Transacting Value: In Search of Micropayments, Again

Ed Kountz [Posted by Ed Kountz]

Micropayments are happening. Not everywhere, but in some promising areas.

The lessons of the iPod and iPhone apps store, Facebook Spare Change and Twitter's TwitPay all stand as notable innovations in a space littered with the remains of failed efforts to monetize "free" online content.

Beenz, anyone?

Yet on media sites, most low-value digital content remains free, even for mainstream media outlets. Two problems remain.

--First, how to process micro transactions cost effectively.

--Second, how to take something that has traditionally been free--like the Internet--and to add a price tag to it.

With that in mind, two recent encounters are worth note.

1) In a recent issue of Time Magazine and supporting TV coverage (including an admirably informative encounter on the subject with John Stewart on the Daily Show…way to nail it, John!), Aspen Institute President and CEO Walter Isaacson argues that a new model of micropayments is essential, if the newspaper as we know it will survive. He predicts that the decline in media could leave some major cities without a daily paper and major periodicals operating with limited full-time reporters ... despite having more active readers than ever!

The paradox is with young adults. As they migrate online they are accessing media content, but for free (the standard for most online outlets). This, with the economy, is contributing to the severity of recent profitability declines.

Isaacson, former Managing Editor of Time, then calls for, in essence, a system to remedy this -- an option that enables news organizations to get paid for content and services.

Whether charging a nickel for an article, a dime for the day's edition, or several dollars for a month's unlimited access, he argues the model should be able to support all of the above. It would also enable regular folks to get paid for supplementing their income via online value-add.

See the Time article here http://www.time.com/time/business/article/0,8599,1877191,00.html

and the Daily Show interview here

http://www.thedailyshow.com/full-episodes/index.jhtml?episodeId=217702

2) In addition, YouTube’s latest effort to monetize online video is noteworthy. On Feb 12 2009, YouTube posted a blog entry announcing that it is testing an option to enable video owners to download their videos from YouTube, either for free or via a small fee payable via Google Checkout. Partners are able to set prices and license details (ensuring "proper credit," the latter via Creative Commons Licenses. (http://creativecommons.org/about/licenses/).

And while it’s too early to tell, it’s an innovative way for long-suffering Checkout to open up acceptance, and visibility, at a time when it faces increasing competition and the recession’s punch on retailing, albeit less so online (see my recent Trends report here http://www.forrester.com/Research/Document/0,7211,48352,00.html

Market reaction from hard-core YouTubites has been mixed.

While several positive comments stand out, there have also been a number of criticisms, some explicit (the first comment under the blog entry announcing the decision contained both a slur and an expletive … it has since been removed).

Despite the continuing efforts, it is not technology, but the ability to successfully spur broad adoption that remains the primary stumbling block in the future of micropayments.