Micropayments on Time

Walter Isaacson had an interesting editorial in the Time Magazine recently. Under the provocative title "How to Save Your Newspaper" it outlined a way in which print journalism could survive in the digital age.

According to Isaacson, even as revenues shrink, readership grows -- at least online. So he proposes bringing about some kind of micropayment system. It's a concept that's been around for a while. The original idea was to have some kind of credit system available online so that, for example, you could purchase a blog post for a nickel, or download a great recipe for a dime.

Obviously, those amounts are too small to process credit cards (banks charge a minimum of 25 cents for small transactions -- and that's their best customer rates). That's why some small brick-and-mortar businesses only let you use a credit card for a purchase of $5.00 or more -- they would actually lose money if they were to process a sale less than $5.00.

And the other part of the idea is that the process should be quick and easy. Deciding on dropping a dime should be an impulse buy. If it takes more than a button click, it won't happen (think about those gumball machines at the supermarket. If the mechanism required two or three steps to get the gum, no one would bother). Several schemes have been tried, and few have been successful.

One notable exception is iTunes. The base price for a song is 99 cents, but Apple doesn't bill your credit card every time you make a purchase. Instead, it bills your card one a month. That way, if you buy several songs throughout the month it adds up to a bigger billable amount to the credit card company, and Apple only gets hit with processing fees once.

So is it possible to make such a system available to everyone? Don't know, but I suspect there's real money to be made at it for the person who figures it out.

A single click on a band's website and you've got their new song for 25 cents, or the daily paper for a dime, or that great article you want for a nickel -- it's been tried in the past, but as more and more people turn to the Internet for their content, I think such a system achieves critical mass quickly.

Isaacson makes an interesting point. He writes:

Charging for content forces discipline on journalists: they must produce things that people actually value. I suspect we will find that this necessity is actually liberating.

And I think that would be true of other types of online content creators as well. So who's going to make it happen? Don't know -- but in an economy where everyone's watching their dollars, a micropayment system that works for pennies seems like a good solution.

- Ralph

Day 237 of the WJMA Web Watch. (Would micropayments persuade WJMA to bring their website back? I'd be willing to pay a little not to see that placeholder anymore.)