Shirky: Fame vs Fortune: Micropayments

by phil on Saturday Sep 13, 2003 11:26 PM
Idea Archive

Shirky: Fame vs Fortune: Micropayments and Free Content

Why Micropayment Systems Don't Work
The people pushing micropayments believe that the dollar cost of goods is the thing most responsible for deflecting readers from buying content, and that a reduction in price to micropayment levels will allow creators to begin charging for their work without deflecting readers.
This strategy doesn't work, because the act of buying anything, even if the price is very small, creates what Nick Szabo calls mental transaction costs, the energy required to decide whether something is worth buying or not, regardless of price. The only business model that delivers money from sender to receiver with no mental transaction costs is theft, and in many ways, theft is the unspoken inspiration for micropayment systems.