The Case against Micropayments

by on March 6, 2005

I just came across this great article from 2000 by Clay Shirky. He argues that micropayments are a bad idea that are doomed to fail because they economize on extremely cheap resources (bandwidth, content) at the expense of a relatively valuable resource–the user’s time. He persuasively argues that there’s no such thing as a no-brainer transaction–if a micropayment is large enough to be worth the bother to the seller, then it’s large enough that the buyer will want to consider it before approving it. But the time and annoyance of having to think before clicking on every link the user encounters might vastly outweigh the value of the penny being transacted.

Another way to put this, I think, is that we already have micropayments: they’re called ads. Users pay for content, not with cash payments, but with their time– giving a split-second of attention to the ads on the page as they read the content. And it turns out that in most cases, advertisers are willing to pay more for ad impressions than users are willing to pay for content. And users prefer ads to micropayments because micropayments take more time and hassle to deal with than ads that can be easily and safely ignored.

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