WEBVTT - TechStuff’s Two Cents on Micropayments 0:00:00.280 --> 0:00:02.960 Brought to you by the reinvented two thousand twelve Camray. 0:00:03.160 --> 0:00:08.920 It's ready. Are you get in touch with technology? With 0:00:09.000 --> 0:00:17.480 tech Stuff from how stuff Looks dot com. Hello, everyone, 0:00:17.520 --> 0:00:20.360 welcome to tech Stuff. My name is Chris Pollette, and 0:00:20.400 --> 0:00:23.320 I am an editor at how Stuff works dot com. 0:00:23.320 --> 0:00:25.560 Sitting across from me, as he always does on the 0:00:25.560 --> 0:00:28.600 occasions when we're talking about stuff in the studio is 0:00:28.680 --> 0:00:32.959 senior writer Jonathan Strickland. You'll find your fortune falling all 0:00:33.080 --> 0:00:36.080 over town. Be sure that your umbrella is upside down. 0:00:38.520 --> 0:00:41.000 That's a good one, Thank you. It's that's that's a 0:00:41.120 --> 0:00:43.599 that's an oldie that I'm going back to you there. 0:00:43.640 --> 0:00:46.479 But today we wanted to talk a little bit about 0:00:46.920 --> 0:00:50.280 the concept of micro payments and micro transactions, and they're 0:00:50.320 --> 0:00:53.880 gonna be some other related topics that fall into this 0:00:54.560 --> 0:00:58.120 um because we're talking about, you know, spending little amounts 0:00:58.160 --> 0:01:02.720 of money for something in return, usually some web content. 0:01:02.800 --> 0:01:05.160 That's really where micro payments kind of came out of. 0:01:05.240 --> 0:01:08.720 That's what the concept grew out of. So to really 0:01:08.800 --> 0:01:11.000 understand this um, you know what, I think we're gonna 0:01:11.000 --> 0:01:13.280 need to do something we haven't done in a very 0:01:13.319 --> 0:01:17.040 long time. No, we need to get into the way 0:01:17.080 --> 0:01:19.240 back machine, and I just happened to have it right 0:01:19.240 --> 0:01:21.920 back here in the corner. It's a little dusty. Um, 0:01:22.000 --> 0:01:25.600 it looks like Josh Clark has drawn wash Me with 0:01:25.720 --> 0:01:28.080 his finger on the dust. So that doesn't matter, all right, 0:01:28.080 --> 0:01:31.960 all right, pile in, let's go. Let's see. I'm just 0:01:32.000 --> 0:01:36.480 gonna I'm gonna set this to uh. Let's go to 0:01:36.560 --> 0:01:43.200 ninety two, all right, And here we are in nineteen 0:01:43.400 --> 0:01:46.880 ninety two. I was still in high school. Back then, 0:01:47.040 --> 0:01:49.560 I was still in college. Back then. I went to 0:01:49.640 --> 0:01:55.440 the Governor's Honors program that year. Anyway, But here's two So, 0:01:55.440 --> 0:02:00.520 so the web is just just a baby now, right, 0:02:00.560 --> 0:02:04.360 But people don't know really about the web. Yeah. Yeah, 0:02:04.480 --> 0:02:07.440 people at CERN know about the web, but outside of 0:02:07.520 --> 0:02:10.799 certain not that many people know. So at this point 0:02:10.960 --> 0:02:14.600 the web is nothing but potential, right. We have no 0:02:14.680 --> 0:02:16.520 idea where it's going to go from here. In fact, 0:02:16.560 --> 0:02:18.680 I can tell a story that back when I was 0:02:19.120 --> 0:02:21.639 in college, so a couple of years after this moment 0:02:21.720 --> 0:02:25.120 right now, I thought the Web was just a fad. 0:02:25.200 --> 0:02:27.080 And I looked at that and I said, who the 0:02:27.080 --> 0:02:31.040 heck needs that tail? Nick? And yeah, yeah, I was 0:02:31.160 --> 0:02:35.160 using a Unix shell account. Yeah, yeah, I did. The 0:02:35.240 --> 0:02:38.560 I would use a similar thing as well, and so yeah, 0:02:38.680 --> 0:02:40.959 you know you might tell that into another computer. You 0:02:41.000 --> 0:02:43.560 might use FTP, but you you're like, what the heck? 0:02:44.040 --> 0:02:48.120 This web thing that's for you know, that's for babies now, 0:02:48.320 --> 0:02:50.639 Just the way the same way I felt about graphic 0:02:50.760 --> 0:02:54.200 user interfaces when they finally started popping up. I'm like, oh, 0:02:54.240 --> 0:02:58.000 come on, you can't memorize forty pages worth of commands 0:02:58.040 --> 0:03:01.920 to navigate through your operating system. Sure, but why would you? Right? Yeah, no, 0:03:02.080 --> 0:03:05.359 I eventually came around, but it took a while. So anyway, 0:03:05.400 --> 0:03:07.919 at this point, no one really knows what's going to 0:03:08.000 --> 0:03:11.720 happen with the web, even companies that are looking at 0:03:11.760 --> 0:03:14.000 the web. As the Web is developing, we're just gonna 0:03:14.320 --> 0:03:17.040 we're just gonna stroll through time here. Well, you know, 0:03:17.080 --> 0:03:19.440 I'll just put the way back machine on this wagon 0:03:19.520 --> 0:03:22.239 here and we'll just tug it along behind us until 0:03:22.280 --> 0:03:24.200 we need to get back to modern day. We're just 0:03:24.200 --> 0:03:27.200 gonna stroll through time. And as as time goes on 0:03:27.240 --> 0:03:29.640 in the web develops, companies start to look at the 0:03:29.639 --> 0:03:34.600 web as a possible place to make money. Right, But 0:03:35.200 --> 0:03:38.720 how do you make money on this new medium. Yeah, 0:03:38.720 --> 0:03:42.560 I mean in the early we're talking about government and 0:03:42.640 --> 0:03:47.320 educational institutions. Big companies weren't really using the internet, right, 0:03:47.400 --> 0:03:50.840 and even even much private individuals weren't using it very 0:03:50.920 --> 0:03:53.400 much yet, so there was no need to worry about 0:03:53.440 --> 0:03:56.080 things like how are you going to monetize your website? Right, 0:03:56.080 --> 0:03:58.120 But by the time you get to around nine four, 0:03:58.200 --> 0:04:01.160 you've already got some companies looking to the possibility of 0:04:01.240 --> 0:04:05.760 using the web in a way to either supplement their 0:04:05.800 --> 0:04:10.040 advertising on television and newspapers, so they would create a 0:04:10.080 --> 0:04:12.640 static website. You would go to this website and it 0:04:12.760 --> 0:04:15.120 might have like a brief information page about the company 0:04:15.160 --> 0:04:18.960 and its products or services, and it never changed, very 0:04:19.040 --> 0:04:21.599 very dull for people who wanted to go back and 0:04:21.680 --> 0:04:23.719 check it out again. In fact, it almost felt like 0:04:23.760 --> 0:04:28.400 the web was like just gonna be this massive magazine 0:04:28.560 --> 0:04:31.279 and the articles would never change, you know. But that 0:04:32.200 --> 0:04:37.040 evolved over time as well. Now, in the beginning, when 0:04:37.200 --> 0:04:41.720 companies started getting onto the web and people started to think, hey, 0:04:42.000 --> 0:04:44.120 the web might be away where I could actually you know, 0:04:44.200 --> 0:04:47.240 leverage this medium to make money, So not just companies 0:04:47.240 --> 0:04:50.720 but individuals as well, the question came up how do 0:04:50.760 --> 0:04:54.120 I make money from this? And there were really two 0:04:54.360 --> 0:04:57.839 main schools of thought on how to make money based 0:04:57.880 --> 0:05:01.960 on web content. Now, I'm not talking about selling products 0:05:02.000 --> 0:05:03.960 on the web, because that's essentially using the web as 0:05:04.000 --> 0:05:07.760 a catalog, right, I'm talking about you are actually selling 0:05:07.920 --> 0:05:12.360 content on the web, whether that is some sort of experience, 0:05:12.640 --> 0:05:17.400 or it's a story, or it's you know, a a 0:05:17.440 --> 0:05:23.360 subscription to a news service, anything along those lines. One 0:05:23.400 --> 0:05:26.520 way of paying for that is to sell advertising space 0:05:26.520 --> 0:05:29.719 on your website. And another way of paying for that 0:05:29.960 --> 0:05:35.520 is to actually charge a fee for those particular little 0:05:35.560 --> 0:05:40.480 services or pieces of web content on a per instance 0:05:40.720 --> 0:05:44.400 basis to the user, a direct fee to the user, right, 0:05:45.440 --> 0:05:49.799 We're sorry fee or a monthly fee, association fee, paywalls 0:05:49.839 --> 0:05:53.400 another example. And we're seeing that back in the modern day. 0:05:53.560 --> 0:05:56.040 In fact, I think we've made our point about how 0:05:56.200 --> 0:05:58.760 the early web like no one knew what to do yet. Yeah, 0:05:58.760 --> 0:06:01.960 I mean, people aren't offering subscription rates right at that time, 0:06:02.000 --> 0:06:05.440 really and and you mean you did have people thinking 0:06:05.440 --> 0:06:08.560 about it, like O'Reilly Media was doing that with the 0:06:08.839 --> 0:06:11.599 g n N network. They were had a subscription fee, 0:06:12.000 --> 0:06:15.200 and of course people like a O L the online 0:06:16.040 --> 0:06:19.520 Uh services that weren't part of the Internet. You're paying 0:06:19.520 --> 0:06:22.200 a subscription fee to get their content. So I don't 0:06:22.240 --> 0:06:24.240 want to make it sound like nobody was doing that, 0:06:24.360 --> 0:06:28.000 but yeah, yeah, for for your average company, it just 0:06:28.120 --> 0:06:31.040 wasn't a thing yet. But you did have a lot 0:06:31.080 --> 0:06:33.800 of smart people at this time we're talking about in 0:06:33.839 --> 0:06:38.320 the mid nineties at this point, coming up with ideas 0:06:38.360 --> 0:06:42.039 to create a micro payment system, a system where you 0:06:42.080 --> 0:06:46.200 could pay just a few pennies sometimes depending upon the content. 0:06:46.240 --> 0:06:48.599 I mean, it might be something as simple as you 0:06:48.640 --> 0:06:52.200 wanna view this web page that has content on it 0:06:52.200 --> 0:06:54.400 that you're going to find valuable, it's ten cents to 0:06:54.440 --> 0:06:56.880 do that. There were a lot of smart people looking 0:06:56.880 --> 0:07:02.280 at ways to possibly standardize that, and including people at IBM, 0:07:02.400 --> 0:07:05.680 and you had people at the World Wide Web Conference 0:07:05.800 --> 0:07:09.040 trying to come up with ways of doing this UM, 0:07:09.080 --> 0:07:11.680 trying to find a way to standardize this so that 0:07:11.760 --> 0:07:16.720 people could take that opportunity both on the the side 0:07:16.720 --> 0:07:18.960 of the provider and the side of the consumer, and 0:07:19.000 --> 0:07:22.040 to take advantage of that UM because there are some 0:07:22.080 --> 0:07:26.360 problems right, A lot of transactions online and not even 0:07:26.400 --> 0:07:32.440 online but in person, have built into them a transaction fee. Well, 0:07:32.480 --> 0:07:35.440 if you add a transaction fee on top of a 0:07:35.520 --> 0:07:40.320 micro payment, it seems ridiculous. If you're you're spending fifty 0:07:40.400 --> 0:07:44.640 cents for the micro payment, right, and there's a let's 0:07:44.640 --> 0:07:47.040 say twenty cent fee on top of that, You're you're 0:07:47.040 --> 0:07:50.960 thinking that I'm paying I'm paying nearly a fifty seurcharge 0:07:50.960 --> 0:07:53.400 on top of what I'm already you know, what the 0:07:53.720 --> 0:07:57.840 cost of the content. Because the people who are like 0:07:57.880 --> 0:08:01.240 the credit card fee, for example, know that that's they're 0:08:01.240 --> 0:08:03.680 trying to make their money too, and on on something 0:08:03.720 --> 0:08:09.120 that's small, it's a much greater percentage of the actual transaction. Right. 0:08:09.440 --> 0:08:10.960 That's why a lot of places you go, like a 0:08:11.040 --> 0:08:13.960 restaurant or something, will say, you know, ten dollar minimum 0:08:14.960 --> 0:08:17.960 purchase because it's too expensive for them, because they're the 0:08:18.000 --> 0:08:20.400 ones paying taking care of the fee. Of course, They'm 0:08:20.440 --> 0:08:22.640 sure they pass it along. You sure they build it. 0:08:22.680 --> 0:08:24.760 They might build it into the actual price of the 0:08:25.240 --> 0:08:28.880 whatever the food items are. Yeah, but that I mean, 0:08:28.920 --> 0:08:31.080 so you may you may have seen exactly what we're 0:08:31.080 --> 0:08:35.040 talking about in a different context. Ye. So, but yeah, 0:08:35.040 --> 0:08:37.880 if you were to walk up to a store and 0:08:38.000 --> 0:08:41.920 you wanted to buy this, um like a something for 0:08:42.000 --> 0:08:44.120 ten dollars, and they said, all right, well, here's it's 0:08:44.160 --> 0:08:47.320 ten dollars. That's what's gonna cost you. But we have 0:08:47.360 --> 0:08:49.280 a transaction fee that we have to put on top 0:08:49.320 --> 0:08:52.320 of it, which is another five dollars, and so that 0:08:52.320 --> 0:08:54.520 brings up the tunnel price to fifteen dollars. You might 0:08:54.600 --> 0:08:57.800 bulk at that, and I've I've actually had that experience 0:08:58.440 --> 0:09:02.679 through a a a very large company that is a 0:09:02.679 --> 0:09:06.040 ticket broker. I think we can all guess what I'm 0:09:06.040 --> 0:09:09.600 talking about here, but I will not name names. But 0:09:09.640 --> 0:09:13.120 I was going to purchase tickets to go see um 0:09:13.320 --> 0:09:16.680 Metric because I really wanted to see Metric. I wanted 0:09:16.720 --> 0:09:19.320 to hear Black Sheep played live. And so I went 0:09:19.440 --> 0:09:22.600 to UH purchase the ticket and the ticket costs twenty dollars, 0:09:22.600 --> 0:09:25.319 and I thought twenty dollars, twenty dollars to see Metric play. 0:09:25.720 --> 0:09:27.560 I'm not really familiar with all their music, but I 0:09:27.640 --> 0:09:29.800 love the song Black Sheep. I am willing to pay 0:09:29.920 --> 0:09:33.679 twenty dollars for this experience. The convenience fee and transaction 0:09:33.760 --> 0:09:40.079 fees UH added up to ten dollars, so it was right, Yeah, 0:09:40.120 --> 0:09:43.120 it was fIF of the ticket price. Was was at 0:09:43.160 --> 0:09:45.480 it on top of it. And yeah, that's when I said, 0:09:45.480 --> 0:09:48.040 you know what, I don't care how convenient it is 0:09:48.160 --> 0:09:50.200 or how it transacts. I am not going to do that. 0:09:50.320 --> 0:09:53.160 And so so, yeah, there's this problem. And when you 0:09:53.200 --> 0:09:56.040 get down to the micropayments, it it sounds like, well, 0:09:56.080 --> 0:09:58.320 you know, you're just talking about pennies anyway, but people 0:09:58.440 --> 0:10:02.560 tend to to bulk at that, and companies do too. 0:10:02.640 --> 0:10:05.360 It's not just the consumers, but the companies as well, 0:10:05.679 --> 0:10:08.800 because they're you know, they don't want to to give 0:10:08.840 --> 0:10:11.680 that experience to their consumers. They because it reflects poorly 0:10:11.720 --> 0:10:15.080 on them. You know, most consumers aren't necessarily gonna take 0:10:15.120 --> 0:10:19.680 the extra leap and say the the financial institution that 0:10:19.760 --> 0:10:21.560 is in charge of this transaction fee is the one 0:10:21.600 --> 0:10:24.839 I'm angry at. What they tend to think is darn 0:10:24.960 --> 0:10:28.439 you company, A. I can't believe you're adding this fee 0:10:28.440 --> 0:10:31.880 on top of this this price. I'm met at you now. 0:10:32.080 --> 0:10:35.400 So it wasn't working out for anybody, um and so 0:10:35.440 --> 0:10:40.520 eventually these really smart people who were working on standardizing 0:10:40.559 --> 0:10:46.360 the micro payments kind of let it fall. They you know, 0:10:46.520 --> 0:10:48.360 just couldn't see a way of making it work. And 0:10:48.480 --> 0:10:50.839 plus a lot of a lot of companies at that point, 0:10:51.440 --> 0:10:55.840 we're looking to focus mainly on web advertising. They decided 0:10:55.920 --> 0:10:59.600 between those two pathways, the web advertising method worked better 0:10:59.679 --> 0:11:03.559 for the um than trying to charge people a per 0:11:03.760 --> 0:11:08.120 instance fee on their content. So let's first of all, 0:11:08.160 --> 0:11:09.920 let's let's jump back in the way back machine, get 0:11:09.920 --> 0:11:13.160 back to modern day. Okay, okay, So all right, well, um, 0:11:13.240 --> 0:11:15.480 the people with the big hair staring at us. Yeah, yeah, 0:11:15.559 --> 0:11:17.680 let's uh let's get out of here. And I'm not 0:11:17.920 --> 0:11:25.479 you know, before the grunge music starts to play. Okay, 0:11:25.520 --> 0:11:29.280 back in eleven. That feels better. Um, you know, it's 0:11:29.280 --> 0:11:35.080 bigger on the inside is on the outside the way 0:11:35.120 --> 0:11:38.199 back machine. I think it's the chameleon circuit that's doing that. 0:11:38.320 --> 0:11:42.400 But anyway, uh So, companies started to look at web advertising. 0:11:42.440 --> 0:11:45.560 It was an easier way in the long run then 0:11:46.080 --> 0:11:49.800 creating a micropayment system, because since there wasn't a standardized approach, 0:11:50.080 --> 0:11:52.880 you know, you would have to invent your own, and 0:11:52.920 --> 0:11:55.640 then you'd have to secure it and encrypt it because 0:11:55.640 --> 0:11:59.400 you wouldn't want anyone to be able to sniff out 0:11:59.440 --> 0:12:04.240 transactions and take advantage of uh that and steal from 0:12:04.280 --> 0:12:06.520 either the company or the customers that would be what 0:12:06.559 --> 0:12:12.640 we call a bad thing. So, uh, people and companies 0:12:12.679 --> 0:12:15.559 started looking at at web advertising. And it's not an 0:12:15.600 --> 0:12:20.920 ideal situation either, because web advertising itself is a little hinky, right. 0:12:21.840 --> 0:12:23.760 I mean, you know, your you might be getting a 0:12:23.840 --> 0:12:28.560 fraction of a penny per click on your website depending 0:12:28.600 --> 0:12:31.840 on how popular your website is and the advertiser that 0:12:31.880 --> 0:12:35.440 you're able to partner with. Yeah, but the desperation behind that, 0:12:35.440 --> 0:12:38.000 that the especially to make money on the part of 0:12:38.080 --> 0:12:44.880 the website creator, um led people to put banner advertising 0:12:44.960 --> 0:12:47.760 and you know, every nook and cranny they could find 0:12:47.760 --> 0:12:51.000 and start doing popovers and pop ups and pop unders, 0:12:51.920 --> 0:12:54.440 and uh, of course that creates a backlash too, right. 0:12:54.600 --> 0:12:57.079 You know, you get a point where the user experience 0:12:57.200 --> 0:13:00.720 is affected enough where the users say, hey, I don't 0:13:00.800 --> 0:13:03.240 like going to your site anymore because I feel like 0:13:03.280 --> 0:13:07.040 I'm being bombarded with advertising and I can't actually see 0:13:07.080 --> 0:13:12.360 the content. And so if your content isn't compelling enough, 0:13:13.000 --> 0:13:15.080 then there's no reason to go to that website. So, 0:13:15.120 --> 0:13:17.160 I mean, there's there's this delicate balance you have to 0:13:17.200 --> 0:13:19.840 make and and there's some companies that do this really 0:13:19.840 --> 0:13:23.160 well in the sense that they have a good reputation. 0:13:23.480 --> 0:13:27.920 They consistently put out content that people find valuable. However 0:13:27.960 --> 0:13:30.480 you wanted to find that it doesn't. I might not 0:13:30.520 --> 0:13:33.880 necessarily find it valuable, like I wouldn't necessarily go to 0:13:33.920 --> 0:13:36.520 a celebrity gossip site. But a celebrity gossip site might 0:13:36.520 --> 0:13:40.440 be very, very popular and therefore might be a a 0:13:40.440 --> 0:13:44.680 a desirable site for advertisers to put their ads on, 0:13:45.160 --> 0:13:46.560 and you might be able to get a pretty good 0:13:46.559 --> 0:13:50.120 click rate and a pretty good amount of money per 0:13:50.160 --> 0:13:53.960 click when you negotiate with that advertiser. Yeah. I was 0:13:54.000 --> 0:13:59.040 reading a couple of essays by Clay Shirky, who basically 0:13:59.360 --> 0:14:02.440 in in the early two thousand's was arguing that micropayments 0:14:02.600 --> 0:14:06.600 just don't work. Um. I think it could be argued 0:14:06.640 --> 0:14:11.400 that time has proven him right and wrong because it 0:14:11.440 --> 0:14:14.400 can work in specific instances. Right. Yeah. But that's part 0:14:14.440 --> 0:14:19.040 of it, though, is that, uh, there's an assigned value. Um. 0:14:19.080 --> 0:14:23.800 I think for things like luxury goods, like a high 0:14:23.920 --> 0:14:28.640 end sports car or brand name fashion close, there is 0:14:28.680 --> 0:14:32.560 a perception of value that this pair of genes is 0:14:32.560 --> 0:14:34.560 worth more than that pair of genes because it has 0:14:34.600 --> 0:14:37.160 this label on it. So it means you have money 0:14:37.160 --> 0:14:40.120 to spend. It means you know, it means something to people. 0:14:40.600 --> 0:14:44.200 The brand means something to people, um, and so people 0:14:44.280 --> 0:14:46.600 might be more willing to spend more money for that 0:14:46.640 --> 0:14:51.239 particular thing than the other. The thing is with micropayments, 0:14:51.280 --> 0:14:54.200 finding a way to assign a value to this very 0:14:54.240 --> 0:14:56.920 small thing that costs a very little amount of money. 0:14:57.360 --> 0:14:59.760 It's it's a matter of perception, and you have to 0:14:59.800 --> 0:15:02.960 fig you're out, am I willing to pay a dollar 0:15:03.080 --> 0:15:06.440 fifty for this? Or geez, it's only a dollar fifty, 0:15:06.640 --> 0:15:09.880 It can't be that good. Yeah, it's a it's a 0:15:09.920 --> 0:15:14.360 weird circular, it's strange argument, and it yeah, it is strange. 0:15:14.360 --> 0:15:17.880 It's very psychological and has has almost nothing to do 0:15:18.520 --> 0:15:22.400 with actual economics or technology. It has more to do 0:15:22.480 --> 0:15:25.080 with the way we think and the way we ascribe 0:15:25.280 --> 0:15:28.000 value to something. And another part of the problem is 0:15:28.040 --> 0:15:32.120 that so much of the content on the web is free, right, 0:15:32.160 --> 0:15:34.600 So we've conditioned ourselves to expect when we go to 0:15:34.600 --> 0:15:36.680 the web and we go to a website, we're gonna 0:15:36.680 --> 0:15:40.960 have free access to that information, and we just that's 0:15:41.160 --> 0:15:42.760 kind of how we assume it. And then when we 0:15:42.880 --> 0:15:47.040 encounter something like let's say the Wall Street Journal and 0:15:47.080 --> 0:15:49.320 you hit an article where you only get that first 0:15:49.320 --> 0:15:51.000 paragraph and it says, in order to get the rest, 0:15:51.000 --> 0:15:53.880 you have to subscribe. I'm wondering what the bounce rate 0:15:53.960 --> 0:15:56.960 is on that website. How many people say, you know what, 0:15:57.120 --> 0:16:00.440 I can find content about this story? So where else? 0:16:00.480 --> 0:16:02.000 It's not going to be The Wall Street Journal. So 0:16:02.000 --> 0:16:04.640 it's not going to be that take on the content. 0:16:04.800 --> 0:16:06.840 And if that's the take you want, you may end 0:16:06.920 --> 0:16:10.320 up ultimately disappointed in wherever you go. But I wonder 0:16:10.360 --> 0:16:13.760 how many people are willing to do that as opposed 0:16:13.800 --> 0:16:18.800 to breaking down and paying for that paywall experience. UM. 0:16:18.840 --> 0:16:21.640 I think part of where that comes from it's from 0:16:21.640 --> 0:16:25.520 the early days of the internet, because, as you what 0:16:25.600 --> 0:16:29.680 we're called we were just talking about, the early nineteen 0:16:29.760 --> 0:16:32.760 nineties is when the Internet really started making a transition 0:16:32.800 --> 0:16:39.200 from government and university UM communications to a commercial entity, 0:16:39.240 --> 0:16:43.480 at least here in the United States, and UM, you know, 0:16:43.760 --> 0:16:46.560 at that point, and there were online community splaces like 0:16:46.560 --> 0:16:52.040 the well um and other UH sites that basically sort 0:16:52.040 --> 0:16:56.480 of adhered to UM. Those are things that created the 0:16:56.520 --> 0:16:59.600 concepts like netiket Well, you don't talk to people like 0:16:59.680 --> 0:17:01.640 this on the Internet. If you're using all capitals, that 0:17:01.720 --> 0:17:06.240 essentially means you're shouting um articles. Information on the Internet 0:17:06.280 --> 0:17:08.959 should be free because the Internet is a you know, 0:17:09.040 --> 0:17:12.840 it's not owned by anybody, So anything that is online 0:17:12.960 --> 0:17:15.440 should be free to you. As you know, once you 0:17:15.480 --> 0:17:18.119 pay your subscription fee to your I s P. You know, 0:17:18.200 --> 0:17:20.840 the information is available to anybody. Uh, you know, because 0:17:20.840 --> 0:17:24.040 they were using net groups and you know, gopher sites 0:17:24.080 --> 0:17:26.200 and all sorts of other things where where you could 0:17:26.200 --> 0:17:30.040 find things like that. UM. And I think that started out. 0:17:30.080 --> 0:17:31.960 I mean, I think the early people who were there 0:17:32.760 --> 0:17:35.600 UM really got the sense that this is the way 0:17:35.680 --> 0:17:38.440 it should be. Uh. The Internet is a place where 0:17:38.440 --> 0:17:41.800 anybody can talk about anything and it's available for everyone. 0:17:42.400 --> 0:17:46.800 And companies are saying, well, we have responsibilities to our shareholders. 0:17:46.840 --> 0:17:49.760 We need to make money on this, and we have 0:17:49.880 --> 0:17:52.800 to find a way to recoup the investment that we're 0:17:52.800 --> 0:17:57.119 making in this new medium, and as a result of that, 0:17:57.119 --> 0:17:59.520 we're gonna put advertising on it, or charge a subscription fee, 0:17:59.560 --> 0:18:03.200 or charge you her article. UM. But I think that's 0:18:03.200 --> 0:18:06.080 where the conflict lies is that people who started using 0:18:06.080 --> 0:18:08.560 the Internet in that transitional period got used to the 0:18:08.640 --> 0:18:11.560 idea too and that, and and for a long time 0:18:11.680 --> 0:18:14.919 people on the internet have offered stuff for free to 0:18:14.920 --> 0:18:16.879 get started. Oh yeah, yeah, yeah, no, no no, no, no no, 0:18:17.040 --> 0:18:19.120 for the first two months you don't have to pay anything, 0:18:19.240 --> 0:18:22.520 or the first ten articles or um. And the music 0:18:22.560 --> 0:18:27.040 subscription services that like mog and audio that just started 0:18:27.600 --> 0:18:30.639 making a certain amount of time available, you know, to 0:18:30.680 --> 0:18:32.760 get you hooked on it so you will pay the 0:18:32.800 --> 0:18:36.760 subscription fee or the per song price or whatever. So 0:18:36.800 --> 0:18:40.520 now we get into where micropayments and micro transactions actually 0:18:40.800 --> 0:18:43.240 do work on the web. And well, like we said, 0:18:43.280 --> 0:18:46.520 they don't work in everything. It's not like, um, I 0:18:46.840 --> 0:18:50.879 don't think the average web developer when he or she 0:18:51.040 --> 0:18:54.159 is launching a website is going to necessarily find a 0:18:54.200 --> 0:18:57.520 lot of success through the micro payment method. Even if 0:18:57.600 --> 0:19:00.520 you think, hey, this is a fair price for this content, 0:19:01.000 --> 0:19:03.119 and it's not a lot like it might just be 0:19:03.200 --> 0:19:08.679 a cents again, because of the psychological barriers we've talked about, 0:19:08.800 --> 0:19:11.560 both the idea of oh it's if it's twenty five cents, 0:19:11.560 --> 0:19:14.560 it can't be worth anything. It's it's crazy to think 0:19:14.600 --> 0:19:17.520 that something that's priced at cents is somehow worth less 0:19:17.520 --> 0:19:22.880 than something you would find for free. But there's that perception, Um, 0:19:22.920 --> 0:19:25.920 you know, it's it let's but there are places where 0:19:25.920 --> 0:19:30.760 it does work, like iTunes for example, or Amazon the 0:19:31.040 --> 0:19:33.879 Amazon Music Store, the Digital Music store, where you're buying 0:19:33.920 --> 0:19:36.440 songs on a per song basis, and you're talking about okay, 0:19:36.440 --> 0:19:39.080 well I'm buying a song for you know, anywhere between 0:19:39.119 --> 0:19:42.520 sixty nine cents and a dollar twenty nine. Um, that's 0:19:42.520 --> 0:19:44.280 where it is working. I mean, that's that you would 0:19:44.280 --> 0:19:47.280 consider that a micro payment. Um. Micropayment, by the way, 0:19:47.359 --> 0:19:52.440 is one of those terms that doesn't have a firm definition. Yeah, 0:19:52.720 --> 0:19:55.280 you don't really have a way of saying, well, anything 0:19:55.440 --> 0:19:59.840 under this price is considered a micropayment. Anything over it 0:19:59.880 --> 0:20:03.560 is not a micro payment, although depending on the financial 0:20:03.680 --> 0:20:07.480 institution you're dealing with, that could be defined, you know, 0:20:07.520 --> 0:20:11.280 like PayPal I think says that anything below twelve dollars 0:20:11.359 --> 0:20:14.359 is a micro payment. Um, but that's PayPal, you know, 0:20:14.440 --> 0:20:18.520 It's it's not like that's the the definitive authority on 0:20:18.560 --> 0:20:22.800 what is and what isn't a micropayment. Anyway, the model 0:20:22.880 --> 0:20:27.320 of buying per song at nine cents or somewhere around 0:20:27.320 --> 0:20:30.840 in that area has worked. You know, people have have 0:20:31.400 --> 0:20:34.760 bought into that, and that's one of the cases where 0:20:34.760 --> 0:20:39.840 a micro payment approach has actually paid off. And you know, 0:20:40.080 --> 0:20:42.640 that's kind of interesting to me. It's it makes sense 0:20:42.680 --> 0:20:46.080 in a way because you know, we're used to buying 0:20:46.640 --> 0:20:50.680 music albums or even singles, you know, the back in 0:20:50.720 --> 0:20:52.960 the old days, we used to buy singles all the time, 0:20:53.400 --> 0:20:59.440 and either on cassette or on vinyls. I do too 0:21:00.080 --> 0:21:05.879 up left over from Chris's childhood, but from mine. I 0:21:05.920 --> 0:21:08.240 will make sure to get Hello Mota, Hello Pata back 0:21:08.240 --> 0:21:10.800 to you as soon as possible. Please, I'm you know, 0:21:10.840 --> 0:21:12.879 I'm sorry. I'm sorry. Sometimes I like to you know, 0:21:13.080 --> 0:21:16.200 Spin Records, and that's one of my favorites. Uh. Anyway, 0:21:16.320 --> 0:21:20.840 the um the we're used to buying songs, and we're 0:21:20.920 --> 0:21:24.560 used to buying music, so going to this micropayment model 0:21:24.600 --> 0:21:27.040 where you can buy individual songs, it appealed to a 0:21:27.119 --> 0:21:29.280 lot of people, including myself. You know, I had gotten 0:21:29.280 --> 0:21:31.119 to the point where I was no longer feeling like 0:21:31.160 --> 0:21:34.080 I was getting the album experience, you know, which is 0:21:34.160 --> 0:21:37.119 where I would buy an album from a band or 0:21:37.200 --> 0:21:40.120 artist that I liked and listen all the way through, 0:21:40.280 --> 0:21:42.840 and that was like the experience I wanted. I wanted 0:21:42.880 --> 0:21:47.280 to hear the transition from song to song, and sometimes 0:21:47.280 --> 0:21:51.119 that actually created a more meaning for me, or I 0:21:51.200 --> 0:21:55.000 just wasn't interesting to hear how they crafted the songs 0:21:55.040 --> 0:21:57.720 and how they arranged them on the album like that 0:21:57.800 --> 0:22:00.320 was a big deal. And then eventually it starts sounding 0:22:00.359 --> 0:22:02.280 to me like there were more and more albums that 0:22:02.320 --> 0:22:06.399 didn't really convey that experience to me as much, and 0:22:06.440 --> 0:22:08.960 then it was more like, hey, there are a couple 0:22:08.960 --> 0:22:11.639 of really good songs on this album. Those also happened 0:22:11.640 --> 0:22:14.480 to be the singles, and all the other songs are 0:22:14.600 --> 0:22:17.240 not that good and or at least I don't enjoy 0:22:17.320 --> 0:22:20.640 them as much. So that gave me the the ability 0:22:20.680 --> 0:22:24.000 to buy specific songs from an album without having to 0:22:24.040 --> 0:22:26.240 get everything else that I may or may not actually like. 0:22:27.320 --> 0:22:29.320 So I think a lot of people followed that they 0:22:29.400 --> 0:22:32.680 enjoyed that as well. So we started seeing that actually 0:22:32.720 --> 0:22:36.480 applied in other areas besides just music. In games, it's 0:22:36.480 --> 0:22:40.400 actually fairly it's becoming more and more common yep, and 0:22:40.560 --> 0:22:44.240 uh not just and and that actually is very common 0:22:44.280 --> 0:22:47.600 on the social network games, yes, the freemium games. Yeah, 0:22:47.640 --> 0:22:52.960 like on on Facebook and Google Plus. You see you know, games, 0:22:53.040 --> 0:22:56.800 especially Zinga Zingca is well known for doing this. UM. 0:22:56.840 --> 0:22:59.439 And I've played a couple of those games where I 0:22:59.440 --> 0:23:01.840 still think they're more like software toys than games. But 0:23:02.240 --> 0:23:04.000