Les Jones

They’re talking about micropayments. Again.

Saturday, February 7th, 2009 | E-commerce |

Via Michael Silence, I see that Time magazine’s Walter Isaacson is proposing that newspapers use micropayments to finance their Web operations. The idea of micropayments is that readers would pay a small fee - a quarter, or a dime, or a penny - to access content. Micropayments have been talked about ever since the early days of the Web. I wouldn’t hold my breath waiting for them.

Web interface guru Jakob Nielsen once boldly predicted that micropayments are the future:

I predict that most sites that are not financed through traditional product sales will move to micropayments in less than two years. Users should be willing to pay, say, one cent per Web page in return for getting quality content and an optimal user experience with less intrusive ads. Once users pay for the pages, then they get to be the site’s customers, and the site will design to satisfy the users’ needs and not the advertisers’ needs.

The punchline is that Nielsen made his prediction in 1998. We’re still waiting for that future to arrive.

Two years later Napster and other P2P applications revived the micropayments idea. Clay Shirky wrote the definitve counterargument to Nielsen’s thoughts on micropayments:

Beneath a certain price, goods or services become harder to value, not easier, because the X for Y comparison becomes more confusing, not less. Users have no trouble deciding whether a $1 newspaper is worthwhile - did it interest you, did it keep you from getting bored, did reading it let you sound up to date - but how could you decide whether each part of the newspaper is worth a penny?

Was each of 100 individual stories in the newspaper worth a penny, even though you didn’t read all of them? Was each of the 25 stories you read worth 4 cents apiece? If you read a story halfway through, was it worth half what a full story was worth? And so on.

When you disaggregate a newspaper, it becomes harder to value, not easier. By accepting that different people will find different things interesting, and by rolling all of those things together, a newspaper achieves what micropayments cannot: clarity in pricing.

The very micro-ness of micropayments makes them confusing. At the very least, users will be persistently puzzled over the conflicting messages of “This is worth so much you have to decide whether to buy it or not” and “This is worth so little that it has virtually no cost to you.”

In 2003 comic artist Scott McCloud famously championed micropayments and a specific version called BitPass in a Web comic called The Right Number.

In 2003 Shirky re-iterated his thoughts about micropayments in response to McCloud and BitPass:

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.

BitPass will fail, as FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See, and many others have in the decade since Digital Silk Road, the paper that helped launch interest in micropayments. These systems didn’t fail because of poor implementation; they failed because the trend towards freely offered content is an epochal change, to which micropayments are a pointless response.

Meanwhile Scott McCloud claimed that contra Shirky BitPass would change everything.* That was in 2003. BitPass went out of business in January, 2007.

After that, McCloud abandoned micropayments and made his formerly micropayment-based work free. Shirky notes Tim O’Reilly’s formulation that “Obscurity is a far greater threat to authors and creative artists than piracy.” That, in turn, echoes Lore Sjöberg’s thoughts on micropayments:

But here’s the dirty little secret of the artistic Web community: We’re not as popular as we like to think we are. It’s fun to look at your access logs and count your visitors and compare yourself favorably to the paid circulation of The Economist. It’s especially nice if you want to rail loudly at the injustice of The Economist making approximately four plabillion percent more revenue than you. But that’s like playing your guitar at the corner of Telegraph and Bancroft and counting the entire population of Berkeley as your fan base.

Shirky argued that most content will stay free because artists want fame more than they want fortune. I’d take it a step further. The Web-wide reticence among independent artists to actually hunker down and charge for material is because we know that if we did so, we wouldn’t get fame or fortune. We’d get, at best, beer money and a clique.

I predict that journalists who lose their newspaper jobs are likely to continue practicing journalism to the extent their personal finances allow. People go into journalism because they want their voices heard. Being paid to have their voices heard was just a bonus. Absent a paycheck they’ll be giving it away for free on a blog. Case in point. Michael Silence’s former Knoxville News Sentinel colleague Don Williams is writing opinion pieces at the Knoxviews.com blog and editing and writing for his own New Millennium Writings, available for charge in print or for free online.

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* Shirky said that the change to free content was epochal. McCloud agreed, but failed to truly understand the enormity of the change. Sure, McCloud argued, people might expect free text, and they might even expect free Web comics, but surely they’d be willing to cough up a micropayment for video.

Let’s suppose you found a site where you could watch your favorite video—you know, that one you haven’t seen in five years that you still remember frame by frame—and you have an easy way to pay them 50¢ to download it. Is there anyone reading this who would honestly refuse such an opportunity in favor of paying a $30 annual subscription fee? Even if there were thousands of videos at such a site, most users would probably go through dozens of single video downloads before deciding that it was worth it to pay the subscription.

Would you pay fifty cents to watch a YouTube video? Me neither. Shirky has been utterly and completely vindicated. Absent seismic shifts in the Internet landscape micropayments aren’t going to be successful.

Tags: lore, mccloud, micropayments, shirky

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