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Making micropayments micro enough

by Giles Turnbull -- 2001/07/11

Clay Shirky and others have declared micropayments a non-starter because they make too many demands on users. I don't agree. And neither does Scott McCloud.

In his latest online cartoon think-piece (part of the on-going I can't stop thinking project), McCloud argues the case for micropayments very well. If they can be implemented in a meaningful, useful way, they would encourage more output on the part of creatives, and more purchases by consumers.

Creative people would be able to claim a greater share of the money and earn more in the long term. Consumers would get stuff much cheaper. Everyone would be happy.

Except the middle men, that is. The record companies, for example, in the case of new music.

The recording industry started out as a plastic manufacturer. It made plastic disks and recorded sounds on them, and sold them at a profit. What it became good at was making disks in large numbers, and distributing them world wide.

That's why the internet has had such a terrifying impact on record companies. They are stuck in their old structures, as legendary manager Pete Jenner pointed out recently (covered in the previous WtW story, The future of music). They face enormous problems in realising that those structures are out-dated, and moving to new ones.

Micropayments offer a sensible solution. They make getting hold of the music easy, and that is what Napster offered the kids. Scott McCloud makes the point in his latest piece that most kids are not sitting out there determined to be pirates. No, most of them just want to listen to the music they love. Cheaply.

Clay Shirky says that micropayments won't work because they force the buyer to stop and think before clicking and downloading. Users hate them, he says, because they not predictable and reliable.

But people tend not to stop and think before picking up a phone to call someone, or sending a text message. Phone calls are dirt cheap. We don't generally consider the cost unless they are unusual calls - across continents, for example.

The key lies in making micropayments micro enough. They have to be way smaller than record company executives have experimented with in the past. A pound or a dollar per song? No! Not even 25 pence or 25 cents. The costs per chunk of content have to fall much further. One or two pence or cents per song, per article, per page - that's the kind of price that people will pay.

The sooner the record industry realises this and starts offering plain-and-simple MP3 downloads at just that kind of price, the better the chances that the brand names everyone knows - BMG, Sony Music, EMI etc - will survive in the long term.