why micropayments don't work

Filed in archive Technology on September 7, 2003

clay Shirky writes about the nature of micro payments and provides some excellent new viewing points. What struck me most is:

"This strategy doesn't work, because the act of buying anything, even if the price is very small, creates what Nick Szabo calls mental transaction costs, the energy required to decide whether something is worth buying or not, regardless of price. The only business model that delivers money from sender to receiver with no mental transaction costs is theft, and in many ways, theft is the unspoken inspiration for micropayment systems."

His final conclusion:

"People want to believe in things like micropayments because without a magic bullet to believe in, they would be left with the uncomfortable conclusion that what seems to be happening -- free content is growing in both amount and quality -- is what's actually happening."

Via Due Diligence