Title:search

Micro-payments: is it a valid business model?

There are several web-based business models.  Is micro-payments a valid alternative?  Micro-payments can allow small payments for valuable intellectual property, which still preserve the generosity of the web, but without dependence on the advertising model.

 

The question is well addressed in this Stanford project on micro-payments

 

In my opinion at present, the predominant web-based business models are:

1) All web-site content is free and revenue is derived from data collection (i.e. via advertising based on consumer knowledge) and viral communication.

2) ‘Freemium’, (i.e. free, but pay for added premium value, which could be extra features, enhanced performance, better aesthetics, more user guidance…)

3) A join-up subscriber fee gives access to content, which is sometimes organised in categories according to the value of the subscription.

4) The web site is used as a shop window or as a marketing brochure, which is a supplement to traditional sales and marketing activities.

5) The web site is a service centre to support core activities and develop customer loyalty.

6) The web site as an integral part of the customer and supplier interface (i.e. in essence some effort and costs gets outsourced to customers and/or suppliers).

7) “Brand-me” aims to create a celebrity or brand effect with doses of excitement and ingenuity (it lies somewhere between the blog and the conference model, and often ties to a best seller.)

 

So the use of micro-payments is possibly an eighth model, and I'm sure there are many others.

 

Micro-payments compete against free, and like newspapers on the street compared to on-line newspapers, micro-payments can offer content and performance in an agreeable and easily accessible format.  

 

(For example, Apple charges about 1€ or $1 for songs, even though people can download music for free elsewhere, but Apple aims to offer an aesthetic user experience, both on the ipod and on the itunes web site.) 

 

However, the newspaper on-line subscription model has struggled, perhaps because of the aesthetic appeal of paper, the habit and convenience of picking up a paper in a newsagent or due to competition from free news sheets. 

 

For the benefit of small content providers, I hope that micro-payments will grow, but only if it is sufficiently convenient and not all of the ingredients are there yet.  It seems to me that it’s still a work in progress.  

 

There is the issue of friction by creating road humps in the flow, surf, crawl and trawl across the Internet.  Micro-payments also requirs people to become more accustomed to using a PayPal style account; or alternatively for pioneering credit approaches to develop such as payment via telephone credits, which already flourishes in Africa.

 

The search is on for the best mix of micro-payments and ‘freemium’ now.






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