{"id":110,"date":"2009-03-04T19:05:04","date_gmt":"2009-03-04T13:35:04","guid":{"rendered":"http:\/\/sketharaman.com\/blog\/?p=110"},"modified":"2009-12-23T00:50:27","modified_gmt":"2009-12-22T14:50:27","slug":"no-pay-per-drink-micropayment-yet","status":"publish","type":"post","link":"https:\/\/sketharaman.com\/blog\/2009\/03\/04\/no-pay-per-drink-micropayment-yet\/","title":{"rendered":"How Micropayments Enable Digital Content Shopping"},"content":{"rendered":"

Following on from my earlier blog post Micropayments –\u00a0Saviors or Enablers?<\/strong><\/a>, I decided to check out\u00a0how well they fare as enablers of digital content shopping.<\/p>\n

Going back to Walter Isaacson’s essay<\/a><\/strong> in the TIME magazine,\u00a0I agree that\u00a0newspaper and magazine publishers should introduce the “pay-per-drink” model whereby they let customers buy and pay only for the specific article or video or whatever content\u00a0they wish\u00a0to buy.\u00a0From my personal experience, I can easily relate to how badly a lack of this model has affected\u00a0publishers’ ability to generate revenues.<\/p>\n

I recall a number of occasions when I’ve come across an article or\u00a0research report that I was so keen on reading that I wanted to buy it. But, the only way to do so was to sign up for an annual subscription costing\u00a0a couple of hundred dollars. Even if I could afford that kind of money, there was no\u00a0way\u00a0I was going to spend it\u00a0because (a) I was interested in only one item at that time (b) I’d no way of knowing if I’d ever visit that website in future, or (c) even if I did, if I’d find anything interesting enough, or (d) even if I did, whether the publisher be charging money for it or giving it away free. In a couple of\u00a0cases, the website would quote a price for that item that was one-fourth of the annual subscription fee, which was a rude way of telling me that the publisher did not encourage pay-per-drink.<\/p>\n

In all these occasions,\u00a0I’ve\u00a0been forced to give up my intention to purchase and the publisher has lost revenue opportunity.<\/p>\n

The thrust of Isaacson’s argument was that, a modern crop of micropayment providers allow pay-per-drink, so they can save the newspaper and magazine industry.<\/p>\n

In a larger context,\u00a0let alone save, even to enable digital content shopping, it’s crucial for micropayment providers to support the pay-per-drink model. Since subscriptions cost 2-4 figures, they’re served well enough by conventional payment methods like credit or debit cards, so\u00c2\u00a0micropayment and pay-per-drink are inextricably linked to each other.<\/p>\n

To see how this link played itself out, I decided to test-drive modern micropayment providers like SpareChange, BeeTokens and TipJoy mentioned in Isaacson’s essay and a few more like Onebip,\u00a0SurfPin, PayMate and ZipCash that I came across subsequently.<\/p>\n

On the face of it, all these micropayment methods support pay-per-drink. But, if you scratch the surface, you notice that all of them\u00a0introduce a ‘subscription effect’ by which I mean that far more of the customer’s money (than the cost of the digital content) is stuck somewhere in the chain.\u00a0<\/p>\n

Let’s take the example of SpareChange to understand the subscription effect.<\/p>\n

You first\u00a0need to open an account with SpareChange.\u00a0Then, you need to fund the account by linking it to your credit card or bank account. Since the premise of Isaacson’s essay is that credit and debit cards charge high processing fees that make them unsuitable for purchases worth a\u00a0few cents or dollars, it’s natural to expect SpareChange to\u00a0specify a minimum pre-funding limit, just the way Skype and a few music download websites specify $10-20 as their minimum. Even if SpareChange doesn’t specify any minimum, you’re going to find it too time-consuming to enter your credit or debit card details (estimated at around 80-100 keystrokes) every time you want to pre-fund your SpareChange account just for your current purchase. So, either way, you’ll\u00a0end up pre-funding your SpareChange account with $$ (say, $20) and spend this\u00a0for multiple \u00a2\u00a0(say 10\u00c2\u00a2) purchases from multiple websites over\u00a0a period of time.\u00a0<\/p>\n

Effectively, you’ve avoided paying\u00a0$$ to the publisher (aka web merchant) for a subscription, but you’re forced to pay $$ to SpareChange when all you wanted to do was buy something for 10 cents. This subscription effect vitiates the basic principle of pay-per-drink model according to which the customer should have a safe and convenient method for paying out just the exact amount of their present purchase, and not more.<\/p>\n

This subscription effect is not unique to SpareChange, so it appears that none of the modern micropayment methods support genuine pay-per-drink.<\/p>\n

Of course, SpareChange and others would argue that you can always spend the remaining credit on other websites that accept SpareChange. But, that’s not very\u00a0different from the subscription-seeking publisher’s argument that you pay once for an annual subscription and keep downloading as many articles\u00a0as you want for the whole year.<\/p>\n

Genuine pay-per-drink will happen only when micropayment providers (and merchants themselves) understand and cater to one\u00a0basic reality about\u00a0digital content shopping, which is,\u00a0when customers\u00a0come to the checkout, it’s\u00a0to pay for\u00a0something costing\u00a0a few cents.\u00a0At that time, they’re\u00a0not interested in buying anything else nor willing to commit to buy anything else in the future, so they shouldn’t be asked to shell out\u00a0anything more than those few cents.<\/p>\n

Given its strong need to support pay-per-drink, the adoption and\u00a0success of micropayment methods will depend\u00a0upon how well their operating model addresses this fundamental reality.<\/p>\n","protected":false},"excerpt":{"rendered":"

Following on from my earlier blog post Micropayments –\u00a0Saviors or Enablers?, I decided to check out\u00a0how well they fare as enablers of digital content shopping. Going back to Walter Isaacson’s…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-110","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/110","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/comments?post=110"}],"version-history":[{"count":0,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/posts\/110\/revisions"}],"wp:attachment":[{"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/media?parent=110"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/categories?post=110"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sketharaman.com\/blog\/wp-json\/wp\/v2\/tags?post=110"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}