Micropayments failed because users hate them[0]. They would rather pay more for flat rate plans. Here's an excerpt from
The Case Against Micropayments [1]. It's an old paper, but human behavior hasn't changed.
Behavioral economics, the study of what had for a long time been dismissed as the economicly irrational behavior of people, is finally becoming respectable within economics. In marketing, it has long been used in implicit ways. One
of the most relevant findings for micropayments is that consumers are willing to pay more for flat-rate plans than for metered ones. This appears to have been discovered first about a century ago, in pricing of local telephone calls [13], but was then forgotten. It was rediscovered in the 1970s in some large scale experiments done by the Bell System [3]. There is now far more evidence of this, see references in [13], [14]. As one example of this phenomenon, in the fall of 1996, AOL was forced to switch to flat rate pricing for Internet access.
The reasons are described in [19]:
What was the biggest complaint of AOL users? Not the widely mocked and irritating blue bar that appeared when members downloaded information. Not the frequent unsolicited junk e-mail. Not dropped connections. Their overwhelming gripe: the ticking clock. Users didn’t want to pay by the hour anymore. ... Case had heard from one AOL member who insisted that she was being cheated by AOL’s hourly rate pricing. When he checked her average monthly usage, he found that she would be paying AOL more under the flat-rate price of $19.95. When Case informed the user of that fact, her reaction was immediate. ‘I don’t care,’ she told an incredulous Case. ’I am being cheated by you.’
The lesson of behavioral economics is thus that small payments are to be avoided, since consumers are likely to pay more for flat-rate plans. This again argues against micropayments.
[0] https://web.archive.org/web/20180222082156/http://www.openp2...
[1] https://www-users.cse.umn.edu/~odlyzko/doc/case.against.micr...