Is it time for a new look at one of the web’s oldest and least successful ideas? Tim Green wonders if bitcoin can revive micropayments and save content from awful ads…
Have you ever had an http error 402? Probably not. The clever people who build the web created 402 as code that might eventually be used for digital cash or micropayments. But it never went any further and as of today it is officially ‘reserved for future use’.
Had 402 followed a different course, the web today might be unrecognisable.
Things are about to get worse for all media outlets and content publishers pursuing the ‘free with ads’ strategy. Ad blockers are everywhere: on the Apple App Store; by default for any 3 mobile subscriber.
We might now be used to web links that flash up a dollar or euro signs when we hovering a cursor (or finger) over them. We would click them to unlock the article, video or music stream for a tiny payment.
Many leading thinkers believed in the idea. Nicholas Negroponte, head of the MIT Media Laboratory, predicted in 1998: “You’re going to see within the next year an extraordinary movement on the web of systems for micropayment.”
And there was no shortage of start-ups aiming to make this happen. Hashcash, Millicent, Cybercoin, Beenz, DigiCash, Barclaycoin, Flooz, CyberCash, BitPass, Peppercoin and others emerged to fuel Negroponte’s faith.
They were all wrong.
Two decades on, online micropayments are still nowhere to be seen. The web just doesn’t do them.
So instead we have free content courtesy of ads that obscure the page you’re reading and email spam that fills up your inbox.
And these ads don’t pay very well.
Look at The Guardian. I’ve listened to The Guardian Media podcast for many years now, and its line has always been very clear: ‘print may be in decline, but we’ll counter that by building a vast global digital audience’.
But here’s what’s happened. The Guardian did build a huge global audience. However, it cost a fortune and the group’s revenue slipped from £310m in 2009 to £214m last year.
And surely things are about to get worse for all media outlets and content publishers pursuing the ‘free with ads’ strategy. Ad blockers are everywhere. On the Apple App Store. By default for any 3 mobile subscriber.
So maybe it’s time for another look at micropayments – with some new ideas.
Traditionally, micropayments were hard to do because of the rev shares involved. Visa and MasterCard are not good a very low value transactions.
And then there’s the UI. How do you get users to sign up to wallets and top them up without them abandoning? And once they’ve done this, how do you alleviate the mental strain of users having to weigh up whether or not to buy stuff all the time?
These are significant challenges.
Perhaps bitcoin can solve them.
This week I’ve been chairing the payments track at Apps World in Berlin, and I was intrigued to hear from Meinhard Benn, the founder of SatoshiPay.
He has built a solution that lets people pay in Satoshis. There are 100m Satoshis to a bitcoin, so one equals about $0.0000044369. He calls them nanopayments.
Using cryptocurrency for micropayments is not a new idea. Benn admitted that there are problems with it such as the fact that it takes 60 minutes to process a transaction and that a growing volume of micropayments would cause ‘blockchain bloat’ (essentially immense new pressure on the mathematical calculations that make the whole blockchain system work).
But Benn believes he’s found a workaround. And the end result is a greyed out page that reveals your balance and the price to unlock the content when you hover over it.
The critical bit is making it easy for users to open a wallet (which they can top up with ‘regular currency’ of course). SatoshiPay’s system looks good, but this is still a massive ask.
However, there situation is so critical for content publishers that maybe the time has come to at least consider ideas like this. If The Guardian, say, can get an audience of 200m worldwide and have most of them pay just a few dollars a year, then its revenues would be transformed.
It would be incumbent on them to popularise the idea. Like I said. A very big ask. After all, explaining cryptocurrencies is one of the hardest tasks known to humankind.