March 05, 2003

Is there a trend towards micropayments for content or services?

I have been thinking a lot lately about how anybody will make money on the web in the future. It seems that web advertising has become less effective every year. "Pop-ups", "Pop-unders" and other annoying tactics have made most web users hostile to web ads, and more and more lawsuits are taking place. (See this article about the Gator situation, where a piece of spyware was swapping ads in web pages.)

Many sites are now using a "pay-to-not-see-ads" policy, and in many cases it seems to be successful. Users get to have a much better experience using the site, and the site gets the funding it needs to operate directly from the information consumer. Some shareware products, like Eudora, use the same technique to make users pay for using an application.

Some sites, like the New York Times, are free, but charge to see old articles. This model makes sense to me for many reasons. The evolution of business models in the world of publishing did not lead to a dead end. I think that paying for good content through micropayment subscriptions will be the next wave for content sites. The only new wrinkle is that subscriptions will be dynamic and of much finer granularity. (For example, subscribing to the "Science" section of the newspaper for the next 3 weeks.)

One very interesting company that I have been meeting with that has developed solutions for content providers who want to begin charging for content is Javien. They have built a service that is easily branded by the customer with their own logo and interface, and that allows sites to charge on a pay-per-view basis, a subscription basis, or both. Some of their customers sell access to archives, others sell monthly reports. In the future, they hope to integrate with other systems and enable music and movies to sold through their system as well.

The key to their technology is the ability to securely protect content to be sold. All the content is kept in a secure proxy server, and only released to the user once the payment has been made.

I think that this kind of solution will be the only way that most web-based content businesses will survive. But before this is truly viable a universal system, perhaps based on Federate Identity (MS Passport, Liberty, etc) that will make this type of transaction effortless to the user.

Posted by cyrus at March 5, 2003 02:46 PM | T r a c k B a c k
Comments

Hi Cyrus,

Fancy 'meeting' you this way. I love it! Thank you so much for linking me...I'm very honored. How did you find me?

Anyway, I'm very impressed with your work...still need more time to read everything, but wow. Do you ever get to Japan? Remember we almost met up in San Diego way back when? I would love to catch up next time you are in Tokyo. Please let me know, OK?

Mie

Posted by: Mie on March 11, 2003 06:54 AM

I just was looking at random blogs, and stumbled upon your site! It is well done!
It would be great to meet up again, perhaps in Tokyo some day soon. I will stay in touch!

Take care,

Cyrus

Posted by: Cyrus Shaoul on March 11, 2003 11:39 AM
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