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Responses to Clay Shirky on Micropayments

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  • by epsalon (518482) * <slash@alon.wox.org> on Sunday September 14, 2003 @06:04AM (#6955978) Homepage Journal
    ... is that there's so many to choose from. The problem is all these micropayment systems don't interconnect with eachother. If I were to sign up with BitPass, I would have to pay $3 even though I need it only for a purchase of $0.25 The same goes for any other micropayment system. I think micropayments should be handled in a decentralized way, all the way from your ISP bill to the target vendor, using so-called "micropayment banks" in the process.
  • Microfraud (Score:5, Insightful)

    by nacturation (646836) <nacturation&gmail,com> on Sunday September 14, 2003 @06:05AM (#6955981) Journal
    If micropayments ever become ubiquitous, I think we'll start seeing the old "salami slicing" hack again. When a lot of stuff you do online costs a nickel here, a penny there, a dime elsewhere... you can rack of some pretty serious numbers of transactions just browsing around. After all, if loading that New York Times article linked to from Slashdot is only 2 cents, who cares, right?

    But perhaps some clever fraudster will see an opportunity here. Wouldn't it be easy to steal 1 cent a month from 1,000,000 people who use micropayments? After all, who's going to notice a line item titled "News article ----- $0.01"? So there's $10,000/month that nobody's really going to miss.

    And for a single penny, would most people take the time to make a phone call or write an email to request clarification on where that charge originated? Even if all you make is a pitiful $3.60/hour, that one penny takes a mere 6 seconds to earn, far shorter than the time it would take to investigate. And is the micropayment company going to investigate your 1 cent dispute? Likely they would ignore you or even just automatically refund your penny without much thought.
  • IMNSHO (Score:3, Insightful)

    by The Famous Brett Wat (12688) on Sunday September 14, 2003 @06:40AM (#6956041) Homepage Journal
    A good mechanism for micropayments would be a good thing, in and of itself, although I won't venture into the tricky area of what counts as "good" in a micropayment system. The mixed results of PayPal to date demonstrate the two-edged nature of a system for managing payments where the custodians of the money are, arguably, a little under-accountable.

    But cutting to the chase, if a good micropayment system does get invented, then it will seriously lower the bar on the "tip jar" concept. The overhead of deciding whether you want to spend a cent here and a cent there (especially on a site that you can't sample for free) is enough of a headache (even at low risk levels) to drive people away, but if your favourite webcomic has a tip jar, you might throw in a dime a day, or even a penny a day (he said, shamelessly resorting to Americanisms). Those things can add up if you have a big readership, and can overcome the expenses that Mr McCloud points out with regards to bandwidth and success being its own worst enemy.

    As for the sites that want to try the "you must pay me 25 cents in order to see this page" approach -- feh -- let them take their chances with the free market; I won't resent them in the unlikely case that it works. But in my not-particularly-humble opinion, voluntary payments [pbs.org] will be the way to go (see second and second-last paragraph of linked Cringely article).

  • Re:Microfraud (Score:4, Insightful)

    by Rogerborg (306625) on Sunday September 14, 2003 @06:50AM (#6956063) Homepage

    Correct! I did the sums on this a while back, and at $0.01 per transaction, you don't have much room for things to go wrong. You need a lot of transactions to amortise your fixed costs, which means a few big micropayment services rather than many small ones. Once you figure a crack for one of the big payment services, you can cream it pretty much at will, because as you so rightly point out, the cost of investigating any given transaction vastly outweighs the cost of the transaction.

    You'd need about 10,000 transactions from one source before it's worth taking action, but then the question becomes: how much do you spend to find and associate those 10,000 fraudulent transactions? The only real strategy is to ignore all but the most blatant and clumsy fraud, but then it's simply a question of whether you can cover your fixed costs while being bled slowly to death.

    MIcropayments are based on trust, and that's in pretty short supply online.

  • by skizz (9994) on Sunday September 14, 2003 @06:54AM (#6956070) Homepage
    McCloud makes the point that no-one is going to pay for Joe Random Blogger's thoughts, But they will pay 25c to an artist who they know will give good value. 10 million iTune users can't be wrong.

    Personally I'd rather pay 25c to give a site a try than give away my credit card details and subscribe for a year to a site I might never read.

    And you can join BitPass using PayPal - so its hardly difficult. And yes I have. And yes it is worth 25c.
  • Art IS a commodity (Score:4, Insightful)

    by Pflipp (130638) on Sunday September 14, 2003 @07:00AM (#6956084)
    Being an "artist" myself, and even having vague plans at earning my money with this after my (unrelated) study, I'm afraid I must disagree with McCloud saying that art isn't a commodity.

    Funny though that Dictionary.com has a rather interesting definition [reference.com] of the word "commodity" with relation to McCloud's comments, but I'm sure that McCloud tries to say that a commodity is "something that you can just take for granted".

    We may not realize this, but our "modern" culture, like any other culture before it, relies on the availability of the art that underwrites it. Belonging to a culture is still something that is expressed through music, art, fashion and religion. People don't like restricted access to culture. Music, cartoons, whatever art it is that you like, it becomes part of your life, and part of your culture. (Striking example: how many `80's songs do you like to hear, while you agree at the same time that they suck -- just because you grew up in the `80's and you can share something with your friends through this music?)

    Life, even in our Western world, would not be so nice if we all threw out our stereos, radios, comic strips, TV's, bioscopes, monuments and ALL other ways in which we access art, and thus culture.

    Art is a gift to culture, and should thus be a gift to the people. Like anyone else, artists should make a living. They should definately find some way to calculate their hours of work into their products. But the art should be free for all of us willing to enjoy and extend it (bar stuff like trademarks that put some structure in the "development process" of our art).

    Now get out there and start making business models again! ;-)
  • One only has to look at the Internet adult entertainment industry to see that micropayments are already a working solution.

    People will pay for content if it's something they actually want. Micropayments using a prepaid scheme are much more attractive than conventional credit-card systems because they are (a) anonymous, (b) transferrable, and (c) cheap.

    I think the discussion in the article is entirely skewed because the author looks only at conventional content, and even a cursory look at the Internet demonstrates that supply far outweighs demand: there is an almost inexhaustible supply of prose, music, humour, and news. Why would you register for such content, let alone pay for it?

    Basic economics: make something people want, and can't get elsewhere, and they will come and pay for it.

    Blaming the payments scheme for weak products that no-one wants is surely a mistake.
  • by CGP314 (672613) <CGP@ColinGrego[ ... t ['ryP' in gap]> on Sunday September 14, 2003 @07:23AM (#6956130) Homepage
    Micropayments, small digital payments of between a quarter and a fraction of a penny, made (yet another) appearance this summer with Scott McCloud's online comic, The Right Number, accompanied by predictions of a rosy future for micropayments.

    To read The Right Number, you have to sign up for the BitPass micropayment system; once you have an account, the comic itself costs 25 cents.


    Right there. Did you see that? That's the problem with micropayments.

    I don't know this guy and I don't know his comics. Why am I going to hand him a quarter to read his stuff?

    Sure, if he is already established in his niche on the 'net, he can make a good living. But, if you are just starting our, micropayments will guarantee the death of your site. No one will pay for a site, um, sight unseen.

    I'd love for people to pay a penny to read my weekly London Journal [colingregorypalmer.net], but I know if I asked for it first, I would never get any new visitors.
  • by Anonymous Coward on Sunday September 14, 2003 @07:26AM (#6956136)
    The total invasion of privacy inherent in the micro payment model is beyond belief. A micro payment record of each and every place you go or document you read etc. The ability to profile people to this degree is the dreams and aspirations of those who would have a totalitarian state.
    Unless they can figure out how to deduct micropayments from a phone card or some other device that can be bought locally for cash over the counter, they better nix that idea but quick. Come to think of it, there's no good reason to give out a persons whole credit card information or even their name for that matter for anything viewed or downloaded directy from the internet. Identity theft or credit card fraud can't happen to you if you never give out that information. No computer system administrator in their right mind would surf the internet with their "ROOT" account so why do we all make purchases on the internet with our "ROOT" credit card accounts. We need cash user account cards for our credit cards or prepaid Visa or Master card debit cards. Then figure out how to use micro payments with them. First things first.
  • by WegianWarrior (649800) on Sunday September 14, 2003 @07:50AM (#6956182) Journal

    On the face of it, government involvement seems like a good idea. However, what about all we non-US citizens? Could we all count on our respective governments to cooperate and allow micropayments to really flourish? Or will 'international' users find themselves unable to access bits of the web?
    I'd much rather see the internet community develop a useful standard that can be easily adopted by vendors...perhaps such a thing already exists? A technological solution is always better than a government mandate.

    Lets face it; over the last few centuries, who is it that has managed to develop several convinient systems for transfering money internationaly - often embracing the latest technology to do so? It's not the various goverments... it's the banks. The banks needed a way to transfer money from one place to another without physicaly moving it, so various system was developed. They even manage to make a profit out of it.

    Now, if the banks got their act together and launced a simple to implement system for micropayments - possible just nationwide as a start - I believe that it might take off. As more and more people saw that the system worked, more and more would pick it up; allowing, for instance, slashdot-readers to pay 0.01 cent to the owner of the website we're pounding into rubble, allowing him to pay his ISP for more bandwidth for a limited time. Off course, this could work for pr0n as well, letting you pay for just the pictures / movies you download rather than to pay for all the crap you'll never bother seeing once you realise that all the stuff you just handed over ten bucks for sucks chunks.

  • Good stuff? (Score:3, Insightful)

    by CGP314 (672613) <CGP@ColinGrego[ ... t ['ryP' in gap]> on Sunday September 14, 2003 @07:53AM (#6956187) Homepage
    In fact, the good stuff is becoming easier to find as the size of the system grows, not harder, because collaborative filters like Google and Technorati rely on rich link structure to sort through links.

    I disagree. If I type in 'good weblogs' to google, I still get a bunch of crap I'm not interested in. Why? Because my idea of a good weblog doesn't necessarily match up with everyone else's.
  • Re:A missing point (Score:3, Insightful)

    by rollingcalf (605357) on Sunday September 14, 2003 @09:50AM (#6956528)
    Going to dinner, buying a chocolate bar or taking a ferry are transactions that are big enough in size that the price of the actual item itself dwarfs the mental transaction costs. It's generally not a big bother to spend 25 cents of mental time and effort on deciding whether to buy a $15 dinner or $2 comic book, but when it's 10 cents of time and effort to decide whether a 1-cent article or web page is worth it, it becomes very discouraging to the customer.
  • Shirky's Folly (Score:3, Insightful)

    by Dan Crash (22904) on Sunday September 14, 2003 @12:40PM (#6957388) Journal
    If I'd known responses to Clay Shirky's article would get their own thread, I would've waited. Here's a crosspost of my original response [slashdot.org].

    By way of setting up a straw man, Shirky asks: "Would you pay 25 cents to view a VR panorama of the Matterhorn?" As if one's personal preference for Matterhorn photography had anything to do with the success or failure of micropayments.

    Make no mistake; like ALL business ventures, some people will fail with micropayments. Some will fail because they didn't know how to market their product, or because they set their prices too high or too low. But so what? That's endemic to capitalism, not just micropayments. Just because Crystal Pepsi failed doesn't mean capitalism itself is a failure. Engaging in these kind of arguments is a beginner's mistake, and most of Shirky's thoughts on micropayments surprisingly and unfortunately exhibit this same kind of sloppy thinking.

    His "mental transaction costs" argument, for example, is predicated on users being forced to engage in one or two cent transactions every time they want to view a page. But most micro advocates have abandoned this line of thought. The idea of charging a penny-per-page is history. What they want in the 21st century is the ability to sell their products -- songs and webcomics, mostly -- at a fair price. And micropayments enable them to do that. Shirky endlessly flogs the dead horse penny-a-page model, but conveniently ignores the 99-cents-a-song model that's made iTunes Music Store such a success.

    Scott McCloud himself writes that 1,354 readers bought Part One of "The Right Number" at 25 cents a pop. Considering that he was the very first BitPass seller ever, and that everyone who wanted to see his comic had to go through the effort of signing up for BitPass, that's remarkable, and worth talking about. It certainly flies in the face of Shirky's assertion that consumers on the internet are so lazy and indiscriminate in their tastes that they'll bolt to free content at the first opportunity. Scott's readers had to not only pay, but go through the effort of risking $3 signing up for a new, untested service. Scott's experience demonstrates that failure to get people to pay for your product has everything to do with your relationship to your audience and nothing to do with micropayments. But Shirky ignores it all the same.

    Finally, Shirky's views on micropayments completely fail to address the idea that micropayments can work with other forms of payment, such as subscriptions or bundling, instead of replacing them. Buying content ala carte may be the step that convinces you to subscribe to a site, for example. Micropayments aren't an either/or, they're an and. One more choice, not one less. And of course, micropayments can work exceptionally well alongside free content. Any public television pledge drive shows this principle in action; even small tchotchkes can induce many people to donate. Any thoughtful analysis of the future of micropayments ought to examine this phenomenon, but Shirky doesn't.

    In some ways, it's nice to see that Shirky hasn't changed his tune. At least he's willing to go down with the ship. But his analysis is -- by any standard -- unbelievably shallow. As the market for micropayment content increases, it will be interesting to see how he tries to spin reality.
  • Cost vs. Value. (Score:3, Insightful)

    by AnotherBlackHat (265897) on Sunday September 14, 2003 @09:39PM (#6960528) Homepage
    There is a big difference between micro value payments, and micro cost payments.
    The inefficiency of all electronic payment system is huge.
    Bitpass charges between 5 - 15%, and it's one of the best in terms of money taken out of the system.

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