Cory Doctorow on Macropayments

In his column at Locus Magazine, Cory Doctorow has a piece on “macropayments.” It lays out a lot of his thinking in giving away his books for free, but also refutes the whole philosophical basis of micropayments at the same time. I like this bit:

Taking someone’s money is expensive. It incurs transaction and bookkeeping costs and it incurs emotional and social costs. Micropayments have historically focused on eliminating the cash overheads while ignoring the intangible costs. For a writer whose career might span decades and involve hundreds of thousands of readers, these costs cannot be ignored.

At various points in my career I’ve been involved in micropayment type startups. I’ve believed in the idea and it always made sense to me in the abstract and theoretical. When Scott McCloud wrote his defense of micropayments, I agreed and cheered along with him. However in the feet on the street sense, it’s impossible to note the relative lack of success of micropayments (remember Bitpass) versus the kinds of projects Cory lays out in his essay. It emphasizes to me the technocratic divide – geeks are always trying to solve people problems with technological solutions, and that seldom if ever works.

I’m working behind the scenes as an advisor to a new media/old media hybrid that is in a bit of a funding crunch. I’m almost wondering if the ideas Cory raises aren’t perhaps the way to go. Rather than looking to get $10 from thousands of people, what about getting $1000 from a few hundred people? When you look at the distribution of people who gave money to fund Jill Sobule’s next record, $70K of the $86k raised came from donations of $100 or more.

Maybe there is something to that, focusing on a few larger donors. In a way, that’s a shame because my leanings are to be communitarian and get lots of people involved. It may be that in terms of generating dough quickly, it is actually more effective to go big or go home.

In a slightly related topic, this is why I priced my stuff packages the way I did. I could have done it more cheaply but then I’m doing all the same work for less profit. That profit has bought most of my equipment and kept my podcast running at close to break even for four years. After a period of inactivity, I actually sold some more stuff packages recently which helps out. If you’d like to pull on that rope, you certainly may. Not only do you help the show, you get to be a styling fool with some great tunes. Win/win, citizens!

One Reply to “Cory Doctorow on Macropayments”

  1. I strongly concur, Dave. I actually still haven’t quite figured out why yet, but I’m willing to admit; for whatever reason, micropayments seem to be a solution in search of a problem.

    While I never worked in the field, the idea of micropayments always seemed to my inner geek to be a great idea! Obviously, my inner geek is sometimes disconnected from reality.

    I think Cory (and you) hit on some of the issues. Two in particular I like:

    1) the notion that part of micropayment’s allure comes from a fundamental misunderstanding of the “information economy” that developed in theory, before there actually was such a beast.

    The idea that we would continue to dice both payments and actions into ever smaller bits ($0.00001/blog post read, etc.) seemed to appeal to the “market is everything, perfect information will mean perfect pricing” libertarian concepts in economics, in me and a lot of other people. We’ve since realized that people aren’t always rational and that our market-based pricing models work better in the abstract and in aggregate than with individuals and real lives. I don’t WANT to figure out if a given webpage is worth a thousandth of a cent before I look at it!

    2) …following from #1; dificult decisions comparing about the “intangible” costs of charging a micropayment vs. making something free can often be dispensed with by realizing the benefits of making at least one incarnation of your good free, and using that to drive fans to the macropayment options.

    To wit, the “Evil Genius Chronicles” podcast is free, but I’m one of the proud (albeit long overdue) recent stuff package purchasers. Can’t wait to stop wearing my shirt to cons! The micropayment usually just isn’t worth the lost opportunity cost in the intangible realm. The chance to create one of Kevin Kelly’s “1000 True Fans” (http://www.kk.org/thetechnium/archives/2008/03/1000_true_fans.php) is worth a lot of free ebook/podcast/mp3 downloads.

    Your post had particularly strong resonance with me tonight, as I’m just about to renew my $25/year Flickr account, and I’m listening to a Magnatunes album (free stream) that I’m about to pay $5-8 to download. And I ordered vitamins from Amazon about 3 hours ago, b/c I couldn’t find the exact brand we wanted at the local store (Amazon Prime FTW!). And, of course, the aforementioned recent “stuff” purchase, plus many more examples. So I’m living the digital macropayments life!

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