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Micropayments Going Mainstream? Not Yet.
Posted by
timothy
on Sun Jan 11, 2004 04:02 PM
from the penny-for-your-thoughts dept.
from the penny-for-your-thoughts dept.
DotEdu writes "Today's NY Times has an interesting article on two new micropayment companies, BitPass and Peppercoin, and the venerable PayPal. More interesting than the companies are the critique: Micropayments are not the silver bullet. You still need to actually have a viable product that you can sell."
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PayPal venerable? (Score:2, Informative)
My dictionary defines venerable as meaning:
PayPal may be old, but it doesn't command any respect whatsoever as far as I'm concerned.
Re:PayPal venerable? (Score:2, Informative)
Re:PayPal venerable? (Score:2, Informative)
I have processed quite a few transactions via paypal and have yet to have any trouble. Just set you paypal account to not accept credit card payments helps quite a bit.
PayPal treats sellers like crap. (Score:3, Informative)
Re:PayPal venerable? (Score:3, Informative)
<p>
Can't speak for anyone else, but for me, the $12,000 that was stolen from my credit cards and bank accounts that were linked to my Paypal account contributes a little bit. I got it all back, but it took nearly a year and to this day, Paypal flags my name as fraudulent. So, not only was I a victim, but if I ever come near Paypal again, I get accused of being a theif.
Re:I don't mean to evangelize but... (Score:3, Informative)
Sorry about that (I guess I should have used the preview function).
Questions still abound. (Score:5, Insightful)
Paypal of course offered their own payment scheme for micropayments as well, but they are limited ONLY to music.
Where I'd personally like to see micropayments is in the services department. You can charge 1.00 per transaction to perform a service, and not get raped by the 33% service charge that forces most of these types of service-oriented businesses to use subscriptions.
Re:Questions still abound. (Score:3, Informative)
The company's software uses advanced encryption and mathematical models to avoid charging a seller a fee each time an item is sold. Instead, the system statistically selects a representative sample of the transactions for billing.
For example, the software might randomly select one sale of a $1 song from among 20. It multiplies this one sale by 20 to represent the other 19 sales, and passes along $20 to the seller. But by lumping the
Re:Questions still abound. (Score:3, Insightful)
Re:Questions still abound. (Score:2)
Re:Questions still abound. (Score:3, Interesting)
Honestly, searching google finds me no sites using this technology. I like to see this in action before I start trying it out on my own site.
We originally ran tech-recipes.com [tech-recipes.com] to help our family and friends keep up with the unix/solaris/etc hints that we gave them... however, we've been looking for a way to turn this into a profit-making business.
Micropayments would seem nice! A cou
Re:Questions still abound. (Score:3, Informative)
They don't have a HUGE number of clients yet, but it seems to be growing pretty fast.
iTunes (Score:4, Interesting)
I think this is a lesson that micropayments will work if you have an in demand item (like resonably restricted music), but you're never going to make money on your crappy MS-Paint web comic.
iTMS is more like long distance than micropayments (Score:3, Interesting)
Dude, iTMS is not a micropayment system. It's analogous to long-distance phone calls (remember when you didn't use your cell phone for those?). You have an existing relationship with a business whereby you can easily make small charges against an account that you pay for in a monthly bill. That doesn't require an intermediary; the customer does business directly with the producer or service provider.
The whole point of micropayments is that you can make lots of little payments to different parties without
Another problem w/ Micropayments (Score:4, Insightful)
Re:Another problem w/ Micropayments (Score:2)
While the 'big bad goverment' could - in theory - use a central database of micropayment to track your online movements. On the other hand, just consider how many online users there are out there. Even if you only consider the ones originating from the US, there is still a number to large to keep tracks on, so while the 'big bad goverment' could in theory use this to spy on everybody the amounth of data is just too large to be practical.
I believe, that if your scenario comes to pass, it will be used to see
Re:Another problem w/ Micropayments (Score:3, Insightful)
Spare us your naivete, will you please?
Every single power we've given to the government to date has been abused. Give them more power, and they will abuse that too.
I'm so sick of you fools who always assume that the government is always good and always noble when the facts--to say nothing of current events--clearly indicate otherwise.
We need technologies that work against the aggregration of power, not technologies that will accelerate it.
Re:Another problem w/ Micropayments (Score:3, Insightful)
Two things, one is programs like carnivore that sift through tons of content trying to determine who the terrorists are. One would hope that they would have an actual human being investigate to make sure the person is really a terrorist before they are hauled off to Guantanamo Bay. However, we are talking abou
Easy? way around that. (Score:2, Interesting)
MicroFUD (Score:5, Insightful)
Second, the internet has no privacy in the first place. There are IP logs and traffic sniffers galore out there. If you want total privacy, stay off the internet and build yourself a cabin in Montana.
Parent
Control+Alt+Del... (Score:3, Interesting)
Viable product? (Score:5, Funny)
Damn, there goes my plan to make cash off my years of collected ascii-art pr0n. :-(
Constant drain = constant pain. (Score:4, Interesting)
I really don't think that the idea of a 1-click micropayment system would be appealing (to me at least). It doesn't matter how little each payment is - if enough sites start demanding I pay them in an ongong basis to see their content, I would just give them all up. I can't stand the abstract psychologcal thought of each of these inputs that I'd rarely use individually taking their own bite, no matter how small, from my income. I can stomach an up-front cost, a known trade of resources, or even a subscription with an opt-in approach to re-subscribing, but there's something about the the leech-like nature of these micro-payment schemes I have a strong urge to stay away from.
Ryan Fenton
Re:Constant drain = constant pain. (Score:2, Insightful)
The micropayment companies provide a way for an individual web site to make small transactions. For example a site that used to only sell 1 year subscriptions could allow you to buy on a per is
Re:Constant drain = constant pain. (Score:5, Informative)
A potential problem with such payment systems would be the websites that trick you into accepting, then try to feed you the information piecemeal. Pay $0,10 to access the article... and when you accept, it's another $0,20 to see the essential graphs and pictures, and $0,30 to get the conclusion. A bit like the $1 / minute phone services with a voice-response system..... that..... speaks..... really..... slow.... and has menu's of 22 levels deep. Not very honest, but not exactly illegal either.
Parent
Re:Constant drain = constant pain. (Score:5, Insightful)
Parent
Useful product.... (Score:5, Funny)
Gumball.... 25 cents
transaction charge... 35cents
shipping / handling... $5.50 for express delivery per unit
Seeing the horror on the parent's faces when little timmy maxed out their credit cards on gumballs... priceless!
banking monopoly monster (Score:5, Informative)
A pretty fair article... (Score:2, Insightful)
Hurdles involved (Score:5, Informative)
This could change if Peppercoin managed to convince the major browser players to include their software with the browser. Certainly having Rivest onboard will go a long way toward getting some credibility for Peppercoin.
Micropayments (Score:5, Interesting)
For example, for $.25, users can download a custom ring-tone for their cell phone. If you rig it up so that a user has to go to a website, try out the ring, set up an account either with a credit card or paypal, and THEN debit a resulting micropayment account for the $.25, you're going to get a lot fewer customers than say, charging their cellphone account for the ring.
What about items that are soley online? Let's assume some author or artist (or director) puts out a series online. Every weekly installment costs the user $.25. If you're a die-hard fan, it'd be easier to prepay $5 for 20 episodes, than go to to the trouble of setting up a dedicated micropayment account JUST for the show. Conversely, if you just want to try it out, it'd be smarter to let you download a free episode in order to hook you onto the show, than to try and convince you to jump through the hoops of getting an account just to try the show.
Now, in both scenarios, it wouldn't be a problem if users ALREADY HAD ACCOUNTS with balances. The question is, how do you promote widespread adoption of these accounts, and convince people to keep money in them? Paypal pays interest on their accounts, but I'll be most users initate a transfer to their bank account the moment their Paypal account starts carrying a balance.
The best idea I can think of so far is to treat micropayment balances as play money - similar to gift card balances (I know they're real money, but you can't get that money back out again unless you buy something) or casino chips (where you can get real money back out again, but they're designed to look like play money to get you to spend freely.) With this idea in mind, you need to seed the market somehow. eBay/Paypal is already doing this with their points system, where you can purchase items on eBay and pay with a combination of cash/credit and eBay/Paypal points. Convincing an ISP to issue automatic BitPass accuonts to their customers upon signup, for example, would be another way of seeding the market.
With all this said though, BitPass only recently (just toward the end of December) came off of their beta program. Since the number of merchants using it is still pretty low, it may be much too soon to judge how well BitPass is doing. Personally, I think someone should pick up the eCash idea that PayPal originally was built around - anyone remember that? Beaming crypto-derived credits from one Palm device to another - there are a hell of a lot more handheld devices (phones, PDAs, etc.) now than there were in 1999. They'd be a heck of a lot cheaper to get into circulation than smart cards, especially since DirectTV tends to sue anyone trying to do research into using smart cards in the United States...
Re:Micropayments ... still have to sign up (Score:2)
You still have to sign up for the ebay points program AND the points aren't interoperable with the parent gold points program. eBay points was more of a way to aquire your email/contact info than anything
shirky clay article (Score:4, Interesting)
Re:shirky clay article (Score:2)
Re:shirky clay article (Score:3, Insightful)
a) People goto vending machines _far_ fewer times then they'll click an article.
b) Most people don't hang out at vending machines trying something new without reason. A lot of people hang out at websites and do the exact opposite.
To me, if i have 50 cents in my pocket and i'm hungry, I'll eat that nice twix sitting in box B3. There's not much thought that goes into it and I'll only make that descision once or twice a week. However, deciding whether or not I want to fork over 10 cents or a dollar o
My Idea (Score:3, Interesting)
Sent the service an AbiWord document and it sends back a real 100% Microsoft Word document in a ZIP file. Instead of thousands of people with their own copies of Microsoft Word, thousands of people use this service occasionally for those rare cases they must have a TRUE file.
The interesting part is when the service changes polarity and everyone starts insisting on receiving files in open source formats. "Write your resume in any word processor you like, but send it to us in XMLRESUME format"
If secure connections get usable for the average joe, then perhaps a non-partisan government could get in on things. Define a standard that anyone could implement for things like tax filings and public bids (or maybe just death notices and zoning changes to start on a local level)
Anyway, it's not a service that can be done without a lot of bandwitdth, good hardware, security, and trust from your customers so it looks like something that has to be funded somehow. Micropayments? I hope something makes this financially feasible.
Maybe I'm a little biased.. (Score:2)
A flat fee subscription would be just fine though. But there are few sites where there's really enough content to do that. Slashdot is one of them, but slashdot isn't exactly average. iTMS is also a "big" shop in this context, even if the payments are small. Never mind that the purchases t
Your screwed if you have no credit card.. (Score:3, Interesting)
iStockPhoto a good example of micropayments (Score:4, Interesting)
It's a pretty smart system, and other companies seem to be building on its success (Adobe offers free iStockPhotos with registration of their Creative Suite).
I think there's a good product there, and I wouldn't mind to see that site succeed, if any.
Micropayments are a step backwards.. (Score:4, Interesting)
Even scientific publishers are having more success selling subscriptions (per seat/site license) than pay-per-view. Cable operators are having difficulty making PPV work, as well.
Let's face it; people are cheapskates and publishers are greedy. That's why things are either free or much too expensive.
I gave up on micropayments (Score:3, Interesting)
It's simple to set up and with IPN and a couple scripts and a modified htpassword.exe it's mostly automated. I could fully automate it but that just invites hackers. When I first started someone tried various user names for something like 8 hours using a dictionary attack. I had a username that could be found in a dictionary. That was one name he didn't try. I reported him to his ISP and that problem went away.
The entire site is browsable so you know exactly what you're paying for. Some subscription sites have this idea they can hide content behind door number 1 and expect people to pay to see what's there.
If you're selling articles, have one or two opening paragraphs vistors can read. If you're selling pictures, use thumbnails of reasonable size. If you're selling comics, keep some strips for free. Maybe sell access to an archive of comics that are greater than X days (months, years) old.
As for PayPal being evil. Stop using them like a bank. They are not a bank. I move funds out every 20 bucks or so. I've never had a problem with them. They offer a money market deal. I use TD Waterhouse.
If you don't trust them on certain aspects it's very easy to avoid those dangerous waters. Every on-line commerce site has attempts by people to scam their users out of their username and password.
Ben
Peppercoin and Bitpass have nothing I want to buy (Score:4, Interesting)
My fellow Slashdotters, this is rubbish. There's not a single thing there that I want to buy, not for a quarter, not for a penny, not for a mill, not for a peppercorn.
Nobody forced Bitpass and Peppercoin to put up "Grand Opening" signs and hire brass bands to promote a giant warehouse store with nothing in it to buy but two magazines and three candybars at the checkout line. It makes them look really stupid. If they didn't want people to see them before they were ready, they could have waited to crank up the publicity machine until they were ready.
There's nothing to argue about here (unless you're personally invested in the systems). Bitpass and Peppercoin can prove me wrong any time they want. McCloud implies that Bitpass is the next eBay (by saying that eBay wouldn't have looked any more impressive when it was the same age Bitpass is). Fine, maybe I'll have accounts with both of them in a year. In which case I'll be glad to say I was mistaken.
But as of today, it sure smells like dot-bomb smoke to me.
PayPal made sense practically from day one. I joined PayPal because there was a guy that had a self-published book I wanted to buy--a very good book about the history of Apple--and his website offered me the choice of mailing him a check or signing up for PayPal and using a credit card. Nobody had to talk me into it. I didn't have to engage in theoretical arguments about whether PayPal was a viable system. There was something I wanted to buy. I wanted the convenience of buying by credit card from someone who didn't have a merchant account. I glanced a leery eye at PayPal's terms and conditions, shrugged, and signed up. PayPal has been continuously useful to me every since.
Peppercoin and Bitpass are a joke. Spare me articles about them until there is something worthwhile I can buy with them.
Move along, folks, there's nothing to buy here.
silver bullet (Score:3, Insightful)
The savings on transaction costs can be the difference between a profit and a loss. For a lot of products, this may be the silver bullet.
Product? (Score:3, Interesting)
Point 1)You missed the .com days didn't you?
Point 2) Although my guess the trend will soon be to take previously free content, and now charge for it, rather than adding additional premium content *cough*IGN*cough*. See, that way you're offering the same product, but now getting paid more for it (usually, see 1)
blah (Score:3, Insightful)
What, is this discussion a cron process? Every couple of months we trot out Bitpass, Peppercoin, PayPal, online comics and copyright and criticize them for how "l4me" they are.
The most entertaining part is how willing people are to, in the same thread, proudly proclaim how they will steal anything that is placed online, yet bitch and gripe when spammers steal their bandwidth.
If micropayments truly sucked, PayPal would have gone out of business years ago. Period. End of story.
Now let's have another story about spam! Anyone see the irony? Anyone?
The problems is the payment amounts... (Score:3, Insightful)
But what is a micropayment on a CEO or CFO salary is usually not worth the money for the rest of the world. So, many companies who claim to have tried micropayments failed, because they were charging too much.
Other forms are micropayments for email are talked about by people who never heard of mailing lists... Even a cent per email will make a tremendous amount of mailing lists shutdown. And I'm talking about true opt-in mailing lists, not about spam.
Is Bitpass a scam? (Score:3, Informative)
Bitpass is either a depository institution, like a bank, or a "check seller", like companies that sell money orders. Either way, they should have the appropriate license and be subject to bank regulations and audits. You can't just go into business handling other people's money without oversight.
Palpal seperates European operations (Score:3, Interesting)
PayPal, Inc. is pleased to announce that we are preparing to introduce PayPal ( Europe) Ltd., a company incorporated in the United Kingdom, as the service provider for PayPal customers in the European Union.
We anticipate that PayPal (Europe) Ltd. will begin operating in February 2004, subject to receiving authorisation from the Financial Services Authority (FSA) in the UK. Please note, no action will be necessary on your part. You will be a ble to continue using your PayPal account as you do today.
This sounds like a good thing to me. I expect the UK financial regulators will keep them on a tighter leash. "Fair negative mods are being marked fair, moderate to improve the s/n ratio."
Re:Nothing like a link (Score:5, Informative)
But, anyway, here's the article:
The early days of Internet commerce offered many promises, none of them brighter than the chance for people to set up Web sites and sell inexpensive digital goods like songs, articles and photos.
But most of the pioneering companies that devised transaction systems for low-cost online purchases faded away, dogged not only by the giveaway ethos of the Internet but also by cumbersome technology and fees that ate up the profit on items that often sold for less than a dollar.
Times have changed, though, and electronic micropayment systems may yet be born again. In the past few months, several new companies dedicated to processing small cash transactions on the Web have introduced commercial services, and some older companies, including one inspired by Apple's huge success in selling 99-cent songs at its online music service, have modified their offerings to accommodate some lower-priced sales.
This time around, innovative technology may make the difference for the micropayments market. For example, two highly regarded scientists at the Massachusetts Institute of Technology have founded a company that they say has the technical expertise to let people sell digital content profitably on the Web for prices as low as pennies.
Ronald L. Rivest, the R in the public key encryption system RSA, which he helped invent, and Silvio Micali, whose honors include the 1993 Godel Prize in theoretical computer science, founded Peppercoin (www.peppercoin.com) and introduced it commercially in December. Peppercoin hopes to reduce online merchants' transaction costs substantially, particularly the number of credit card charges they pay. These are typically about 25 cents per sale, said Robert W. Carney, vice president for marketing at Peppercoin.
The company's software uses advanced encryption and mathematical models to avoid charging a seller a fee each time an item is sold. Instead, the system statistically selects a representative sample of the transactions for billing.
For example, the software might randomly select one sale of a $1 song from among 20. It multiplies this one sale by 20 to represent the other 19 sales, and passes along $20 to the seller. But by lumping the sales together, only one transaction fee, not 20, is charged.
"Would you prefer to be paid $1 minus a 25 cent transaction fee each time you make a sale," Dr. Micali asked, "or zero dollars 19 times and $20 minus a 25-cent transaction fee once?"
Algorithms that were developed and refined over the past 20 years are used for the process, Dr. Rivest said. With a large volume of transactions, the errors that derive from the sampling are negligible.
One of the companies Peppercoin has signed up is Smithsonian Folkways Recordings of Washington, which is about to begin offering individual tracks from 33,000 folk recordings for sale electronically. Richard Burgess, director of marketing, said that the organization was comfortable with Peppercoin's complex algorithms. "Probability cuts down on the number of transaction fees," he said, but "there's no probability attached to the purchases - we know who bought what."
Thomas Frey, executive director of the DaVinci Institute, a research organization in Louisville, Colo., recently sponsored a seminar on micropayment systems. While such systems failed in the past, he said, their future now seems brighter. "Having people like Ron Rivest solving problems opens the door for interesting things to happen," he said.
Dr. Frey predicts that one day people might buy low-cost items ranging from ring tones for their cellphones to weapons upgrades for their video games. "They could even buy cool sunglasses and new hairdos for their avatars," he said.
BitPass, another new micropayment company, st
Parent
Re:Paying for online content? (Score:5, Insightful)
I thought of using this on my site Geekzone. The idea of keeping the content free, but being rewarded by happy readers is quite cool. It's being use in on-line comics, e-zines, and sometimes even with tangible goods too.
I have to say that I have Donate Paypal button and some users do act on that - mainly adding messages like "Thanks, your content helped me doing this and that", or "Keep the good work".
This is about knowledge sharing, and helping the people who put these things together and make available.
Parent