A better version of your question is – why do newspapers charge for a monthly subscription instead of a per-article fee? The simple reason is that the numbers just don't work out. They'd have to charge a lot per article and have people pay for a lot of them to break even with the current subscription or ad-supported model, and that's not going to happen. And even if it does, there would just be too much day-to-day variance in sales. The reason subscriptions are popular is that businesses like a steady, predictable stream of revenue.
Now try and build a micropayments ecosystem ontop of this infrastructure that is very expensive to interact with (in the context of $0.01 charges). Amazon can do it for AWS as they aggregate many small charges into one bill, resulting in the service cost not being dwarfed by the payment processing cost.
The technical challenges of doing it with credit cards are overwhelming (in CC parlance, a "microtransaction" is anything under $10) due to fee structure.
You can simplify this by using a different payment rail (in my case, Lightning over Bitcoin), but now you have a different problem: nobody has Bitcoin.
You also need to add the lack of convincing incentive: since microtransactions don't yet exist, there's no proof that that's a market for them. That leap of faith is a significant barrier.
Clay Shirky: http://web.archive.org/web/20060214180624/http://www.openp2p...
Andrew Odlyzko: http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropaymen...
Nick Szabo: http://web.archive.org/web/20080514172459/http://szabo.best....
To stay strictly with the analogy, 1) what is our online license plate? 2) how would one send a bill after translating license plate to home address?
To me, these are fundamental web browser capability deficits. Tim Berners-Lee envisioned this and put some HTTP response codes in the registry with a TODO bookmark and never got around to it or something like that. It is possible but we will have to call in the committee.
They can. See https://blendle.com/, though the going rate there is considerably more than 0.01. But that's a question of pricing, not of logistics. The way it works is that you pay a small-ish lump sum up front and then you draw down that balance in small increments. That is different from true micropayments where you can send small amounts to anyone on demand, but it's a proven model.
The real problem is that to scale this beyond payments to a fixed set of vendors you basically need a license from the federal government. You need to either be a bank or a money-transfer agent, and both of those have extremely high barriers to entry, basically insurmountable, mainly to prevent money laundering, which is the tough nut that no one has been able to crack.
You can then give anywhere from 1 bit to whatever to the streamer. Some streamers will set minimums of 5 or 25 bits. At end of month the bits are converted back to real money minus twitch fee. And they send check to streamer.
The problem really isn't in the tech. Its solved and easy. Its getting some intermediary to be used by many. New York times can't be it for itself. It needs to be something that a user buys bits or whatever and then can use a large variety of websites.
People resent that the credit card companies take 3%, but it takes more than just 'transfer money from this account to that' but also dealing with fraudulent buyers and sellers.
In the case of you visiting a site and feeling you didn't get 0.005 cents worth of value it is very clear that somebody could perceive it was unfair. In the advertising economy, however, no one party sees the whole transaction so rip-offs can be pervasive and people don't know.
As others have noted it all boils down to user agent support. Otherwise most publishers probably won't consider giving up ad or subscription financed models.
Also, forcing users into subscriptions allows for better demographics data/statistics.
In real life if you want to give somebody a dime, you just do it. But online you have to query your account to make sure you have enough money to make the payment, reserve the funds so the payment can go through without stopping other pending transactions, pass it the amount through some infrastructure where you can dispute the charge at a later date (if needed), and you also have to make sure the government is able to track your transactions for tax and anti-money laundering purposes.
For Amazon it's a different situation because they're charging you for a service based on usage. They have given you an account number and they handle all the accounting on their end. It's not a general payments system.
Practically things like Spotify and Netflix are microtransactions; you just don't have to worry about the details of how much each product costs.
Unfortunately the incentives for these marketplaces are to power them with subscriptions instead of, say, a monthly bill, and so what tends to happen is fragmented markets where new players hope to capture a segment of the monthly subscriptions people are willing to maintain instead of a fraction of the market as a whole.
On the other hand, I am willing to spend $80 on a book if it contains really valuable information.
One idea I like is spending $x flat each month and then consume as much as I like knowing that the amount gets shared equally among all the creators whose contents I have consumed. There probably are businesses with such a mode out there but I am not aware of any.
1. It's not merchant fees or inconvenience. E-wallet apps are very common in Asia and they let you load an amount once and pay multiple smaller amounts. They even auto reload.
They're, at least for the time being, cheaper then using any other payment gateway and are even free most of the time.
They're also in fact quicker and more convenient than using a credit card because your phone is more likely to be at hand and the transaction often involves just scanning a QR code and tapping confirm.
They're a very viable way to do microtransactions.
2. Culture
Microtransactions have been around for a long time in Asia so have good adoption rates. This was the result of having to pay transaction fees in USD but having a currency that's a lot weaker. Think having to pay $1 for lunch and the transaction fee being $0.50.
In the west, not so much. People aren't used to doing that because companies prefer a steady income from recurring subscriptions and the cost of transactions are proportional. Quite a few things that don't need to be subs are for some reason.
In Asia subs are a higher threshold for sales. (At least they used to be, they're much more common now.)
I think the endless discussion of a desire for "micropayments" is just another excuse for "We don't really want to pay for content and we imagine if you get it down to a penny, that's so close to zero, we think it would basically be free."
I imagine if someone solved it, there would be some new complaint (like "Do you know how many articles I click into each week? I am getting charged a penny for every single one! This is killing me!")
The internet doesn't like paying writers/content producers. The internet loudly objects to every means to pay content producers: ads, content marketing, tip jars, etc. It all gets decried by someone, somewhere for existing at all.
People basically think content producers are supposed to be slave labor and then don't like it if you put it that way.
Edit: to be clear, I think chasing the mythical beast of "If only we had micropayments, then we could pay for content!" is like friends who say "If I won the lottery, I would give you half." What they really mean us that in theory they would like to do something for you, but in reality they aren't going to do anything for you in the here and now and probably would change their mind if they really won.
Both winning the lottery and solving the micropayments problem are sufficiently long shot that you probably won't have to pay up. It's frequently code for "I wish you people could get paid. It's sad that writing is slave labor. But I don't want to give you my hard earned money."
I m not sure why this model is not being adopted by blogs , i guess it's because those companies don't want to go into the content moderation minefield. It's all fun when coins are paid for virtual sheep, but if people start being activists with the micropayments vendor it's a really bad
I don't think Ads are a bad model for content monetizing, they have been the dominant way to monetize newspapers since forever. HN's constant preaching against advertising is illogical, and discourages people (willfully?) from creating more ethical , better forms of advertising.
1. Credit card vendors have flat fees that will eat up a whole transaction if it's too small. For instance, strip has a flat 30c fee. This means the only reasonable way to do this is to have a user pre-pay a large sum and reduce from that, or to batch their transactions and extend them some credit. The former dissuades people from making a payment at all, and the latter runs the risk of bounced charges or users never purchasing enough to justify the charge.
2. There is no universal payments API. Browsers are starting to work on this with the w3c web payments standard https://www.w3.org/Payments/ but this is just for user input. You still have to work with companies like Stripe or PayPal to then actually make the charge.
3. Dark patterns are more successful. You see this with a lot of game currencies. By forcing users into larger purchases, you can get them to justify spending more (e.g. bundling multiple items into one package, maybe with "discounts") and if you sell your own currency, you can make the values not add up evenly so that the user has leftover balance that they perceive as being "wasted" unless they buy more.
I work on a web extension that provides a javascript API for making payments using the Bitcoin Lightning network: https://lightningjoule.com/. I really love the possibilities that small payments open up, and have been working to smooth out the UX of having to confirm a payment every time: https://medium.com/@wbobeirne/introducing-joule-allowances-2.... However it's still a long way from any mainstream adoption.
There was such a service in The Netherlands but they pivoted to a subscription model (still p*ssed about it)
https://www.niemanlab.org/2019/06/micropayments-for-news-pio...
Being a payment processor in the ways that are safe and efficient and irreversible, at least in the US, requires a money transmission license in each state that costs on the order of $1M per state to obtain.
I really really wanted to start a micropayment processor, but it's basically illegal to do it the way I wanted to.
Up to $1 or $2 a piece.
I just want it like Blendle used to be that I can get my money back if I jump back out after a few seconds and I want some more choice (travel and fashion isn't exactly my stuff but actively looked for tech stuff to read there and hardly found anything).
There was Flattr, but they pivoted from their original idea because they couldn't make it work for some reason.
It can't be implemented on the level of individual sites - the solution needs to be universal, like Google adding a 'tip' button to Chrome + Play Store payment integration.
The hope with the paywall is if you keep seeing it, you'll go ahead and pay to unlock it, and the amount you're paying offsets the transaction fees.
1000 users each paying 20 cents for ten articles (so assuming -double- the rate you propose, and charging only at the end of the monthly billing cycle) is still a loss of likely around 1/4th the revenue even with a cut rate payment provider (due to the large fixed cost of 2-4%). So might make $50. It's -negative- if using something pleasant to integrate with (because they will charge for that convenience with a larger fixed cost, like Stripe, who will charge $.30 + small percentage per charge), unless you work with them to design a new pricing model for you.
Converting 50 of those thousand (so just 5%) of those people to paid users at $5 each is going to be north of $200 you keep, even if you use Stripe and don't negotiate anything.
And for those users that -will- load up a news site intentionally, the economics are even starker; a subscription means you'll likely go to their site, and stay there. Pay-as-you-go pricing incentivizes you to not visit the site, and instead find other, cheaper news sources.
AWS pricing works because of the scale of the resources people tend to use, and that for businesses, using those resources = additional revenue. It is spending money to make money.
Google & Apple should waive their 30% for this.
The bottom line is network effects, I think.
As in, you sign up for my service, ACME Micropayments, and give me whatever you want as a monthly subscription. Based on that and your web activity, ACME Micropayments determines a per ad amount and starts bidding on advertisement space (but only to show to you). In the sense of GDPR this is one of the few things that might make sense to opt into tracking for.
Anyways, if you win the ad space you don't see an ad and if you don't win the ad space the site you are visiting still gets paid. If you pay enough monthly to outbid everyone, you are paying for an ad free experience. If you low ball it you still see a bunch of ads (until the end of your year/subscription period where with a surplus of money the bidding can go up).
The transaction costs of small transactions quickly overwhelm the value of the transaction. This gives rise to market structure included (especially) the firm and the bundling within of non-market transactions.
THIS! And having seen the standard of journalism and the amount of ads they fill the content with, I'm rarely, if ever going to waste $5 a month for a subscription. Often, I see an interesting article which hides behind a paywall, and I'd pay to read it, if a micropayment system was in operation.
Each newspaper is already charging you $0.01 an article, from their perspective. They give you an issue every day that has 100s of articles and it costs you like, a $1? $2? So each article is indeed super cheap for you to consume.
As others observe, you as a consumer probably aren't asking to be gated at every article - you are probably imagining some sort of general fund from which the paper draws down. Now if you really like just one paper or magazine, then you are back to a subscription model in this case.
So your use case is most probably that you want to read a FEW articles from LOTS of sites. Like, 20 from the NYT, 20 from WSJ, 30 from Slate etc.
Now the problem is to have an entity that is a 3rd party relative to these sites, which manages the common kitty. I vaguely remember some companies trying this, I can't remmeber the names, but you can see why this won't be easy. First, there's conflict of interest. It's tough to decide to enable a platform which also enables subscriptions to competing sources. Second, the platform company itself has to strike these deals individually because AT&T/the Mercers/George Soros haven't yet bought up all the news sources, which is a lot of friction.
And third, the execs at the sites have to decide that this complicated arrangement is really going to attract a completely new set of subscribers who actually like their content but just haven't signed up because the subscription price is too much. Why is it intuitive that _at scale_, a non subscriber's main barrier is not their affinity to or interest in the content itself, but this reluctance to commit to the subscription model? Why even should I assume that this unserved market has significant marginal utility to me as a company, relative to all the other ways I am making money? Even if all this is true, as an exec, I'd probably first experiment with tiered subscription on my site, and have multiple gates, rather than buy into some micro payment kitty system.
[Edit] As I ruminated on my own analysis, I realized that what you are looking for is the "cable TV" business equivalent for news sites. So maybe it's not totally undoable, if it's already happened with another media industry, but I think it'll be worth thinking about whether such a model works on time sensitive content or not. The typical participant in a cable TV system has a TON of resale value but with news articles, it's mostly one-and-done. Is there really enough aggregation value that a new business can survive on it? Just how many different versions of this riot and that election and those chicken fajita recipes and these 50 cool ways to decorate your bathroom are you, the consumer, going to pay for?
It could work if you started with some long-form subset of this content, and I think that's somewhat the inspiration behind sites like Medium and Substack. Not entirely ofc, because they are betting on the long tail of producers, not consumers, but there's also the aspect of the latter, in that this content tends to have long-term value.
As with any new business idea, there's no "will work/won't work" answer here. It's more like, "What form does this work in?"
Quite a few states require you to collect sales tax on sales to customers in those states. Most have thresholds and you only have to collect taxes if you exceed those thresholds, but unfortunately most of those thresholds are of the form sales of at least $D dollars or at least T transactions.
$D is usually reasonably high, like $100k or $200k, but T is often 200.
So 200 people in South Dakota each pay $0.01 for an article on your site generating a whopping $2 in revenue...but you have 200 transactions so you owe sales tax on that $2. Same thing will probably happen in a bunch of other states.
And so there you are, with tiny revenues from many states, but having to register with their tax authorities, having to file tax reports (quarterly in most cases, but I think some may be monthly), pay filing fees in some (which might be more than your revenue in those states!), and of course actually send the tax money.
Now throw in other countries. There is VAT in the EU, for instance. Most countries have VAT thresholds, but those often do not apply to out-of-country sellers, so you might have to deal with VAT for European that comes and buys one of your $0.01 articles.
There are some things that help with this. In the US there is the Streamlined Sales Tax Agreement, which is an agreement between about half the states where if an online seller agrees to collect sales tax for all sales in all the participating states (even the ones that they do not meet the thresholds for), the states will pay for the seller to use a service like Avalara or Tax Cloud, which will handle the rate calculations, the filing, and all that at no charge to the seller.
But that only covers about half the states. Those services will handle the rest for you, but not for free, so you can't escape tax pain.
With VAT in EU, there is a thing called VAT MOSS that you can sign up for. You sign up for VAT MOSS in one country (Ireland is a good choice for US businesses), and then you just have to file one quarterly report with them listing your sales in all EU countries and the tax owed, pay that tax to the VAT MOSS country, and that country then distributes their shares to the others.
The VAT situation is considerably nicer than the US sales tax situation, because VAT is per country. I just have to know that a customer is in, say, Germany, to know how much VAT to collect. In the US, the sales tax depends on address. 123 Fake Street in a town can have a different tax rate than 124 Fake Street, and the seller is expected to deal with that.
If instead of charging $0.01 per article you make the site free to users and plaster it with ads and make your money from those ads all those tax issues go away. The money you make from the ads is just ordinary business income, that gets taxes as part of your corporate income tax. The tax is the same regardless of whether someone who saw the ad lived at 123 Fake Street or 124 Fake Street.