go to the Bank of England and ask for your 50p back. But if a shop sells lots of bad gum, and lots of people complain to the Trading Standards or Better Business people, then action can be taken. This ought to be easier to manage on the web than off it and it links with elements of the reputation economy concept.
My guess is neither MySpace nor Facebook will launch a direct payments platform. There’s just too many headaches to deal with - fraud, chargebacks and security issues bring real costs and real liability. Duplicating PayPal’s infrastructure just isn’t cost effective.[From iPhone, MySpace, Facebook Race To Micropayments In 2009]
Once again, we're back looking at the connectivity providers. The ISPs, the telcos and the mobile operators. They have the customer service, the billing relationship and the customer base so it's natural look at building something out of the micropayment technologies that they already use: premium-rate SMS, stored value and postpaid billing. But perhaps there's a dark horse. Despite the flurry of press releases from this week's Barcelona bash, the NFC world has been getting despondent about the handset manufacturers and operators getting their act together to offer mass market payment services to the general public, and they both get really upset with me when I mention stickers. But suppose we begin to look at contactless prepaid as an opportunity not just for retail POS but for online? Sony have been selling their contactless USB interfaces in Japan and they are plugged into PCs and Playstations by the millions.
The PaSoRi is barely larger than a credit card and weighs just 35 grams. It works with the Windows XP and Vista operating systems, including the Media Center Edition, and needs Internet Explorer version 6 or 7. Mac users are left out in this move toward a cashless society.[From Sony brings home the convenience of FeliCa | The Japan Times Online]
Customer use these to buy train tickets, load their cash cards, pay for online games and so forth, but here I'm thinking about the loading and spending of pre-paid e-purses for low-value payments. If there is someone out there looking for an opportunity to innovate in a recession, I can think of significantly worse ideas than bringing digital money (and, incidentally, digital identity) to the web by putting contactless stickers on the backs of mobile phones and selling USB contactless interfaces to implement standards that already exist:
- Want to stop Mum & Dad from logging in to your Facebook account kids?
- Want give customers easy access to home banking?
- Want run an OpenID 2FA service that's sexy and simple?
And, of course, being able to read a blog that costs 10p by doing nothing except putting your phone on the USB reader next to your laptop (or built in to your laptop, as they increasingly are in Japan). This may be a combination of utility and ease of use that finally gets us into some new ways of dong business online.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]