Micropayments Revisited

unbridled enthusiasm for an unproven solution does not cause him to overstate the results of his experiment

Tell us how you really feel... :-)

that means being patient and knowing how to properly interpret the results.

SCIENCE!

Let me be a dick for a moment:

Your post reads more like "Preparations for an argument before the facts are in."

(takes off his dick hat)

Seriously, from your comments it's easy enough to read between the lines to see that you strongly dissagree with micropayments as a business model.

My advice... Drop this until a year from now. By then some real data will be in. i.e. if Scott claims success, others will follow in his footsteps and their success (or failure) will be the true test.

But this does bring up something that interests me: Why does he have an obligation to publish the results? What business of ours is it how well this micropayment scheme works out? He is (at some level) a businessperson and how he chooses to run his business is his own damn business.

I realize online comics aren't really a 'zero sum game' and there is a certain amount of community here... isn't there also a certain amount of competition for our 'online dollar'?

Just wondering...

In Response to lemur666 (#6681):

Admittedly, I have few facts upon which to base my predictions, aside from experience with other schemes presented in the past that supposedly were going to solve this problem. But there are certain hurdles that a micropayments system will need to get past before it is successful. Registering users in a simple and easy way is one; loweing the cost of individual transactions is another. We've discussed this before ad nauseum.

McCloud has an obligation because he positions himself as a comics pundit. I'm not sure if you're familiar with his work or not, but most of his career has involved writing about comics as a whole. He is seen as a source of scholarly information by people in the industry and journalists outside of it. He has written books touting the revolution that micropayments will bring to the online comics world.

Because he positions himself in this manner, I feel it is in McCloud's best interest for a full disclosure of his findings, if he wants to maintain his credibility. I doubt he would disagree with me; I am sure that he is eager to show what his new system can do.

My problem with his ideas in the past is that they were in no way based in fact; McCloud admitted to me as much in our phone conversation two years ago that he had no real system on which he based his predictions; he was simply an optimist and a cheerleader. The fact that two entire years have passed since then with little development would seem to support that.

It is his optimism that I feel sometimes gets in the way of a sober and scientific analysis of the facts; I am simply stating that it would be best to take precautions to make sure that we don't get swept up in a wave of hype as we did two years ago. Again, if he succeeds, it will be a great thing for comics as a whole.

As far as competition goes, I don't really see myself in competition with anyone. We do our own thing, and if people like it, that's cool. I actively support other comic strip artists and have always been a proponent of the medium, not just for us, but for everyone.

In Response to jon (#6682):

two entire years have passed since then with little development

To support your point - I had kind of assumed that since nothing had been happening that micropayments had already been proven useless.

The big problem I see with micropayments is transaction aggregation. Nobody is going to want to receive a thirty page credit card bill, filled with line items of $0.05.

The second big problem is transaction verification. If my credit card bill contains $200 in aggregated micropayments, I'm gonna wanna know for sure that I really made those payments. And I'm not going to want to reconcile by hand, either.

(takes off his dick hat)

That's spelled c-o-n-d-o-m.

In Response to zamphir (#6683):

(takes off his dick hat)

That's spelled c-o-n-d-o-m.

condom = dick hat? hmmm....

Doesn't that cover a little more than a hat normally would?

I see only three possibilities:

A. You wear very large hats
B. You buy very small condoms
C. You have an abnormally large ... well...let's be serious, it's probably A or B...

In Response to zamphir (#6683):

Well the 'credit card bill' issue would be solved by someone like Paypal acting as an intermediary.

You'd get a bill on you credit card saying "Pay Pal Micropayments: $200" you could then go log into paypal and see the individual charges.

It's odd given that early experiments in Pay web site subscriptions failed early on in the internet, but now they are increasingly popular. And now that Paypal had become a sort of de facto (if not de jure) currency on the internet they could pull off something like this. Especially if they did it with the same level of 'client' support they have now (with details on their site on how to add a little micropayment gizmo to other people's sites.)

Mind you, I don't see them rushing into this market... and if they don't do it, it's highly doubtful anyone else will. Too much infrastructure required and too much dependance on everyone adopting the same 'format' (who wants to maintain multiple Micropayment accounts with different vendors?)

Still, time will tell... If paypal thinks they can make more money this way they will eventually do it...

Which is a long-winded way of saying "Scott won't make it happen. Paypal will."

Jon, you lovable bitch.

In Response to lemur666 (#6698):

also consider the support costs of dealing with people disputing lots of $0.25 charges. It doesn't take too much time on the phone, via email, or whatever, for the portion of that which is PP (or whoever's) actual profit to evaporate.....if we assume that the percentage of transactions generating disputes is approximately the same as for larger transactions, then it drastically reduces the ability of the intermediary to actually make money.

In Response to stilllwaiting (#6697):

Okay. You're obviously not hip to the slang from the late 80's/early 90's.

It used to be, back in the day, that a condom was known as a "Jimmy" or a "Jim-hat".

It is this to which I was making a humorous reference.

And if you're going to be so literal, you should accept the fact that a Hat is merely that which covers a head - and is not precluded from covering more.

In Response to zamphir (#6683):

(takes off his dick hat)

A dick hat is a fedora. You know, like Sam Spade and Samuel Greeley wear.

In Response to Rich (#6718):

A dick hat is a fedora

Only if you don't share it with anyone but your friends...

In Response to zamphir (#6712):

You're obviously not hip to the slang from the late 80's/early 90's.

Ahh! Here is where the generation gap divides us. I'm sure there's plenty of 80's/early 90's slang that I'm hip to, but seeing as I was around 12 going into the 90's, I had little use for condoms.

you should accept the fact that a Hat is merely that which covers a head - and is not precluded from covering more.

Now, zamphir, I'm disappointed. From someone whose pedantry I've come to admire greatly, I expected more. Obviously, I've accepted the fact that a hat could be used to cover move than just the head. Point A in my previous post offers the possibility of your wearing hats of larger than typical size. If that possibility were true, said hats would likely cover more than just your head.

You are a behemoth in the pedantry field. If you’re going to retort my elusion towards a jibe at your masculinity, don’t tap my chin! Knock my head off! Minor pedants like myself need someone to look up to.

In Response to stilllwaiting (#6780):

You are a behemoth in the pedantry field
Are you calling me fat?

If you’re going to retort my elusion towards a jibe at your masculinity, don’t tap my chin!

I gave you what you could take. If I had given you any more, you would have cracked. This is proven by the fact that you don't know the difference between allusion [reference.com] and elusion [reference.com]

In Response to stilllwaiting (#6697):

A. You wear very large hats

You mean like Agent USA [classicgaming.com]?

I'd post this as a news item, but the news-posting app is hosed right now (Phillip did a major upgrade to our dev server and then ran away for a week).

Anyway, McCloud's micropayment comic is up [scottmccloud.com]. It seems to use a system called BitPass [bitpass.com], which is basically an account that you can fund with a credit card or PayPal, and then spend will-nilly all over the internet. Of course, you can't, because McCloud's site is the only place you can spend the money. So your minimum $3 account can buy you 12 views of McCloud's comic, but not much else.

Ignore the signup hurdle. Ignore the lack of purchaseable online content or support for this system just about anywhere. If this is a feasible business model, why wouldn't PayPal just implement it themselves? They could knock these guys out cold with a mere thought -- they could just eliminate the middleman and use their huge established base of sellers and buyers. But they don't because it's not economically feasible for them to put a micropayment system like this in place. The individual cost of transactions is just too high. I give BitPass less than a year before the company closes shop and takes their ball home (likely taking the balance of your BitPass account with them).

In Response to jon (#6986):

I guess I'm talking out my ass, because I haven't studied how BitPass works, but...

I suppose the problem with using PayPal directly is that they charge $.XX/transaction. So it would seem BitPass addresses this by aggregating PayPal transactions. Ok, but how do they pass along quarters to McCloud? Surely they must spend resources to process the transactions (for accounting, confirmation, and the actual movement of funds).

This would mean that at best BitPass is offering McCloud a better rate for the same service that PayPal already provides on a per-small-transaction basis. There are only two possibilities. (1) PayPal has been somehow getting by with massively overcharging per transactoin (in which case Amazon would've eaten their lunch); or (2) BitPass won't scale.

I used to see this same pattern in a former boss of mine who wasn't very technical. He'd try to argue for a technical solution to a technical problem without ever understanding the real issues that had to be overcome, steadfastly believing that whatever they were, they could be overcome if we just add one more level of complexity.

Naturally, he'd come up with some clever treatment for a symptom, only to stare in disbelief as we calmly tried to explain how the underlying cause would simply manifest itself in a different way. It was a lot like watching someone try for perpetual motion, really.

In Response to mea37 (#6993):

Based on my reading of the bitpass user agreement and privacy policy, it seems that they plan to make money in three ways:

1) locking up your $3 along with everyone else's in a non-or-partially-non-liquid interest-bearing account, and keeping the combined interest for themselves.

Additionally, you agree that BitPass may use these funds held in pooled accounts to pledge to a Bank, or multiple Banks, amounts necessary to secure merchant processing accounts. BitPass will manage the pool of commingled funds in such a way as to minimize impact on your account.

However, no assurance can be made that managing pooled funds in this manner will not adversely affect the liquidity of your account or other accounts.

2) Possibly selling your contact information. (the privacy policy is very weak).

3) Not actually doing anything and keeping your money...


b. BITPASS MAKES NO WARRANTY THAT (i) THE SERVICES WILL MEET YOUR REQUIREMENTS, (ii) THE SERVICES WILL BE UNINTERRUPTED, TIMELY, SECURE, OR ERROR-FREE, ... (v) ANY ERRORS IN THE SOFTWARE USED TO PROVIDE THE SERVICES WILL BE CORRECTED.

Seems to me like they'll be looking for a new business model soon (unless they can make out with #1 and 100000 members @ $3 each)

By the way, if you want to send me $3, I won't do anything with it either, but thanks :)

In Response to mea37 (#6993):

Man, I didn't know you used to work where I work...

That's amazing.

I like the idea of a micropayment system but it seems to have a problem of adoption. That could be one of the reasons why PayPal is letting BitPass run with this ball for a bit until they see how it developes. Since McCloud is currently the only person generating content for this I would tend to agree with Jon that this really won't be an accurate measure of how well this technique will work.

I don't think that means that it should be given up on. Kurtz over at pvponline looked into what it takes to get set up as a bitpass content provider and was told that it was in beta. Hopefully one or two more people will get in on providing some material to bitpass and a more accurate read can be taken on how well the system will actually work. Certainly if bitpass was as easy to sign up on and use as, say paypal, I would set up a small account there.

We'll see how it does turn out. It is always amazing to see McCloud's self promotion machine in action. One thing I will give the guy, he is good at getting his ideas to people, wether you agree with them or not.

In Response to mea37 (#6993):

Based on reality in the UK - might be different in the US, but I doubt it...

(1) PayPal has been somehow getting by with massively overcharging per transactoin (in which case Amazon would've eaten their lunch);

Typically, credit card providers charge between 2% and 5% per transaction, with extra charges for all sorts of situations where something goes wrong. (Online transactions are especially bad for this.) PayPals rate of 2.2% plus 30c is incredibly good. They're barely making money on that - they're only doing so by going for high volume and low admin.

For even quite large companies, this sort of rate is impossible to get anywhere else. One business I've done work with is getting hit for 4% plus 10p (15c) per transaction online and 2.5% offline, and they have a 9 figure turnover.

(2) BitPass won't scale.

Guess where my bet goes... The trouble, as Jon has said, is admin. Say that Scott or whoever gets only half the money you pay. Of your three dollars, 37c is already going to PayPal. Credit card is probably similar. $1.50 goes to the merchant. That leaves BitPass with $1.13. Out of this, they need to pay for twelve transactions, and turn a profit. Their (lack of) warranty isn't worth the paper it isn't written on. Complain to your credit card company, and they won't even read the "user agreement". Most likely, they'll refund your money, pass the cost on to BitPass, along with a hefty admin fee. PayPal won't be much more sympathetic - they want to keep the credit cards sweet (otherwise they get hit for the chargeback fees) and admin costs them money.

One complaint per thousand transactions will eat up pretty much all the money, and somewhere in all this they need to pay for staff, hardware, bandwidth, marketing... To be viable, they need complaints below the one in a hundred thousand level. Which is laughable.

So, yeah, BitPass won't scale. As soon as they're handling thousands of transactions, they're gone. They simply aren't charging enough to pay for it.

Cheers,
Graham

In Response to albionsoft (#7031):

They simply aren't charging enough to pay for it.

Profit is Step 3. They're still at Step 1.

In Response to albionsoft (#7031):

"To be viable, they need complaints below the one in a hundred thousand level. Which is laughable."

True and if nature teaches us anything there is always, ALWAYS at least one jack ass that will complain just for the sheer joy of complaining.

As an aside Tycho over at penny-arcade has weighed in with his opinions about this kooky micropayment thing.

In Response to tenebrae (#7041):

Slashdot [slashdot.org] has picked it up as well....ensuring a lot of discussion (most of it pointless since people don't read the articles)

In Response to zamphir (#7032):

They're collecting underpants?