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Status: RO Subject: Re: [picoIPO] Re: Micropayments, redux Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED] To: [EMAIL PROTECTED] (Andrew Odlyzko) From: Charles Evans <[EMAIL PROTECTED]> Sender: [EMAIL PROTECTED] Date: Wed, 18 Dec 2002 12:56:27 -0500 This message is coming by way of the picoIPO list. Apologies for any confusion caused by intercommunication among para-debates. On Wednesday, Dec 18, 2002, at 08:01 US/Eastern, Andrew Odlyzko wrote: > 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... The second sentence of the abstract reads, "The main concern of this paper is with pricing of goods that are likely to be consumed in large quantities by individuals." The current debate, with regard to micropayments and microfinance, is like comparing apples and orangutans. For mass-market goods, the argument in favor of subscription is compelling, especially in the West/North. I would not rent time on MS Word or OS X, even if it were less expensive than buying licenses. However, in the Third World, where money is very scarce, a la carte is still very common. In Ukraine, where typical incomes are USD 200-300 per MONTH, computers are too expensive for most. Internet cafés are quite common, and charge about USD 1 per hour. A flat USD 20 per month dial-up subscription is prohibitively expensive, when you add in the per-minute telephone charges and the cost of the computer, monitor, and modem. <snip> > 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... For large Western/Northern software and entertainment producers, yes. However, in the Third World -- the other 5.5 billion -- the economies of scale are different. For the price of a full license of MS Office, a family can live for a month or two. Building a viable business model out of this observation, and implementing it are separate matters. This is a theoretical discussion of subscription versus a la carte. There are markets where a la carte is preferable over subscription. <snip> > 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. There is large and there is large. But your point is correct. We economists do not like corner solutions, and one-size-fits-all solutions generally neither fit nor solve. CE _______________________________________________ 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]
