This is wildly incorrect. $ billions have been transacted as micropayments in social games[1]. The key to their success was bulk purchases of intermediary "currency" that frees players from the mental energy of thinking about actual money (its a sunk cost because the currency can't be redeemed).
[1] Distaste for social games and the business model does not invalidate the financial success of their implementation of micropayments. Note: I started a micropayments company.
Charging $10 is accepted by the paying consumers, being nickel-and-dimed isn't. Even in the "micropayment" games.
That's it right there. That's the "what". :)
Paying 0.01 cents to someone is quite different from paying $5 to that same someone that gets delivered in tiny portions over some span of time.
In the first case, you're out a tiny fraction of a cent. In the second case, you're out $5.
Because (AIUI) the money movement system makes it prohibitively expensive to move fractions of cents around, micropayments don't happen.
Puts $5 each month into a bucket, and then each time you visit a site you pay a few cents in order to have an ad-free experience.
In short: I don't think the "skinner box" model is relevant to web content. I can't set up a pain/pleasure response in readers and condition a tiny fraction of them to pay vast sums after 10 to 50 hours of engagement. That's not an option in journalism.
(Not that this has stopped the FT from trying it: $1 for a one-month trial, $480 a year for a subscription. I wonder how good the conversion rates are?)
I (and it appears a significant number of others) ended up paying for the Economist - the 10 articles free / month was conditioning enough.
Web content and gaming aren't remotely the same. Micropayments in gaming is almost akin to gambling for many games. Then there's the whole "pay to win" aspect, and "pay to play" aspect where you have points or stamina that gets eaten/spent as you play. When it reaches zero, you need to wait hours for it to recharge, or pay to recharge.
Web content is like buying a magazine in a store, or a newspaper from a gas station. It's nothing like mobile gaming.
I set up an account, put some money in it, set a $20 monthly limit, hook it up to soundcloud and github, and then every time I "like" a song or "star" a repo it adds them to that month's list. At the end of the month it divides the $20 between everything I enjoyed most that month.
A similar system would probably work for ALL web content. But as always this gives the control directly to the consumer and big companies don't like that at all.
With the obvious proviso that it would need to be simple enough for everyone to set up in order to get the traction necessary to be useful. Simple enough for everyone means one button with a single 'Yes please' screen (eg OAuth). Anything more complex than that is destined to fail.
And similarly, how do you prevent fraud? WAP was a walled garden experience; if I can send money to any site on the Internet by clicking a button, what's to stop a malware author from using their malware to send lots of clicks (and thus money) to a site they run?
Technically, micropayments aren't a difficult problem to implement. The business rules around financial transactions (which exist for good reasons) often present an intractable conflict with what would be a viable user experience.
Already happening with pay-pr-click ads etc.
Micropayments would be a different story since the money would be coming out of individuals' pockets.
Now, you can remove the friction by devising some automated system that pays sites some amount of money based on how long you spend there, but then you have to build an entire fraud-detection system to make sure people don't try to game the system and take more money than they are owed. This would add significant transaction costs -- and these costs would be high enough that very small transactions would no longer make sense to process. Keep going down this road and you'll eventually realize that you're just another credit card payment processor and have a similar cost structure. Bitcoin solves none of this, btw - you still want to make sure whatever micropayment scheme you use doesn't hand over your Bitcoin to a fraudster.
So now we're back at the user being the "filter" for good vs. bad transactions by making them explicitly authorize those transactions. And the friction problem you describe is very real: something like 90% of buy flows are abandoned at the credit card entry page. Micropayments are an intractable problem in my mind; they would solve a lot of business model problems but I don't know that they're very attractive to consumers.
I'm interested in this statistic, do you have a source?
Are you saying that 90% of all buy flows are abandoned at the payment stage while x% are abandoned at another stage and <10% are completed or are you saying that 90% of all abandoned buy flows were terminated at this stage? In case of the latter it seems like knowing what percent of all buy flows become abandoned would be relevant to your point.
Also, was this data collected from one vendor/industry or from multiple sources? I'm also curious if the study examined cases where the "pay now" screen already had the customer's payment information (e.g. for a pre-existing customer).
I bought some electronics today; I ended up almost placing an order at three different distributors until I found the one I wanted.
It varies quite a lot based on how your individual buy flow is set up. I personally prefer to be up-front about pricing with people; it skews your metrics if you make them get to the credit card entry page just to see a price. Regardless, if we're talking a SaaS buy flow the conversion rates are usually far worse: your best case scenario is that 3% of customers who sign up for a free trial will convert.
Honestly, this is a case where A/B testing helps. Build both buy flows, measure the outcomes you care about, and go with the one that produces the result you're looking for. This assumes you have sufficient volume for A/B testing: if you don't, you shouldn't be focusing on optimizing your buy flow, you should be focusing on traffic acquisition :)
Such scheme being HTTPS? Unless you are speaking about "stolen content" which basically boils down to the fact that copy costs nothing and nothing in the world will solve this.
When texting started it was almost universally $.25 or $.10 or so per text. One would definitely be aware of that fact when communicating with friends but you get over it because it's useful.
Wait I have another example, $0.99 songs via iTunes. That was the model that created the largest music retailer in the world from whole cloth.
It's not that complicated, all it would take is for someone (gee I wonder who) to standardize the price (or price tiers) and have a quick modal OK to continue on to the article for one credit, or equivalent.
A $0.99 song from itunes isn't a micropayment. It's a dollar paid for a music track you are likely to listen to over and over. Additionally, you knew what you were buying because you heard the music for free on the radio or in a club.
Journalistic work doesn't fit the iTunes model. News and blog posts tend to be fire and forget. Nobody will pay $1 up front, and once they've consumed the content once, they no longer need to pay for it.
When texting started, it was free until the phone companies figured out that my wife and spent more time texting for free than we did talking for money. When I'd be on the road, we texted until our thumbs had callouses. Imagine our disappointment when Verizon (and everyone else) started charging for it. (Caveats: U. S. on Verizon using pay-as-you-go phones, and at least 12 years ago.)
In my opinion iTunes is an outlier due to several factors: 1. The tie-in with the hardware (Apple iPod), 2. High-profile discussion about piracy and "punishment" avenues that were being discussed prominently, and 3. Steve Jobs working in the background to capitalize on 1 & 2 for very favorable terms with record labels enabling the price point (which was again maneuvered by Tim Cook with iTunes Music getting good deals for the new service).
You couldn't just buy one track before. Now you can for $.99. You couldn't send a text message at all before.
Try $.10 per email and see what traction that gets.
The market, like all markets, is defined by people's willingness to pay and their next best alternative. Make the transaction cheap and nearly frictionless and it might be the choice with the highest utility.
So... pretty much every web paywall I've ever encountered. Where's my amazon 1-click for news website paywalls? Several of which I encounter using this very site?
I don't want to create an account, subscribe, save my details, unsubscribe from services I no longer use, etc. for each individual website.
You don't want to be deciding whether to pay on every little pageview.
I agree with the above, but disagree that this makes micropayments for online content a futile venture. There are a couple ways that come to mind to solve the mental fatigue issue:
1. Automate all the payments
2. Automate all the payments w/ a cap
3. Automate payments from whitelisted domains
4. Don't automate payments, but ask to whitelist new domains (similar to: "remember me").
These could all just be user preferences, just as described in the post.
The other three all fall on the sword of "should I pay $0.05 for this mouse click?". If the user ever has to ask himself that question, the game is up.
The whole thing basically heads face first into net neutrality territory.
That said, back during for pay phone services the service got paid by the telco, and then the telco added the cost to the callers bill.
So should perhaps my ISP bill me for my Netflix viewing, rather than me paying Netflix directly?
http://szabo.best.vwh.net/micropayments.html
Amazon's recently come up with $10/mo all-you-can-eat book purchase plan.
Think about it this way. Businesses need stable, predictable income. If they depend on "micropayments," then they would depend on producing consistently high quality articles. I am a subscriber to the New Yorker. They have some of the best writing out there -- but some of it is just not that good, in my opinion. And yet, I still pay for it.
A subscriber is willing to forgive bad content -- and still give you money. You're able to build a relationship, and ask for the money once (a year), not constantly.
$70 * 1,000 subscribers = $70k a year. Plenty to support the livelihood of a good writer.
How many "micropayments" would they need? What if they struck out a few months in a row?
They'd have to find another job.
As a new visitor I might click the flattr/contributor button (equivalent to "+1"), then when reviewing a statement I realise that I am visiting your site a lot, so switch to subscription instead.
The core issue is people recognising the value of good journalism or tech writing in terms of dollars, and being willing to pay for stuff that is worthwhile. After that the problem is only removing "friction" in getting a payment to the publisher.
Related in a way: How people can easily waste "energy" because it takes no "mental energy" to do so. Each time you turn on a light or decide to leave a light on (or even drive to a store) you are not confronted with "going to drugstore, cost 1.23, proceed?". ".10 to turn light on for 1 hour, proceed?" The cost is hidden and given to you in bulk. You just have to decide generally that spending $35 per week for gas is "worth it". (Along with other fixed type expenses).
It's interesting that the opposite of netflix was the video store, even with a monthly plan and no cost per DVD. You would have to get to the store, review the available movies, and then decide which one to rent. All along knowing that if you got home and didn't like the movie, you'd have to trek back to the video store and repeat the process. In that case, and even assuming the cost was $9.99 per month, you are closer to having a "cost" and energy (physical and mental) than you do on netflix.
On netflix the mental energy requirement is there as well but not the same as a video store obviously. You still have to cue up the movie, watch some of it, and then decide when to stop watching (3 minutes in, 20 minutes in etc/) if it doesn't appear to be what you like. This is after spending some thought to what you want to watch in the first place.
Which brings me to my point. One of the things that I have learned in business is to not make people have to think, that is to make it easy for them to make a decision. Instead of giving them 20 choices only give them 3 or 5 choices. People I have found, at least with things that I have sold, like this a great deal.
Every single example provided by the author takes one of two formats. Either you pay a monthly bill for "all you can eat," or you make discrete payments of $1-$2-$10. These are the models that work.
It's not that your article isn't worth a nickel, it's that it's not worth my mental energy to debate whether to spend a nickel.
It is not a question of whether it is built into your phone, your browser, or any other platform. It's what's built into your brain. "Pay as you go" is incompatible with the observed preferences of consumers.
I'm sure that most sites that rely on advertising would have rather been paid directly by consumers, such that they would not have to rely on ad networks or other third parties. But consumers don't want to spend a penny or a nickel at a time. It's not worth the mental transaction costs. Ad views were the only realistic way to squeeze a penny out of a page view.