There’s an interesting opinion piece by Alan Kohler in the Business Spectator, linking the lack of an online micropayment system with the imminent demise of traditional media. The basic problem, and I agree with Alan’s point, is that it is currently inconvenient to make small purchases over the internet. As a result owners/sellers are under pressure to simply give their content away for free, or rely on a rapidly diminishing advertising revenue stream.
The incredible blooming of iPhone applications and the creation, from nowhere in just a couple of years, of a booming global “iPhone app” cottage industry, has demonstrated the biggest tragedy of the internet: the failure to find a viable micropayments system.
In fact I would go as far as to say this failure is the reason journalism as we know it and traditional media companies are in danger of dying.
Newspapers and magazines in print are sold for ‘micropayments’ at newsstands and newsagents – $1 to $10 – but you can’t do that online. Therefore publishers are stuck with expensive, long-term credit card subscriptions or giving the content away.
– Alan Kohler, Size matters, Business Spectator, 17 June 2009
The solution to this micropayment problem has been chirping away in our pockets and handbags the whole time. I’m talking about mobile phones. The notion of a mobile phone as virtual wallet/purse is not a new one. Advocates of a cashless society have been predicting the usurping of coin by the mobile phone as a transaction instrument ever since, well, ever since the invention of the mobile phone. And every day millions of people all over the world use their mobile phones to make small transactions whenever they purchase ringtones and/or text services from their telco carriers. In fact I understand it’s a multi-billion dollar industry. Why anyone would want to pay for Crazy Frog is a mystery to me, but there you go.
So can this model ever extend to other micropayments, such as buying on online edition of a newspaper or magazine?
Well the answer is yes, and in fact Coca Cola tried this some years ago with their vending machines. You’d text a message to a special number, some electronic shenanigans would go on behind the scenes, the can of Coke would be dispensed, and the cost of the Coke (+additional charges) would appear on your next mobile phone bill. At some point I expect you’d want to drink the can of Coke. Simple. Effective. The same principle could be applied to an online newspaper. You’d text a message (e.g. “issue”) to a special number (e.g. 133-news). A unique, random password or electronic token would be messaged back to your handset, and you would use this token to log into the site. The cost of the token would be minimal (say $1) but you could only use it to view that particular day’s issue of the newspaper. If you wanted to read tomorrow’s edition that would require a whole new token (and another $1). And all your transactions would be neatly itemised on your next monthly mobile phone bill. (Naturally you could choose to buy an ongoing subscription using standard current credit card methods if you wanted multiple issues. I’m only talking about very small, one-off type purchases here.)
All this seems rather obvious. Many people much smarter than me have thought of all this before. So the question really becomes, why hasn’t this taken off in a big way? Where are my mobile phone micropayment options? The issue, surely, cannot be technical. Indeed, a glimpse of a possible reason can be found over at Mobile Industry Review…
The biggest hurdle is getting the business relationships in place with companies like ours, the mobile carriers, the operators and the financial services. We are working hard to find the right business construct.
– Tim Attinger, Head of Product Innovation at Visa.
Or, as Mobile Industry Review says, “who gets what split of the revenue”. Pie. It’s always about who gets how much pie.
The mobile-phone-as-a-virtual-wallet paradigm needs a big push from a powerful sponsor. And I think it’s the old print media companies desperately fighting for survival, and desperately searching for a viable business model in today’s “Web 2.0” world, that can really put this thing into gear. Would people purchase online newspapers this way? I don’t know. I certainly would, as long as the price is right and the content is good and the convenience is there. For $1 I would expect access to a full edition (i.e. identical content to the dead-tree version) of the newspaper, and I would expect the company to make access to that day’s edition I paid for perpetual (i.e. I get to keep that copy forever – again, just like a paper copy). But discussion of long term archiving of online records is perhaps a topic for another day.
I wonder if Rupert Murdoch reads my blog. That’ll be $1, thanks.