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Micropayment vs Microcharging · 30 March 2009 by Crosbie Fitch

On the ProjectVRM list I recently suggested a few principles that might make an online revenue mechanism easy:

  1. Publish it – and they will come.
  2. If people think it’s worth paying for, let them pay. If they don’t, improve the product.
  3. Make the decision to pay easy – a token amount – a penny.
  4. Make the intention to pay easy – a click of a button – the actual payment invariably isn’t (save it up for a rainy day).
  5. Payment is voluntary, but not a donation – make the deal clear – value for money.
  6. Your customers are not your enemy, but your ambassadors.

In a response to this, Doc Searls both acknowledged these as describing PayChoice in a nutshell, and suggested the term ‘microaccounting’ might best describe the process of collecting such microtransactions into significantly sized payments.

I think microaccounting is a good term for such a process, but it doesn’t quite pin down the critical aspect.

I have been thinking that this principle of ‘decision/intention to pay’ is actually ‘micropayment’, and the misadventure that people had attempted in the past was better termed ‘microcharging’ (as in “Download/read this for $0.01”).

There are other terms too, i.e. micropledging, micropatronage, microcontracting, etc.

However, as can be observed, the obvious way to reduce the transaction cost of micropayments is to collect them and settle the bill a thousand micropayments later (hence microaccounting). A less obvious, more sophisticated method is demonstrated by PepperCoin (probabalistic distribution of $1 among a thousand payments). As PepperCoin probably discovered, the problem isn’t so much having a mechanism for handling micropayments, but having an application (and especially realising why microcharging can’t apply to published work).

I thus wholeheartedly agree with Clay Shirky on the case against micropayments and even small payments if what is really meant is microcharging or simply charging, but this subtle terminological confusion has discredited what micropayment should have been about, i.e. enabling people who WANT to pay a small amount to do so extremely easily (and that’s ‘pay’ rather than ‘be charged’).

Moreover, and this is what I think people are still missing (cf Kachingle), it’s ‘wanting to micropay’ not ‘wanting to be microcharged’ – a dominant, not a submissive act. Moreover, it’s ‘wanting to pay for work to be produced’, not ‘wanting to be microcharged for consuming content already produced’. The latter still reveals contamination by the copyright mentality, that if one benefits from or consumes another’s art one becomes indebted (a disturbingly pervasive mindset that has polluted contemporary culture).

The micropayment must be captured as close as is possible to the decision to pay, because that is precisely the moment at which the payer has sunk the cost of the decision and can absorb the minute friction of executing that decision in the form of a button click. What Shirky explains is that we cannot impose the cost of a decision upon members of an audience (microcharging). However, as I contend, this does not mean that a member of the audience will not wish to make such a decision of their own volition (micropayment).

Even so, we must remain vigilant that we don’t slip back into the misadventure of inviting people to submit themselves to microcharging, e.g. “Give us your credit card and we’ll charge you a penny per page view for consuming our premium content”. That touches on another critical aspect – are you paying for the production of the art, a copy of it, or its use?

Payment: “This is good. I want more. Heck, I’ll pay you to produce more. Where do I click?”

Charging: “I feel indebted to you each time I consume your work. Please keep track of my consumption and bill me later.”

The problem with ‘microaccounting’ is that it applies to both, i.e. the collection of micropayments or microcharges for a later lump payment. It doesn’t shed light on payment vs charge.

Anyway, the term is a minor concern. When audiences become enabled in paying artists, and then do so in large numbers, a term will arise pretty sharpish (I like micropatronage). I certainly can’t see a day when people will say “Please permit these collection societies to withdraw funds from my bank account according to my use of their members’ copyrighted works”. Unfortunately, while people still persist in believing that art is consumed and that consumers must pay for what they consume, there will be a movement that suggests that people should indeed submit themselves to be charged, and failing that, taxed – there can be no volition about it – you consume, you pay.

With the imminent demise of copyright we thus see ourselves at a crossroads: should there be a free market in art (audiences deciding who to patronise and how much), or should art be funded by taxation (appraised and costed centrally)?

Francis Davey said 5257 days ago :

Micropatronage works best for me. I think partly because it expresses the relationship well: patronage conjures in the mind historically wealthy donors funding the creation of art. It carries with it no doubt that the person who is paying is doing so not only voluntarily but entirely freely. Also I suspect the payment v charging dichotomy will be hard for people to remember of understand without further explanation.

Just a thought anyway.

Your main thesis is right though I think.



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