I found an article called “Why the subscription economy has yet to hit its peak” on Marketing Week. It looked interesting and relevant to the topic of this article, so I clicked on it to read it and was confronted with two subscription options (£7 per week or £18 per week for the “ultimate” package) neither of which I was remotely interested in. I don’t want another subscription to anything. I already have a subscription to the Wall Street Journal, The Economist and MIT Technology Review (and Tabletop Gaming, which is excellent) and I don’t read even a fraction of that content.
If I had the option of paying £1 to read the Marketing Week article, then I would have cheerfully paid it, but without that option neither of us was satisfied: I didn’t get to read the article and they didn’t get my money.
If I could click on one button marked “Pay £1” and then start reading the article, I would do. If I have to click on button marked “Pay” and then type in my credit card details and my personal information and the amount etc etc they I wouldn’t, especially if I had to pay £2 in order to cover the transactions fees imposed by the platform, the acquirer, the scheme and the issuer. I have the £1, and I want to pay, but I can’t. I can go into a store a buy a pack of gum for £1 and pay in a couple of seconds with my contactless card, but I can’t do the same online.
This is hardly a new idea. The noted venture capitalist Marc Andreessen knows more about the web than I will ever do, and back in 2012 he told a Wired magazine conference in New York that “we should have built payments in the browser”. They got half way, because buried in your browser in addition to the familiar error 404 for page not found there is also error 402 for page requires payment. But no payment mechanism was provided and I note that the Collisons (the brothers behind Stripe) were quoted arguing that this is the reason that the web went from being an open environment and opportunity for all to an “oligopoly controlled by five companies now worth more than $3 trillion”.
A couple of years ago, Mance Harmon wrote here in Forbes that “today’s business models were not designed to protect consumers” and talked about the problems of trying to build micropayments on top of the legacy infrastructure. He was right: but what will stimulate the demand for micropayments and what technologies can be used to satisfy that demand? And not only for magazines with an established brand – what about the content creators trying to connect with their audience directly?
Amber Case says that micropayments could become “a new financial interface”, one where creators and consumers are both able to participate in the web economy”, and I agree. The idea of a web based on content rather than advertising is very appealing indeed. But to get there, I think we need a mechanism that is one button that sends a fixed tip (let’s say $1) to the creator of content. But I just don’t see how we can make that happen by building yet another layer on top of the legacy payment network.
Some people will talk about so-called “level 2” solutions built on top of cryptocurrencies and who knows, they may be right in the long term, but not now. Mr. Andressen said years ago that a “fascinating use case for Bitcoin is micropayments”. Observing that it was not cost-effective to run small payments through the existing payments infrastructure, he thought that Bitcoin’s divisibility would make it easy to send a thousandth of penny to anyone in the world for near-free.
A decade on, and we now have Twitter’s “Tip Jar” which does not use Bitcoin or digital currency some clever blockchain application that none of us had thought of before, but adds another layer on top of the creaking payment system to create a means to send someone a buck while simultaneously giving away your Paypal address and paying a transaction fee of one-third. Tip Jar simply sends you to a third-party payment platform (right now PayPal, Venmo, Cash App, Patreon and Bandcamp).
What could deliver the ideal form of micropayments? I’m experimenting with a few different models myself, running a subscription service on Substack and piloting a couple of online content micropayment schemes (including one from a Y Combinator startup that will go live on the 15Mb Ltd. web site shortly) but I’m not sure that any of these are the perfect solution (maybe there isn’t one – maybe it depends on the channel and content) but I have to say I am enjoying the renewed focus on the micropayments opportunity now.
Hands in the Tip Jar.
NFT available direct from the artist at TheOfficeMuse (CC-BY-ND 4.0)
We are long overdue a working micropayments infrastructure to deliver a different kind of internet, one based on content not advertising. It seems to me that there is now a chance that it will be central bank digital currency of one form or another. Not Bitcoin, not a tip system built on top of Paypal built on top of credit cards built on top of bank accounts built on top of central bank digital money. If Twitter has access to my CBDC wallet, then it can simply transfer £1 from my wallet to the creator’s wallet with the pseudonymity integral to a well-designed CBDC. I never get to see any of the creator’s personal information (unless they want me to) and the creator never gets to see any of my personal information (unless I want them to).
The micropayments dream from the earliest days of the internet may be about to be realised and I am sure that the implications of this are much, much more than helping a few Tik Tok teens get paid for whatever it is they do on Tik Tok.
(This is an edited version of an article first published on Forbes, 16th May 2021.)