Back in 2001, I posted an amateurish essay on micropayments, written from my perspective as a willing-to-pay consumer that hoped to continue to enjoy quality content while the online advertising market collapsed.

Embarrassingly it got picked up by Slashdot and was put up as the awkward counterpoint to an earlier article by Clay Shirkey, in which the author competently, with research and everything, argued against the concept.

Arguments were had and forgotten, and we all moved on. Lots of great content disappeared from the web, advertisers got more and more desperate, often malicious, and a long and horrible content drought ensued.

Eventually Google came onto the scene, bringing advertising to the little guy, and the content market was reborn on the back of Adsense.

Clay was held up as the victor, or more correctly was considered the only contender, and has been used for citations countless times since, unquestionably proving the non-viability of any small-transaction system. I came across just such an article moments ago, as I do several times a month.

Was Clay right? Are people really psychologically unable to handle small payments? Is the idea of small-cost subscription packages for websites an unworkable model, or do people just say that because they like imagining that they're having a free lunch?

Lots of people seem to think so.

Then again, lots of people thought the Earth was flat, terrible things would happen when we passed the speed of sound, it would be impossible to full-text index the internet or to search it economically, and so on.

Take a moment to consider that there have been 2 billion iPhone apps sold, with a current average price hovering around a dollar. There are predictions that the average price will rise in the coming years, to a magnificent $2.37 by 2013.

This is for generally small, disposable apps that often do little, but because the cost is small and the transaction surprisingly well lubricated by the iTunes process, a lot of people just click "buy" and enjoy the experience. Look at Atwood himself — using him as an example given that he comes into play in the article I referenced earlier — who said:

My total bill for 3 screens worth of great iPhone software applications? About fifty bucks. I've paid more than that for Xbox 360 games I ended up playing for a total of maybe three hours! About half of the apps were free, and the rest were a few bucks. I think the most I paid was $9.99, and that was for an entire library. What's revolutionary here isn't just the development ecosystem, but the economics that support it, too. At these crazy low prices, why not fill your phone with cool and useful apps? You might wonder if developers can really make a living selling apps that only cost 99 cents. Sure you can, if you sell hundreds of thousands of copies:

That's impossible! Clay Shirkey says so! Or at least that's what people often interpret him as saying.

iTunes doesn't just service the iPhone app market. Aside from its start selling music (usually sold by the track), countless people are avoiding advertisers and buying network television content via the services. Marginally small amounts, but low transaction costs, technology, and the ease of purchase makes it a viable market.

iTunes doesn't own this nickle-and-dime market, though.

I enjoy the occasional bout of gaming on the xbox 360, and it takes every opportunity it can to try to get me to partake of tiny little purchases, some as low as $0.40. Want a game-specific theme? Want some bling for your avatar? Want that car before you've "earned" it? Want this amateur community game? Come on, it's just a couple of points from some nebulous points pool that you can spend simply by pressing A a couple of times, and when it empties you just add a bunch more.

Of course, all of this naturally leads to the semantics of what a "micropayment" is, and inevitably people will argue that a micropayment must be paying sub-pennies by the page, or the KB, or the image, or whatever. That isn't the spirit of it at all, however, and instead the origins of micropayments were easy to accommodate payments of amounts that were traditionally uneconomical to gather. In my mind iTunes absolutely supports micropayments the theory, because prior to that service it simply wasn't possible to sell applications for $1 or less. There was a fairly lofty minimum threshold below which it wasn't worth your time.

That is no longer the case within certain spaces.

Which again brings us to the possibility of micropayments for websites that hold actual value: People need to quit pretending that micropayments are some disproven, unworkable theory. There are a lot of us who simply abhor advertisement or economic coersion in all its forms (as you saw in the prior entry, the moment someone adds commission links to what is purportedly a subjective review, my opinion of their credibility drops precipitously, and I'm suddenly wondering if they actually liked the product, or if they just fumbled around for something and pushed the first thing they found, using it to effectively tax the readership indirectly and terribly inefficiently), and who aren't cheap bastards. If you have a site of value, and if there were a trustworthy, credible and lubricated system like iTunes for Websites, the idea could have legs.