Micropayments are back (in the news)

Issue 26/2019

Have micropayments as a viable source of revenue on the internet finally arrived? Some people seem to think so:

"The era of almost-everything-free-on-the-Internet may be evolving into the age of the micropayment with new software from IBM and Compaq, who are pushing for new Net standards to hurry things along."

That quote is from Wired, not from its most recent articles but its 1999 archives. You see, the idea of micropayments as a method of compensating content creators for basically anything you can imagine has been around for almost as long as the internet itself, and now they're back again:

"It's a problem that’s long flummoxed media outlets, and also one that’s increasingly frustrating consumers: The inability to pay a small sum, such as 25 cents or $1, to read an article online. Yet a breakthrough could be near, as big web platforms like Facebook and Kik are building technology that could mean a new revenue stream for news outlets and an alternative to consumers having to hand over their credit card information to read a single story."

Can Facebook (or Kik) solve a problem that has thwarted every large internet company going back at least as far as IBM's failed attempt in 1999? There's definitely scope for such a mechanism, as people really hate adverts:

"We have found evidence of negative links between national advertising and national wellbeing. Using longitudinal information on countries, from pooled cross-sectional surveys, we find that rises and falls in advertising are followed, a few years later, by falls and rises in national life-satisfaction, giving an inverse connection between advertising levels and the later wellbeing levels of nations."

But what do people hate more, adverts or paying for stuff? Even paying as little as a cent for a news article necessitates what Clay Shirky, writing back in 2000, called a "mental transaction cost", causing both "anxiety and confusion":

"Thus the anxiety of buying is a permanent feature of micropayment systems, since economic decisions are made on the margin - not, "Is a drink worth a dollar?" but, "Is the next drink worth the next dollar?" Anything that requires the user to approve a transaction creates this anxiety, no matter what the mechanism for deciding or paying is."

The technology for processing micropayments has been improving since they were conceived, with a number of recent examples using blockchain technology in an attempt to get micropayments to work. Alex Bosworth, for example, is using Bitcoin's lightning network to charge users a cent or two per article on his blog. A new platform, SatoshiPay promises "global, fast and easy micropayment solutions", again facilitated via the blockchain.

But while interesting, no one has yet found a way to get around "mental transaction costs", the ultimate bane of the micropayment model. People seem to be fine with monthly or annual subscriptions to an aggregation of content - Amazon, Netflix, Apple, Spotify, etc., all rely on this model to varying extents - but once you break it down further, it's just not worth people's time and effort to make the requisite number of decisions needed for such a system to survive.

Maybe Facebook will solve the problem of micropayments and in the process relieve us from the constant onslaught of advertising to which it, and others, subject us. More likely, micropayments will just form another piece of the constantly evolving Facebook revenue puzzle, for example instead of simply "liking" someone's post you'll be able to "tip" them using Facebook's "Globalcoin" currency.

Personally, I don't see such an implementation doing anything to disrupt the status quo, meaning the age of micropayments (as originally envisioned) is still as much of a pipe dream now as it was back in 1999.

Enjoy the rest of this week's issue. Cheers,

— Justin


The bits


Apple, privacy friend

Just joking. It turns out Apple lets apps use something called "background app refresh" to send tracking info like location and IP address, even late at night. Google is no better, though, and has gone ahead with its controversial plan to restrict ad-blockers on Chrome. Time to switch to Firefox if you haven't already.

Learn more:


What's up with Google and Huawei?

A couple of semi-interesting tidbits here. First, Huawei has benefited from government subsidies... just like every other big company out there (Tesla anyone?). Second, Google has re-added a Huawei phone to its Android Q beta program, with no explanation as to why. Hmmm...

Learn more:


Four big governments, four big problems

While Australia, the United States and United Kingdom continue to undermine people's privacy, the European Union is strengthening it, but at enormous cost and with unintended consequences leaking from every orifice (yes, the GDPR is that abhorrent). I'm not happy with the direction any of these governments are moving in with regard to privacy regulation. It's almost as if everyone in charge is no more technologically literate than Japan's cybersecurity minister, who famously admitted to never having used a computer.

Learn more:



Image of the week

View source

How Facebook, Apple, Microsoft, Google, and Amazon are investing in AI

"AI has become not a luxury but a must-have technology for those companies that wish to grow in a steady manner and keep up with the changing business environment."

I disagree. While there was/is a big rush to enter the AI space, most of the investment will end up wasted. Empirical studies are starting to show up showing that AI/big data-generated things like behavioural advertising aren't worth the extra capital, with "publishers only get[ting] about 4% more revenue for an ad impression that has a cookie enabled than for one that doesn't".


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Issue 26/2019: Micropayments are back (in the news) was compiled by Dr Justin Pyvis and delivered on 04 June, 2019. Feel free to send feedback, suggestions for future issues, ideas, insults, or pretty much anything that crosses your mind to his Keybase or Twitter account.