JJB Blog

Looking at the panels beforehand, I thought yesterday would be a lackluster day at SXSW. But in the morning I went to two really excellent panels. Open Science, and Commons-Based Business Models, both of which had stellar lineups and lots of great discussion.

In Commons-Based Business Models I asked the panelists if there were any revenue models other than advertising that might get some legs in the next decade or so. I sited micropayments as the pie in the sky that in many ways Makes Sense, but perhaps consumers would never be able to get past the threshold. The responses brought to light some very interseting things:

• Some anime outfits in Japan are using the “monetize the head, give away the tail” model, and selling super expensive special edition box sets (in the thousands of dollars) to hardcore fans. I’m not sure where the “give away the tail” part of this comes in… not pursuing media pirates for the primary content I suppose?
• In China, 95% of music consumed is from pirated media. Musicians and/or their labels must pay others for inclusion in other products (like doing the theme song for a show costs the musician on the order of 2 million USD). They are able to make the money back from the popularity it generates. The quality of musicians in China is considered to be better than those in other Asian countries, and their careers last much longer.
• Consumers actually are fine with micropayments, look at the iTunes Music store.

The iTunes Music Store model is not quite what I consider The Micropayments Dream. To me the micropayments model is pay-per-click: a fraction of of a penny for most pages, up to a couple dollars for some content like music and videos.

The panel got me thinking: one of the major problems with transitioning to micropayments is having a centralized service, so that users don’t have to give their credit card number to every single site they visit. What if Apple started offering micropayment services? Users would visit arbitrary sites using only their micropayments account from Apple.

Apple could make a killing. They would get a cut of all content transactions on the internet.

Of course, any other company that has a massive existing userbase is also in a position to begin offering this. Yahoo and Amazon come to mind. But Apple is the only one that is really doing anything that looks like micropayments.

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