September 05, 2003
Shirky Disses Micropayments

Clay Shirky has another essay up, this one arguing that micropayments are a pipe dream:

BitPass will fail, as FirstVirtual, Cybercoin, Millicent, Digicash, Internet Dollar, Pay2See, and many others have in the decade since Digital Silk Road, the paper that helped launch interest in micropayments. These systems didn’t fail because of poor implementation; they failed because the trend towards freely offered content is an epochal change, to which micropayments are a pointless response.

The failure of BitPass is not terribly interesting in itself. What is interesting is the way the failure of micropayments, both past and future, illustrates the depth and importance of putting publishing tools in the hands of individuals. In the face of a force this large, user-pays schemes can’t simply be restored through minor tinkering with payment systems, because they don’t address the cause of that change — a huge increase the power and reach of the individual creator.

I think that Shirky is right on some points and wrong on others. In discussing micropayments, he makes much of how the content that’s for sale via the BitPass system isn’t worth paying even a small amount for. He then argues that giving content away is a stable strategy that’s attractive to creators, since they are creators, not publishers, and therefore derive value and satisfaction simply from getting attention from readers/users.

That bit, I think, is spot on. But I think he misses how micropayments could fill a valuable middle space in financing content that currently doesn’t exist. See, the problem with the BitPass example is that he is coming to almost all of these creators cold — he knows nothing about them, he has no way of predicting whether their content will be worth the $1 or 50 cents or whatever they’re charging. Naturally, therefore, he shies away from taking the risk (as would I).

But imagine that the author is someone I already know something about — they’re somebody who has already given away free content to show me that they’re worth paying attention to. An example would be Scott McCloud, who has a comic up on BitPass for 25 cents. If I was coming to McCloud’s work cold, there’s no way I’d waste time trying to determine if it was worth “risking” a quarter on his work or not. But the key thing is, I’m not coming to McCloud cold — I already know I like his work based on the free stuff he’s put on his site. In that case, it’s easy for me to determine if I like McCloud enough to risk dropping the quarter on him. What’s more, this comic-for-a-quarter fills that middle space between the free content on his site and the full-out books he’s published; maybe I’m not ready to spend $20 for a whole book of McCloudiana, but a quarter might be more in the range I’m willing to part with.

Also, don’t forget that in order to get my content distributed as a book, I still have to go through the traditional gatekeepers — publishers and distributors. If I can’t find a publisher, my really good content — the stuff that’s too good to give away — either languishes in my desk drawer, or ends up being given away for free anyway. If I had the option of selling pieces of it for $1 or $5 or whatever, that might be valuable to those people who dig the stuff I’ve been giving away for free, even if it is worthless to those who could care less about me.

Currently there’s no way to provide options in that space between “free” (blogs) and “substantially expensive” (books). Micropayments for microcontent could fill that niche. The standard barrier of the lack of a universal payment system for micropayments is still there, though, so we’re not out of the woods yet.

Posted by Jason Lefkowitz at September 05, 2003
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