Micropayments

February 8, 2009

Walter Isaacson pleads the case for micropayments to save the newspapers.  Andrew Sullivan dismisses it (it’s too late!).  I do fear a news coverage gap as traditional media shuts down their foreign bureaus, investigative reporting teams, etc.

The article comes short because it acknowledges how many micropayment systems have come and gone but doesn’t propose how a new one could be made successful, except maybe to say that it should be ‘iTunes-easy’.  So let me take up where he left of:

First off, the environment has changed significantly since past players tried and failed, thanks to an unsung hero: Apple.

It is widely recognized that Steve Jobs has revolutionized computers, portable music, wireless and even retail, but one key overlooked aspect is iTunes’ micropayments system, which has quietly got consumers used to paying 99 cents or more for music, software, audiobooks, movies and music lessons.  It also incorporated two key ideas that really show us the way: daily transaction batching and standardized pricing (which the labels vehemently opposed).

With that in mind, here’s what I think would make a micropayment system successful today:

  1. Concurrent free and paid availability: Switching to a paid model is a risky proposition for any content provider.  So why switch at all?  Instead let customers choose.  The paid version of an article could be easier to read (full width, no pagination, no or less intrusive ads), have related resources, additional pictures/charts and enhanced/prioritized/separate discussion and other social tools.  A paid video would not play a 20 second commercial in front and could be higher resolution.  User should be able to select paid versions as a general preference, or click through to a paid version individually (after initial payment system signup/authorization).
  2. Standard pricing: We are not willing to spend time deciding whether each article is worth 15 or 25 cents before reading it.  But if we only have to do this once per publication it is a better value proposition.
  3. Don’t monetize everything: Instead of making everything available for 9 cents, offer paid versions only for major features and stories for 29 cents.
  4. Batching:  Costs are very high if there is a transaction for each purchase, or if authorization needs to happen in real time.  Instead, on signup publisher assigns the user a ‘credit limit’ and captures funds only if limit reached, but more typically every week by batch submission.
  5. No costly chargebacks: Customer can decline charges via online tool within a month.  Requests are automatically approved without research involved, but each one lowers a customer risk score that is provided to the publishers on signup.
  6. Not publisher-specific:  Entering a credit card number to purchase that first $0.20 item is a non-starter.  Consumer should be able to setup a payment account once, and approve its use with a simple form, in under 10 seconds, for each new content provider.
  7. Not vendor-specific: Content providers should support multiple micropayment providers that offer a standardized interface.  Customers can use their preferred provider at most publishers.
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2 Responses to “Micropayments”


  1. [...] February 15, 2009 Nobody likes clicking through multiple pages to read one article, that’s partly why paid content via micropayments CAN work. [...]


  2. [...] a shame.  As I’ve said before, if they offered both free and paid versions side by side they could satisfy the casual [...]


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