Micropayments: a bad idea that will not die

I received a notification today that Tipjoy, my second foray as an early adopter of a micropayments strategy, was going under (and that if I didn’t redeem my pathetic little barely used account balance it would vanish, probably to displace a tiny portion of some beleaguered founder’s credit card balance. So I went and transferred my $4.80 right back into PayPal, because, you know, like that’s my problem). I’m far from oblivious to the irony that the whole ineffectual experiment was transacted via what is essentially a functional (if fee heavy and intermittently evil) small transaction provider.

I signed up for Tipjoy somewhat reluctantly, at the motivation of a friend, because I had been through definitive micropayment disappointment as a beta seller and buyer for the now several-years-dead Bitpass. I set up a musicians account on their Mperia store experiment. I bought anything I could remotely justify “owning” (as much as you own data). I bought micropayment cheerleader Scott McCloud’s pay per view webcomic experiment The Right Number and I’m still waiting for him to finish the story. I paid serial project-abandoner Patrick Farley for his Pokemon-Revelations mashup Apocamon - I don’t ever expect to see the end of that one. I bought music of dubious quality (though there were a couple of rough gems in the slag).

Bitpass left a particularly bad taste in my mouth because prior to closing up shop they quietly instituted account-hoovering fees - account inactivity fees, low balance fees - and I had to go raise hell to get them to give me back the money they had taken, which wasn’t much, less than twenty dollars, but which I felt obligated to demand on general principles. So at least Tipjoy got something right.

And now I see there are another couple going concerns out there, Kachingle and flattr (and I suppose there are more obscure contenders). My faith in these enterprises can be assessed by the fact that I won’t even go to the trouble of adding hyperlinks to their sites. You know how to use Google. I will note that Flattr comes from the mind of one of the founders of the Pirate Bay, which is so damn funny it deserves a post all its own, aside from the fact that it doesn’t really matter and will be defunct in just a few short years.

Let’s get into the history of micropayments as it stretches back to the mid 1990s. I’ll break down the evolution of these various strategies to collect small amounts of money from a large base of users and distribute them to content providers, and explain how these most recent start-ups have taken the lessons of the failures of their predecessors, and tapped into the robust and contentious discussions that have circled the internet, featuring heady concepts like the mental accounting barrier, and how their strategies differ from what has gone before.

Hah, yeah, right. Hey, maybe I’m wrong, and everyone will be Flattr’d and Kachingling this time next year and you can all come back and laugh and throw mocking quarters at the ubiquitous buttons I have been sheepishly compelled to add to all my projects. No. I know these people think they have figured out the core problems with micropayments, or “crowdfunding” or whatever they want to call it. They think they will change the game because they have eliminated paywalls and made everything voluntary and instituted the customer-selected price point and made it so easy to pay. Like all the foundered ships before them they have focused on the quality of the individual transaction of a consumer at a content site. These are deck chair on Titanic solutions, lipstick on pig solutions. Let’s take a look at the sow underneath. Here’s how it breaks down.

Number one problem: the content is not worth paying for. That’s the meanest way to put it but there it is. Bloggers, podcasters, webcomic artists, sub-indie label musicians set the price already at zero. There’s too much of it. Nobody is really asking to pay for it. The majority of people who think they should get paid for it can just put a donation button on their site. The tiny percentage of people who want to pay for the pleasure have already applied the button. Sites with sufficiently high value content and high volume traffic to make it worth the effort to formally “monetize” already do so with the methods that work, advertising and merchandising.

The transaction systems all break down on two points, neither of which are what ever get addressed by the fixes for a simple reason: they aren’t fixable by any small third-party intermediary. First, you have to sign up. Every day my resistance to sign-ups gets higher. Sign ups are something I have to maintain, I have to keep track of logins and passwords and update them if my email changes. They are potential weaknesses in the eternal battle to hold a line on my privacy and security. My online history is littered with pointless sign-ups I never used and which served no purpose, and every time I’m solicited to set up another one I ask, with increasing self-interest, what am I getting out of doing this? In this case I then go and take a look at their (always poorly framed, disorganized) content rosters. Which returns us to problem number one.

Second, if I do sign up, I have to maintain some sort of account. I have to transact real money into this thing so that I have something to spend (or pay off something I owe). Should I trust you to hold on to my credit card information? Is what you have to offer compelling enough to get me to sign up for a repeating transaction on some kind of subscription basis? Right now the enterprises that have earned this position are Apple (via iTunes and Apps), eMusic and Amazon. For random one-off small transactions PayPal already exists. Take a look at problem number one and guess what your chances are.

Next problem: the support transaction itself invites me to do something I have become incredibly proficient at avoiding. I have to notice a thing to click and then click it. If you’ve gotten all clever and made it some sort of optional pay-what-you-like scheme then I have to make a decision on top of that. At some point along the line I have to have signed up. On the internet I am ignoring this sort of thing all the live long day. Advertisement clicks, donation button clicks, partners and affiliate clicks, take a survey clicks. I find the content on the page and pay attention to that.

What it all adds up to is work and money for something I’m used to getting for free. Which brings us to the last but not least point: a significant percentage of your best potential customers and clients have been burned by the assholes who have gone before you. I honestly can’t think what anyone would have to show me get me to sign up for their scheme, as a buyer or seller, after Bitpass. We went through a bunch of rigamarole to no benefit to ourselves or anyone. Nobody got squat out of their relationship with Bitpass that they couldn’t have exceeded in a tenth the time with a good old begging session. And Bitpass is hardly the start of it. There are probably people out there who still remember getting burned by Flooz. And Beenz. You say you’re different but when I look at your little charts or watch your videos you look exactly the same to me. The differences in the character of the core transaction are cosmetic. I have no faith in my participation doing your clients any good or adding any substance to my experience as a consumer. You are a solution that doesn’t work for a problem that doesn’t actually need to be solved.