Media companies should consider micropayments

Imagine walking into a fast-food restaurant and ordering a hamburger. The cashier says “Please fill out this form to purchase a cow.” This sounds ludicrous, but it’s not much different from how media companies have tried to adapt to the online world.

They argue that no-one wants to pay for content; everyone wants everything to be free. So to read an article, a consumer has to either pay for a monthly subscription or create a “free” account which will open them up to endless targeted marketing and sales pitches. The reality, according to a 2015 CRTC report, is that Canadian families spend an average of $203 per month on digital services. People are paying for access to content, just not for the content directly.

Like many people, I buy many things online. I frequently use eBay and pay with PayPal. It’s secure and very convenient, at least for purchases of a few dollars or more. The solution for digital media is to create a similar system for micropayments. Micropayments are very small payments; typically under a dollar but they could even be fractions of a cent if done electronically. That would allow consumers to pay for individual articles from newspapers, for instance, like how iTunes allows people to pay for individual songs.

For a newspaper that costs a dollar or two at the newsstand, a single article shouldn’t cost more than a few cents. (Even if the lack of advertising raises the cost, individual articles should still cost less than the entire paper does presently.) A Netflix subscription costs under $10 a month, and someone watching 20 hours of content, which is less than an hour a day, pays an average of 50 cents per episode. Watching more than that makes the effective cost even lower.

Here’s how a micropayment scheme could work. A user account could have yearly, monthly, weekly, and daily limits, and even a limit for individual transactions. Below the limits, transactions could happen automatically. Anything above a limit would require an explicit approval. Suppose I have a yearly limit of $100, a monthly limit of $30, a daily limit of $5, and an individual item limit of 25 cents. (The numbers don’t have to add up.)

If an online article costs 10 cents, and I haven’t exceeded any of my limits, when I choose to “read this article” the payment will happen automatically. If I go over a limit, such as if an article costs $1, then I get a notification that I’ll go over the limit and get asked if I want to proceed. The point is that as long as I stay below my limits the payments will be mostly invisible and convenient. The preset limits mean that I have peace of mind knowing I won’t get a big surprise at the end of the month.

One benefit of a micropayment system is the potential for anonymity; if both the payment and the article are funneled through the payment site, then the vendor doesn’t need to know who bought the content and can’t follow up with undesired advertising and promotions. This may sound like a loss to vendors, but it’s not; all of that marketing is to guess what consumers want, but by people paying for individual articles, media companies would know exactly how popular each individual item was. Furthermore, by adjusting how much they charge for individual articles, they could determine precisely what value people place on each one. Instead of trying to guess at what people might buy, they could see what specifically people did buy, and at what price.

Another benefit is the possibility of eliminating email spam. Most email spam is only profitable since the cost of delivery is essentially zero. At a cost of even a fraction of a cent, much of it wouldn’t pay. So an email system that charged even a penny (or possibly less) per item would eliminate mountains of spam.

I send a few emails a day, so at a penny apiece all of my email would amount to a dollar a month or less. (Probably a lot less, since many of my emails are internal to my workplace, and those would be free anyway.) The time I would save in not having to glance at subject lines for spam would easily be worth it.

If I can actually buy a burger, I’ll probably buy some fries to go with it, provided I don’t have to buy a whole field of potatoes.