Micropayments Can Work, But Not With Site by Site Registrations

Rupert Murdoch is right: at some point, web consumers are going to pay for online content. The only question is when and how much. And the Wall Street Journal has an answer: “this fall,” and “not that much.”

The article doesn’t mention any exact pricing schemes other than people paying more for “specialist content” (presumably oh so important investment news that totally prevented the stock market crash last year and is thus incredibly valuable). But I’ve already heard all I need to hear to be skeptical: “It’s a payments system — once we have your details…”

Yeah… my details. So, here’s the thing.

My theory is that the problem with paying for content on the internet isn’t that people won’t pay. Set the price low enough and people will pay for just about anything. If there’s a true micropayments system in place (i.e. you can read individual articles for far less than a penny, meaning that there is no real floor on what anything can cost) then all that matters is figuring out the correct market price for various content.

No, the problem is that setting up any sort of payment or subscription system online is traditionally a huge hassle, end stop. Consumers know this instinctively. It’s annoying enough to be asked to register a separate commenting/reading account by nearly every website under the sun. Throw having to type my credit card numbers into the mix separately for every major content provider I want to subscribe to, complete with all the security risks and the lack of any central balance sheet on what I’ve spent online across all of these different sites… and I’m already gagging. I have no particular brand loyalty to websites: I’ll pay for good content, but I’m not locking myself into any particular venue or wasting any of my time registering for each and every paysite I come across.

What consumers need are intermediary companies with which they can register once, link a single credit card to, and have that company negotiate and report the pricing with every single website wishing to charge for content. Consumers need nothing more than to see, via a simple browser plug-in, a price per article, no matter where they surf, and a constantly updated central total of what they’ve spent. If that price is merely 0.02 of a penny, they’ll pay it. The only real technological hurdle is security: making sure illicit sites can’t covertly redirect you to a hundred sites at once and automatically charge you at each stop without your consent.

It’s not rocket science. All it needs is a big enough player that already has enough hooks in the market. Someone who can make it worth the while of even tiny websites to sign up and install the necessary server software. Google could do this. Microsoft could do this. Apple could do this (think of a sort of iTunes for the web). Mobile carriers could do it (they have the payments infrastructure already in place, complete with contracts). There’s no fundamental reason why even the credit card companies themselves couldn’t do it (though there are likely a few minor legal hurdles in that case). The point is that if cash-strapped content providers really want micropayments to happen, they have to band together and demand that SOMEONE do it in a unified and universal fashion (to be fair, some niche companies, like paypal, already have it in place, and smaller outfits have tested the waters, but they just aren’t big or ubiquitous or brand trusted enough to make it work on the proper scale).

Heck, maybe someone is already trying, and I just haven’t heard about it (somehow, I bet the online porn industry has already solved this problem and is humming merrily along while the rest of the web languishes).

But apparently the Wall Street Journal hasn’t heard about it either. And that’s exactly the problem.

Update: It’s worth mentioning donation-themed efforts like tipjoy, which aim to streamline the process of donating money to specific accounts (including those of non-profit websites) and link their authentication to laudably large social media site twitter. These, (along with mobile payments systems like Obopay) have been around for awhile, but have yet to gain the sort of streamlined critical mass market domination necessary to make micropayment systems really take off. But they’re definitely worth keeping an eye on: consider them a ground-up approach to making micropayments a reality. Still needs a browser plugin and a user-friendly signup process that doesn’t require ordinary people to know what a “Twitter OAuth credential” is without checking a FAQ. But consider me a watchful fan.

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~ by Drew on 2009/05/11.

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