2/10/2005

Pennies from Heaven

In yesterday’s post about paid content I noted that buying monthly rather than annual subscriptions was the frequency preferred by most of the 17 million consumers who purchased info wares during the survey period. Couple that with the runaway success of under-a-buck music downloads, and I wonder whether the time is right for a revival of the micropayment phenomenon that crashed and burned during the dot.com era.

There is a sad story there that I cannot reprise here. Nor can I hope to fully describe the new micropayment vendors. But today I'll identify several of them and also some market analysts as a starting point for further research. Tomorrow I’ll think out loud about why micropayments may or may not succeed this time around.

First, the players.

A 2004 article by a colleague at the San Francisco Chronicle (where I currently report on economics) focused on Bitpass, a Stanford startup, while mentioning several others. A subsequent search turned up a piece in ecommerce-guide.com that briefly encapsulated what PayPal, the MIT startup Peppercoin, and San Francisco-based Yaga are doing in this category. A piece in MIT Review, though focused mainly on Peppercoin, pointed me to Vancouver’s Paystone Technologies, and cited Avivah Litan, an analyst with Gartner, and Andrew Whinston, who directs the Center for Research in Electronic Commerce at the University of Texas at Austin.

Comparing and contrasting these vendors and their technologies is more than I can bite off in one blog post. But two comments in the ecommerce-guide.com article seem worth repeating. The piece quotes Gartner’s Litan as saying “The credit card companies have first dibs (on micropayments), and if they don’t want it or it’s not enough volume, then there’s room for these other players.” That's conventional wisdom. We all have charge cards. There is no learning curve. Earlier, the piece notes that PayPal has (or then had) 40 million users. So they already have the relationships with consumers that the startups have to build.

Of course, startups do break through or are acquired by big players who finally see the market and need the enabling technology to go after it. Either way I hope the micropayment vendors prosper, because small Web publishers need them. But whether micropayment succeed depends on consumer acceptance. Tomorrow I'll look at the flip side of the coin.

Tom Abate MiniMediaGuy “Cause if you ain’t Mass Media, you’re Mini Media.”

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