Micropayments for Digital Goods in a Social World

Micropayments for Digital Goods in a Social World 10/20/09 by Cynthia Typaldos, Founder & President, Kachingle 10001001010011001001000100101111100011001010001010010100010000100000… 9/21/2009 9:10 PM

For news and content sites, advertising is not paying the bills. The Problem

Theorem Anything that can be digitized will be napsterized Newspapers Magazines Books Music Photos, Images, Art Video, TV, Movies 10001001010011001001000100101111100011001010001010010100010000100000… FREE! Previously - $$$$ or € or ¥ or..

iTunes, Kindle, iPhone are just plugging holes in the dike…

Micropayments sound good BUT… “… the act of buying anything, even if the price is very small, creates what Nick Szabo calls mental transaction costs , the energy required to decide whether something is worth buying or not, regardless of price” — Clay Shirky http://www.shirky.com/writings/fame_vs_fortune.html

Are there parameters for success?

user-centric

no “mental transaction costs”

tap into existing social networks

financial transparency

fun, entertaining, like a game

beside advertising…what are the choices? Micropayments Tipping Subscriptions Kachingling

individual consumer/ user producer Whose value system is applied? Ease of use (reduction in “mental transaction costs”) difficult effortless Micropayments

Decide each time

At price set by producer

No financial limits

Encourages copycat sites (e.g. music biz)

Creates barriers for viral & social behaviors

beside advertising…what are the choices?

Decide each time

At a price explicitly set by user

No financial limits

Co-exists with advertising

Enables viral & social behaviors

Tipping Subscriptions

Decide once (for each subscription)

At price set by producer

No financial limits

Encourages copycat sites (e.g. music biz)

Creates barriers for viral & social behaviors

Kachingling (crowdfunding)

Decide once (for everything)

At a price implicitly set by user (equitably distributed)

Financial limits (bounded total $)

Co-exists with advertising

Enables viral & social behaviors

Social recognition & association

Kachingling is two-sided Site Owners (producers) Kachinglers (consumers) Note: someone can easily be both!

Kachingle 101 for Consumers

The Kachingle Medallion on a Content Providers’ Site

List of Kachinglers

Push status updates through microblogging sites

(e.g. Twitter and Facebook status integration)

Development of social media applications

Facebook app for comparing your contributions to friends and expressing your values

iPhone app

Live access to statistics

Compare your behavior to others

Social Media Integration

NOT content

BUT to build an online persona, achieve recognition, gain status – just like in the real world

What Will Consumers Pay For?

Kachingle to 'sprinkle' dollars to online publishers c|net May 8, 2009 Paul Romer , economist and senior fellow at the Stanford Center for International Development “ (Kachingle) doesn't try to solve the underlying free-rider problem. It tries to use volunteerism, altruism, and good citizenship instead. I like this aspect of the model. Economists and the policy makers who listen to them frequently underestimate the potential for this kind of motive to solve problems.” Kachingle is the economic model for free