For the past fifteen years, ever since the World Wide Web hid mainstream consciousness, it's been predicted by many, including myself, Guy Kawasaki, usability guru Jakob Nielsen, and writer Scott McCloud, that micropayments would become the next big thing... any day now... just wait and see...
It hasn't happened.
Micropayments is the idea that you click on something and you buy a song or a picture or whatever for download, for a small amount, like five cents, twenty cents or fifty cents. This is not practical with credit card payments since the fee is more than fifty cents. (I think iTunes works because most people buy more than one song at a time.)
For a couple of years there was a pretty good system called BitPass, which I used. The buyer went to their site and bought "units" which then could be spent in small amounts on sites which used the system. Guy Kawasaki was involved with them. And I think I was their biggest vendor until they went bust.
My experience with that system gave me a clue as to why micropayments have not taken off: when I sold twenty pictures for fifty cents, I had some sales, but when I sold four hundred pictures for ten dollars, I sold more! It was the same price per picture, but people wanted to buy the larger amount at a time.
So what I'm wondering is if we are wrong in only considering the pain of spending money, but not also the pleasure of spending money. Spending fifty cents is exciting for a child, but for an adult it has to be five or ten dollars to give a kick.
Maybe instead it is the amount of content which you get that is the important bit. But maybe not. Think about it: say you're looking at a painted plaster souvenir in a shop. It's priced at ten dollars. If you like it, you buy it. But if it's priced at five cents, it's clearly junk! You don't bother.
It's a different matter if we are talking about things we actually need. We buy them regardless. But things you can buy via download are mostly things we could do fine without, so the value is all in the mind. And so what value we attach to it is influenced by the price. And so things priced less than a dollar are "worthless", and so micropayments have not attracted enough attention to go mainstream.
I experienced this 25 years ago when I was a traveling peddler. We would put stuff out to sale were we doubled our money, but at a great low price, and things wouldn't sell.
ReplyDeleteWe then tripled our money on the same product, and couldn't keep it in stock.
When ever we wanted to increase sales, we upped the price. Don't understand it, but that was how it actually worked. Price influenced the thought process as to whether or not the product was good, or bad.
Looks like things haven't changed. Even in my business now, I get the price too low, and it won't sell, or worse, I end up with lousy customers who are hard to collect from.
As a consumer:-
ReplyDeleteI can go in a shop and buy a candy bar, and maybe a soda, or stop by to grab an ice cream. Single, low cost item. Normally fast cash transaction, and immediate gratification.
If I go into the CD shop (yes I do), I typically am no longer interested in singles. Where's the satisfaction in a single? I'd rather have the album, it fits better into my life. It's also debit card sized purchase with modest wait in line.
I do still buy postcards, and more often than art books. Yet I bought some Domai downloads of CD's, and would not consider spending the effort of buying onesy twosy orders. On-line purchases are slower and more painful than in store purchases, they just guarantee availability (eventually) and save you running off to the store. However if I still lived in a British city I would stroll around one afternoon in a month and hit all the CD and book stores, stopping for a candy bar and pasty as appropriate.
I think micro payments work in the stores, but until there is a smart card equivalent on-line, I think on-line prices will be big ticket only.
Oh, and for too cheap. Sure, if I see a pair of pliers for $5 I wonder how soon before they will crack under load. A $20 pair will let me leave the store feeling confident, but when they fail I'd feel ripped off.
The biggest problem with paying $0.02 to read a comic is the mental effort to decide how much it's worth. Bigger units of sales are easier to deal with. I can't decide how much one article is worth, but I can figure out that it's worth $50 per year to me to have access to the Wall Street Journal.
ReplyDeleteYes, good point. Every decision is a little added stress and time.
ReplyDeleteI've been reading some of your stuff here, and man would it kill to not do something half assed for once in your life?? You never research anything and end up looking like a complete twat when people have to correct your idiotic ideas.
ReplyDeleteI think Google Adwords has filled the void that micropayments didn't.
ReplyDeleteIt's quite an elegant solution: the visitors of the site don't even need to decide to pay and there's no money being taken out of their pockets.
Thanks for this thought!
ReplyDeleteI saw a documentary some years ago that showed the same thing as Baloo explained. It's nice to bring it back into consciousness.
So funny to think that (unconsciously) we think that the money invested gives the value of the stuff, so, within a certain limit, we like to pay more... So interesting.
It seems that we are basically, somehow, programmed to like fair deals!
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But we know that a big part of the clothing for example is made in Third World countries for incredibly low wages. Then, if it is sold (ex: Gap) for a 100 bucks, one can know the production cost was around 5 bucks or less. So, when I find the same stuff for 15 bucks in an asian store, I know I have around the same chances to buy something good.
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I ever gave dance classes fro free, and the students were not serious. I gave dance classes for money, and they were serious.
You will find many valuable psychological insights in the old Donald Duck comics => uncle Scrooge has expressed it there already in the Fifties: "Which doesn't cost anything is of no value" (I have translated back the German version "Was nichts kostet, ist auch nichts wert.")
ReplyDeleteIt seems to be a deeply built-in mechanism ... I have made the same experience: When I try to give a bodywork session for free (e.g. as introduction or as promotion), nearly nobody takes it serious (there are rare exceptions), but when I charge enough money, then it's totally different. And when I give after a few paid sessions a free one as bonus, then it is taken as a great gift. Strange.
Yes, very strange.
ReplyDeleteI wonder if Robert Heinlein ripped off Carl Barks? One of the sayings of his Lazarus character was "anything free is worth what you pay for it".
Heinlein was very intelligent, but very materialistic.