I hope this is not true, but it seems to be. In my own experience with Bitpass, it certainly seemed to be. I couldn’t find anything that I wanted to buy and when I did find a few things that I did want (music), the prices were the same as at the Apple store (75¢ to 99¢/track). And the particular music – quite frankly – was not worth it. At 25¢/track I would have made more of an effort to find dig through the dross. This is the sort of thing which keeps major record labels in business. In the end, Bitpass kept almost my whole $5 starter account unused – obvious winners. But I never added to that account – everyone loses. The whole independent online art and music commercial space needs to be revisited with better editorial and with prices that are more in line with the costs. Whoever gets this right will be Croesus. Nothing to envy to Bill Gates. Link: OpenP2P.com: The Case Against Micropayments.
There is a certain amount of anxiety involved in any decision to buy, no matter how small, and it derives not from the interface used or the time required, but from the very act of deciding. Micropayments, like all payments, require a comparison: “Is this much of X worth that much of Y?” There is a minimum mental transaction cost created by this fact that cannot be optimized away, because the only transaction a user will be willing to approve with no thought will be one that costs them nothing, which is no transaction at all. Thus the anxiety of buying is a permanent feature of micropayment systems, since economic decisions are made on the margin – not, “Is a drink worth a dollar?” but, “Is the next drink worth the next dollar?” Anything that requires the user to approve a transaction creates this anxiety, no matter what the mechanism for deciding or paying is. The desired state for micropayments – “Get the user to authorize payment without creating any overhead” – can thus never be achieved, because the anxiety of decision making creates overhead. No matter how simple the interface is, there will always be transactions too small to be worth the hassle.