Five Key Internet Megatrends: 1. Nanopayments

When I started this blog, it was with the main aim that when I repeated something at work to multiple customers or colleagues, my aim was to document it here. This could be a news article, or a new technology or process.

During a recent conversation with a client, I realised that one of the key discussions that I have never documented are five key Internet trends, or what they would now be termed ‘megatrends’.

These megatrends are based on several years’ experience working across multiple sectors – including sport, insurance, retail, banking and recruitment.

This is the first of five posts, each dealing with a specific trend. Once I’ve covered all the trends in detail, I’ll put the full presentation on Slideshare.

I’m happy to discuss each of the trends, either here on the website, or to discuss on Twitter, or just give me a call.

1. Nanopayments

Credit: http://www.flickr.com/photos/labyrinthx/1955692114/in/photostream/
Coins for micropayments – what about the electronic equivalent?
Credit: http://www.flickr.com/photos/labyrinthx/1955692114/in/photostream/

Key points:

  • High quality content and services can’t be free for much longer
  • It costs too much money to send someone a very small amount of money
  • When we can solve the small payments problem, piracy will significantly reduce

Our children will look back on this period of the Internet and be shocked at how many services we receive for free. Google searches, music from Spotify, news from Sky, an encyclopaedia from Wikipedia, photos from Flickr, email from Microsoft, word processing and spreadsheets from Google, the list goes on and on. It’s quite easy to use the Internet at the moment without paying a penny.

It’s unsustainable. It can’t be ad-funded for much longer – and I’ll discuss this later on in another trend “Real money”.

Content web sites such as those from newspapers and films are moving to a subscription model, but this is an inflexible model. I want to read The Sunday Times on the weekend, the Metro during the week when I use the Tube, and once a fortnight I’ll read The Financial Times.

On the Internet, this model isn’t possible. At the moment, users need to subscribe to The Sunday Times or The FT on a weekly basis. I only want to read for one day, and next week I want to be able to go back to the content without paying again. It’s not possible.

The newspaper model is the opposite to the music industry’s. You can’t just buy a single track on a CD, you need to buy the entire album. On the Internet however, you can buy just a single track.

There are authors who earn a reasonable living from successful blogs. When I say successful, it’s in terms of traffic levels. The blogs have advertising, and the authors rely on readers to click on the adverts. Neither authors nor readers want advertising. Authors would much rather a model where each reader pays a small amount for the content.

At the moment, if a content producer or service provider wanted to implement a paywall, they could use PayPal and charge users a few pence per article. A major problem is PayPal charges 3.4% of total amount plus 20p per transaction. Actually, PayPal has a micropayment model, however it is only available within a country, which on the Internet isn’t useful.

In the future, we’ll have a central company which will have a pot of our money. As we visit websites, the central company will provide the websites we visit with nanopayments, which are tiny amounts of money – perhaps less than a penny, on a per-page or per feature (e.g. sending an email, or searching the Internet) basis. This will be an automatic process, and we’ll have some sort of browser plug-in which shows how much money we’ve given to this website, and the remaining balance in our centralised wallet.

As a result, nanopayments will significantly reduce piracy. If the price point for content can be reduced to nanopayments, perhaps on a per-play model, users will find this model as easy to use as the illegal models. (This is one of the was the music business combat piracy – buy allowing legal downloads at less than a dollar per track, the price point is acceptable, and piracy is less desirable).

Currently, content owners need to charge a higher price partly to cover the transaction processing costs. If the transactions costs are significantly reduced, we could move to a per-play model. So instead of paying 89p for an mp3 track, users could pay under 5p for the track each time they listen to it.

2 thoughts on “Five Key Internet Megatrends: 1. Nanopayments

  1. I do agree with your statement about nanopayments, I only would suggest a different approach than central company doing this. I think that a crypto-currency such as bitcoin can do the trick very well, because there are no fees for transwerring the money, so those micro payments can be done very well and there is no need for a third party. What do you think about this trend?

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