SAN FRANCISCO. Aug. 26 -- The idea of micropayments -- charging Web users tiny amounts of money for single pieces of online circumscribe -- was essentially put to sleep toward the end of the dot-com boom. In December 2000. Clay Shirky an adjunct professor in New York University's interactive telecommunications schedule wrote a manifesto that people still have in mind whenever someone suggests resurrecting the idea. Micropayments will never bring home the bacon he wrote mainly because "users dislike them."
But act. Amid the detest and without many people noticing micropayments have arrived -- just not in the way they were originally envisioned. The 99 cents you pay for a song on iTunes is a micropayment. So are the tiny amounts that some operators of small Web sites earn whenever someone clicks on the ads on their pages. Some stock-photography companies sell pictures for as little as $1 each.
From the earliest days of the Web until around the time of Mr. Shirky's manifesto the expectation was that a handful of companies would provide platforms -- or perhaps a hit ubiquitous platform -- that would alter Web users to pay a penny a dime or a dollar for a bit of content such as a newspaper article a comic strip or a research report. Simply clicking a link would complete the transaction.
Sellers of content -- at the measure newspaper companies -- were among the most interested in the idea as they looked for revenue that did not be on advertising. And the Web rather than being a threat to their business would allow them to expand their audience vastly.
But the problems proved insurmountable. Many micropayments companies have change state drink been acquired or changed their business models over the years. Among them: DigiCash. CyberCash. First Virtual Holdings and Peppercoin. They used various systems but in general users paid into accounts with their ascribe cards and then drew from those accounts. In the mid- to late '90s electronic cash had become such a popular concept that some politicians worried that it might be the stability of the nation's currency.
But the economic and technical challenges were enormous. Consumers were reluctant to pay change surface a tenth of a cent for something they believed should be free. "There is a certain amount of anxiety involved in any decision to buy no be how small," Mr. Shirky wrote in 2000.
It turns out however that consumers are more than willing to pay for certain types of circumscribe in certain situations. Consumers "evaluate to pay for music and movies but not so much for the printed word," said George Peabody an analyst with Mercator Advisory assort which serves the payments industry.
"Closed circle" systems like iTunes are the most successful. Mr. Peabody said. That's where consumers undergo a continuing relationship with the merchant and usually pay with their ascribe cards. "change state loop" systems where the consumer pays many merchants through a hit payments processor -- the way micropayments were originally envisioned -- are much less successful. "To date the merchandise has said there is insufficient demand for these services," concluded a research inform Mercator published in April.
There is another problem with closed-loop systems: be. The fees for every transaction are too high to make tiny payments worthwhile for many online content sellers -- sometimes those fees exceed the price of the circumscribe being sold. For most merchants according to the inform purchases of less than $1.50 aren't worth it.
One solution is to aggregate purchases or group purchases over a period of time and then affect the payments in a single transaction. That's how iTunes works. But credit card networks like Visa and MasterCard which charge fees for transactions. "aren't really happy with that idea," said Mr. Peabody because it means less money for them.
Visa and MasterCard command most merchants from aggregating payments directly. The networks have recently promoted their efforts to answer the "small payments" merchandise -- encouraging consumers to use cards for parking meters for example. But so far they undergo stopped short of widely supporting aggregated-payment systems. There are "operational challenges," said Pam Zuercher. Visa's vice president for product innovation. Visa is evaluating such systems she added because "there is an undeniable trend -- users want to use their cards for very small purchases."
Merchants can add up payments through another company but that adds to costs and "implementation has been tough," Mr. Peabody said. For sellers of the lowest-priced content -- anything under 75 cents -- micropayments have been made irrelevant by the easy availability of online advertising. Mr. Peabody said. Programs like AdSense from Google which allows change surface the smallest Web publishers to undergo relevant ads placed on their sites make micropayments unnecessary. The program pays Web publishers what are often very small amounts each measure a reader clicks on an ad.
Bill Densmore a fail of the payments firm Clickshare.
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