Why should there be arguments for or against micropayments?
The only issue is can it work? and that is not something about which there can reasonably be a "YES I am for it working" or NO I am against it working." This is not an ideological question; it is a practical one and practical people will either solve it or not. To argue, (as Davies does in the link referenced by Cowen below,) that there is some sort of impossibility because of transaction costs is a bit short-sighted and only reflects current reality. A businessman would say "We have a deal except we have to lower the transaction costs. If we can't, then no deal."
Why not use web technology to charge people very small bits for downloading songs, or reading blogs for that matter? An earlier note of mine discussed mental transactions costs -- having to ponder the small charge each time -- as a potential problem. An excellent post by Daniel Davies provides further, and better, ammunition against the micropayments idea. His key point: at some point micropayments have to clear through real financial institutions and the real shuffling of paper. Right now we don't have the technology to do this more cheaply than credit card companies do, and they don't find very small transactions to be worth their while.
Davies' post is indeed persuasive as to one factor limiting micro-payments. But it's only the story now and merely presents business hurdles to overcome. I am somewhat puzzled by any tone of advocacy; either someone will be able to make it work or no one will be able to make it work. All seem to agree that it's
1. a good idea
but
2. it's not happening.
It's great that people are applying their minds to explain why it's not working now.
But now and forever are a long way apart.
Agreed for the technical costs; it strikes me though that fraud-related costs can't be cut by technological improvement, assuming that technology is available to fraudsters.
Posted by: dsquared | Sep 18, 2003 at 05:06 AM