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Micropayments for

Digital Goodsin a

Social World

Presentation for EuroFinance 2009

by Cynthia Typaldos, Founder & President, Kachingle

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

The Problem

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Theorem

Anything that can be digitized will be

napsterized

Newspapers

Magazines

Books

Music

Photos, Images, Art

Video, TV, Movies

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FREE!Previously -

$$$$ or € or ¥ or..

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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.”

“… beneath a certain threshold, mental transaction costs actually rise, a phenomenon is especially significant for information goods. It's easy to think a newspaper is worth a dollar, but is each article worth half a penny? Is each word worth a thousandth of a penny? A newspaper, exposed to the logic of micropayments, becomes impossible to value.”

— Clay Shirky

http://www.shirky.com/writings/fame_vs_fortune.html

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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 Creates barriers for viral & social

behaviors Negatively affects ad revenue

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 Negatively affects ad revenue Creates barriers for viral & social

behaviors

Kachingling 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

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How Kachingle “Automates” Micropayments

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Are there parameters for success in the implementation of consumer

micropayment systems?

user-centric

no “mental transaction costs”

tap into existing social networks

financial transparency

fun, entertaining, like a game

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What will consumers pay for (using micropayments)?

Persona development (and control) [Kachingle]

Convenience [iTunes]

Special Features [Game tool upgrades]

Virtual Goods [Facebook flowers]

Other?