The Return of Micropayments
Will Tiny Payments Finally Make Their Big Debut?
By Michael Hurwicz
Since the earliest days of the Web, visionaries dreamed of the profits they'd make if only they could charge a few pennies for each stock quote, weather update, and news story viewed by consumers. Although that dream was lost for a few years amidst claims that "content wants to be free," many content providers are now showing a renewed interest in micropayments because of floundering advertising proceeds.
The micropayment concept is simple: Require consumers to pay a trivial fee for each item of content he or she downloads. Over time, those trivial fees add up to a large revenue stream for sellers. For example, stores like Amazon.com could sell music tracks for 50 cents apiece—a bargain for audiophiles who prefer to compile their own playlists or just don't want to purchase an entire album. It's also not a bad deal for sellers, who are freed from the expense of pressing, packaging, and distributing physical CDs, not to mention the risk of getting stuck with excess inventory.
Despite the potential benefits, there is a debate about whether micropayments are feasible. Whereas prominent figures like Jakob Nielsen and Nicholas Negroponte point out the potential in micropayments, others argue that consumers don't want them. In his December 2000 essay, "The Case Against Micropayments," Clay Shirky claims that the micropayment is "an idea whose time has gone." He notes that users want easy access to content and predictable pricing, similar to what they get with long-term subscriptions to content.
