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Status: RO To: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED] Cc: [EMAIL PROTECTED] From: [EMAIL PROTECTED] (Andrew Odlyzko) Subject: [picoIPO] Re: Micropayments, redux Sender: [EMAIL PROTECTED] Date: Wed, 18 Dec 2002 07:01:42 -0600 (CST) Dear Colleagues, Just a few general comments on the flurry of messages from yesterday. I certainly do see micropayments playing some role in the economy in the future. I agree that we do have the technology to implement them easily. However, I still think that they will play only a marginal role, as predicted explicitly in the paper "Fixed fee versus unit pricing for information goods: competition, equilibria, and price wars," (with Fishburn and Siders, the result of work during the same summer of 1996 when Jarecki and I invented our probabilistic polling micropayment scheme). This paper appeared first in First Monday, <http://firstmonday.org/issues/issue2_7/odlyzko/index.html>. The basic reason for this prediction is that even in the absence of the many behavioral economics factors, producers benefit from bundling (as in selling an entire newspaper instead of individual articles) by taking advantage of uneven preferences among consumers for the individual items. That is why Microsoft (not known for its charitable impulses, after all) sells its Office bundle for less than half the sum total of prices of individual components. In addition to the basic power of bundling, we also have the behavioral economics factors, already discussed slightly in the paper with Fishburn and Siders, and treated more fully in "Internet pricing and the history of communications," <http://www.dtc.umn.edu/~odlyzko/doc/history.communications1b.pdf> and even more fully in "The history of communications and its implications for the Internet," <http://www.dtc.umn.edu/~odlyzko/doc/history.communications0.pdf> which (i) cause people to be willing to pay more for simple, preferably flat-rate, pricing, and (ii) make people drastically cut down their usage when faced with metered pricing. Not everything can be shoehorned into the flat-rate subscription model, so I do expect that micropayments will eventually play a role in the economy, but I don't expect that role to be large. Best regards, Andrew _______________________________________________ picoIPO mailing list [EMAIL PROTECTED] http://lists.picoipo.com/mailman/listinfo/picoipo --- end forwarded text -- ----------------- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]