Issue 35

Micropayments are back (in the news)

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:


Other bits of interest


Image of the week

"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".

That's all for now. If you enjoyed this issue, feel free to share it via email


Issue 35: Micropayments are back (in the news) was compiled by 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 their Keybase or Riot.im account.