Small Change: Micropayments Enable Teensy Content Purchases

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TOMORROW'S NEWS
Which micropayment solution will emerge triumphant? It is way too early to be calling winners, but with so many providers offering increasingly slick tools, it seems certain that technical barriers to offering micro-priced content are about to be erased. But, that still leaves a huge question: when will consumers genuinely embrace paying for content via micropayment solutions? At least some content providers are hanging back from adopting any micropayment scheme—they are either continuing to give away their content or, in other instances, allowing users to make conventional credit card purchases and thereby letting the card issuers take most of the revenue. "That's what we are doing," says Loc Vo, CEO of IndyPublishing.com, a Web site that offers everything from self-published novels to specialty reports priced above four figures. With the pricey content, there's no problem absorbing fees, but, with low-priced articles, Vo says that, for now, he believes it's wiser not to attempt to create a new system. "Consumers are used to using credit cards. There might be better solutions out there, but for now we intend to keep using cards."

Another obstacle faced by content providers: Users will boycott any system that isn't easy to use, says Ranjit Singh, president of ContentGuard, a McLean, VA-based provider of digital rights management tools. That's going to be key to the success of any micropayment solution, he adds.

"Absolutely, solutions have to be easy to use or they won't be used," echoes Microcreditcard.com's Poole.

That puts the micropayment issue in sharp focus—consumers have got to be persuaded to jump in, and ease-of-use is a prerequisite. In that regard, stored-value account providers may have the higher hurdle to jump. Their job is persuading users who are unfamiliar with buying content to put down at least $10 to get started. But all micropayment providers face a similar problem of convincing skeptical, time-harried consumers to spend five or ten minutes inputting personal data—a credit card number, usually a phone number, and possibly an address.

This is chicken and egg," admits Ruggles, who acknowledges that a lack of merchants has meant less than compelling reasons for consumers to open an account, and a lack of consumers hasn't offered substantial enticements to merchants to get on board.

But optimism is growing. "This is coming—consumers will be buying more content," says Digital World Service's Buhse.

Adds Scott Burnett, an IBM vice president in charge of global media and entertainment, "This is all nascent. We're looking at the transformation of an analog world into a digital world. But now we have entered a period where the pace is quickening. In the next year, some of the smoke will clear."

The lesson for content providers: "Now is the time to start experimenting," says Buhse. "We don't know what business models will succeed. We do know there will be buyers of online content and, for content providers, now is the time to begin experimenting."

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