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Free or Not: the Case for and mostly Against Micropayments

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: 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.


  1. “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.”

    Better editorial is not the point. The point is to allow anybody who wants to sell music online the ability to do so. The artists on Mperia price their own work, not the site, and we recommend a price point of about 50 cents per track.

    And the costs? A tricky question. Are you talking about the actual cost of producing music? The cost of hosting it? Or the intangible value of that music as determined by the person who created it, or the person who downloads it?

    If so, we’d better have a pretty major fire sale on 95% of the absolutely horrible shit the major record labels market as “music,” though it’s not music as I understand the term. Most of that is worth less than the stuff on Mperia, which is at least the product of somebody’s good intentions to make good work.

    Shirky’s notion about micropayments and anxiety is just stupid. Do you feel anxiety about buying a candy bar if it means you have to break a dollar? You want a candy bar, you buy a candy bar. You want a song — or a stock photo or an edition of a web comic or what have you — you buy it. If the fifty cents or whatever it is proves to be a major sticking point for the buyer, I would humbly suggest that to be the buyer’s problem, not the system’s.

  2. Joshua, a much better example of curated high quality music can be found here. The uncurated and mediocre bulk of what is on Mperia discourages both the listener seeking alternative music and the better alternative artists from remaining independent.

    Horrible music promoted by the majors is not an excuse for horrible music promoted by Mperia. By setting such a low standard of fare and relatively high prices for the poor goods on offer, Mperia – with its prominent Bitpass support – is disrupting and discouraging the independent music commercial space and only encouraging people to continue to seek their music within mainstream channels.

    Joshua you have to do better. Or you will disappear. You are serving neither artists nor fans but drowning all in ever falling standards.

    An example of a well curated alternative music space. Look and learn. More thoughts on online music, curated music and mini record labels.

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