Misunderstanding Micropayments (2003) | Hacker News Reader

Misunderstanding Micropayments (2003)

scottmccloud.com

41 pointsTomte21 comments

@pg recently tweeted: "Prediction: Micropayments will happen, but the main beneficiaries will be new publications created to take advantage of them."

I'd love to hear from him and any others who think the time has come (or not), and what has changed or still needs to change. Such a huge percentage of CPC advertisements seem to me to be predatory, and yet that is what pays for Google, among others...

Shirky seems to have been entirely right. Microtransactions haven't really succeeded except inside games - and there they're successful but unpopular.

And, arguably, they've "succeeded" (for certain meanings of success) because the mental transaction costs are offset by the perception of sunk costs.

It's interesting to ask "what are people buying, if it's not exactly the game itself?"

Extensive research has been done on this and there seem to be various things that come up as popular ways of extracting money. Paying to overcome a slowly raising artificial barrier. Social status in competitive games. Gambling, usually disguised as "crates". "Whales". And kids who don't understand what they're doing but have been left alone to press the button that spends money.

You forgot "entertainment"

Gambling is entertainment.

And many people that play games with micropayments are doing so for entertainment. So why not mention the main and positive reason that people play games?

I think people are downvoting because what is interesting is the form in which the entertainment is being delivered. We're sort of presuming people buying games in any form are primarily buying entertainment.

Of course the bitpass website is dead, as are micropayments. Now we have all you can eat subscriptions.

I think the fundamental issue is there's too much stuff, if item A costs money, items B-Z are also available for free.

Bandwidth costs appear to be 0 now, you can pay to listen to music without also downloading a video, or download the video to listen to it for free.

Bandwidth costs are highly dependent on where you live and what you can pay for. In most of the developing world, people access internet through their phones primarily, on prepaid plans costing about $5 per gigabyte, which can be a significant part of a monthly income.

Where? In Cambodia 1.4gb costs $1.50. That's the cheapest I encountered but other developing countries in South East Asia isn't that much more expensive. Even Myanmar which has been on lockdown for decades and only recently got public sim cards is affordable for data.

http://www.cellcard.com.kh/en/prepaid-plans/xg/

Kenya, for example, has 500Ksh for a GB, which comes to about $4.92, USD; this is comparable to rates I encountered elsewhere in SSA.

Meanwhile, the less money you have, the more you pay! Smaller bundles cost more per GB, and many of the Kenyans I knew would regularly buy 150MB top-ups due to lack of upfront funds.

On AirTel in India, it looks like they charge about $3.88 for a 1GB bundle good for 28 days (there's a cheaper 1GB bundle good for 1 day, however, and some other deals available). There are also a few articles floating around on the _increasing_ cost of data in India, suggesting that companies started with cheaper data while establishing themselves in the marketplace, and over time have been more obliged to turn a profit instead of burning investor money on subsidized plans. Cambodia does look pretty cheap, though, I agree.

The other side of too much stuff is that if micropayments start being widely used, you won't be able to keep up with the costs.

We can see this with the App store where people complain bitterly about $0.99 or $1.99 prices.

Competition with free (from a direct monetary perspective) is certainly a problem with charging upfront for many types of content generally. However, that's not a problem that's especially unique to micropayments.

It's been a while since I've read it but Shirky's original piece most focused on the mental transaction costs with deciding to pay a nickel (or whatever) to read an article. Assuming you accept that argument--which I'm largely inclined to--nothing has really changed. The arguments against micropayments have never been primarily about technology. Sure, you need a way to make low-cost transactions very low friction and very low cost overhead but that's the easy part.

Subscriptions seem to be the way paid content access has mostly headed. The problem with making subscriptions more broadly apply to online text content is that you need to get a critical mass for a platform and you need to deal in some way with the standard issues of paywalls.

Micropayments dead? In-game purchasing alone has yearly revenue of how many billion dollars? It just doesn't look like people thought in the 90s.

On the web, not in Store walled silos.

A simple way to look at micropayments for content such as on websites:

If micropayments are used in addition to ads-- perhaps for premium content or premium sidebar sister content -- then micropayments are acretive to publishers and the only problem is convenience of payment.

If microtrans are to replace ads (or be offered as a choice to users instead of watching ads), then In order to embrace micropayments, publishers would need to see themselves making nearly as much from micropayments as from ads.

Say a typical publisher gets a $10 eCPM aggregate across all the ads they show on a page. That is 1c per pageview. So, would some users pay 1c per article? Say users read 100 articles a day across many sites: would they be fine paying $1/day to access all this content?

The actual range might be anywhere from a fraction of a penny to several cents per article/page, but we're in the ballpark.

To me, this sort of system could work. As a user, I'd go for it. But payment needs to be automatic and frictionless (after I authorize a site to charge me for views).

Those best positioned to enable such a microtransaction payments are browser makers. Next up are as blockers. Maybe Facebook as they aggregate so much content now, though this conflicts with their model. Google AdWords+Double-click could also introduce a user-facing option to disable ads in favor of micropayments which users could purchase in-bulk and then spend through over time by viewing pages, but this too would conflict with Google Ads' model and network effects in many ways. A third-party new entrant could also do this. Perhaps you'd subscribe or fill a wallet with a service which content publishers integrate and get authorized to deduct fractional-pennies per view from.

This sort of model would be a welcome change, from my POV. And the economics seem workable from a publisher's POV as well.

I would really love to see micropayments succeed. It seems to me it is the only alternative to ads, which can include malware, and websites making money through tracking.

Unfortunately, the fact the idea has been around so long but never caught on beyond a few areas makes me worry is simply is unworkable.

That said, here is an idea. I spend a lot of time on HN clicking on links. I would hate to have to spend time clicking a "send micropayment" icon every time I did that. But what if I had an arrangement with HN that every time I clicked on one of its links, HN would send a payment from me to the page I linked on?

YouTube Red seems to be a form of micropayments that works well. I signed up for the service as part of Google's July 4th promotion and its made YouTube so much better as a product. I assume the monthly fee is somehow distributed to content creators as a micropayment, as replacement for viewing an ad.

Your total spending is fixed. That's a subscription.

The artists also aren't looking at each playback as a transaction.

Youtube pays red share to creators by total minutes watched by YouTube Red users, each minute of playback is a transaction

Reply on news.ycombinator.com