Micropayments - Do Users Want Them?

It used to be a given (amongst those in the know at least) that 'micropayments' were the only sustainable business model for those providing content on the web. Micropayments work by charging a tiny amount for access to web content, and are touted as the alternative to giving content away for free (which doesn't make any money) or charging for subscriptions (which is unlikely to appeal to Internet users now accustomed to freedom of movement online. The theory goes that small amounts to each individual consumer will add up to sufficient funds to keep online publishing firms in business.

In recent times, however, any consensus there was surrounding micropayments as 'the way forward' has begun to dissolve. There is a growing feeling that the slow introduction of this method of payment is less to do with technical constraints than user requirements. Put simply - micropayments are not emerging as a 'web standard' because users dislike them. There are certainly a number of good arguments against their implementation.

The Burden Of Decisions

At the heart of this debate is the concept of the 'cost' (both in terms of money and the user's time) of any individual payment decision. Those who support micropayments argue that the amounts involved are so trivial that there is effectively no decision to make. Consumers rarely think twice before making a phone call or turning on a light, and experience suggests that utility bills are always on or about the same amount every month anyway.

Applying the same argument to the web, articles costing a couple of cents each will be aggregated into a periodical bill, which in itself is unlikely to amount to much. In this situation, each article could be so cheap that pricing is not even transparent when the link is clicked - just as (to extend the phone analogy) we don't check the rates of national calls every time we phone a friend.

The counter argument works from the basis that ALL decisions require some input from the user; some thought or deliberation. On this basis, micropayments are demanding on the user's time (a scarce resource) in order to ration web-based content (a non-scarce resource). As any economist will tell you, that doesn't necessarily make sense. A favoured analogy of the anti-micropayments camp would be the newspaper. The technology does not exist to only buy individual stories from a paper, but even if it did, would anyone use it? Newspaper sales rely on the user trusting the editor's judgement to assemble a group of stories that will interest readers. The all-in cost of the paper saves us the effort of making a decision about each individual article.

Subscription-Based Services

Some online success stories, such as The Economist and Wall Street Journal, do suggest that subscription-based services can work online. However, in both these cases it could be said that the content in question is of particularly high-value. Can subscription work for every content site out there? The answer is clearly 'no' - there is only so much time in the day and there are only so many users. The content market is over-saturated and a global move to subscription only models would see many sites go to the wall.

There is clearly a role in the web's future for micropayments, but they may eventually co-exist with other models. Subscription has already been mentioned. Some content sites may manage to survive from advertising revenue alone, despite what the doom-mongers claim. Similarly, content sites will continue to be sponsored by businesses who wish to establish a reputation in a particular area - this site is an example.

Lessons From Usability

Different sites will suit different payment models. This is probably the single most important conclusion that is regularly ignored in the micropayments debate. Despite some claims to the contrary, there is no reason why micropayments must be implemented in an 'all or nothing' manner, whereby every content site on the web simultaneously adopts such a payment mechanism.

Given that the web will support a number of ways of paying for content, which is right for which site? As always, much of the decision comes down to an analysis of user requirements. High-value content that readers will return to again and again (a favourite newspaper for example) may be able to implement a subscription-based payment model. Micropayments are much more likely to suit those resources that user will visit occasionally in search of specific information. Into this category fall travel guides, consumer reports, or special-interest sites. Depending on the exact nature of the content, some payments may be less 'micro' than others.

Lastly, high-volume, widely available content, such as news and sports feeds, may survive on a combination of advertising and extremely low value micropayments. In each case the nature of the user base will determine exactly which pricing model best fits the site.