March 15, 2005

An academic at McGill University has a simple plan to stop the plague of unauthorized music downloads on the Internet. But it entails changing the entire music industry as we know it, and Apple Computers, which may have the power to make the change, is listening.

from Would you pay 5 cents for a song?

This makes perfect sense to me. I find the lack of success of micropayment on the web a bit odd, really. The web is cut out for micropayment. The fact that it has never worked in the past has less to do with the basic concept and more because noone ever really pushed micropayment on large scale*, because the security problem remains unsolved and perhaps also because it's extremely difficult to 'microprice' a product. "Why charge 5 cents when you can charge 10 cents and double the revenue," asks someone. In reality of course, you don't double the revenue because by overpricing you reduce the number of people that purchase.

But how do you determine what is overpricing when you microprice? How do you settle on that magic figure that maximizes profit? How do you convince the bean counters in your company of that impossibly low price that you hope will attract hordes of users? Then, how you keep them from raising the price when they do?

* BitPass is a great idea but I don't recognize more than one name from their list of clients. I'm yet to hear about a big micropayment success story.

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