Subscriptions and Micropayments

I've long been interested in micropayments as a viable alternative to advertising on the internet. In this model, a website would charge a user pennies or even fractions of a penny to access its content, an aggregator would track all the pennies from all the websites a person visits, tack on a service charge, then send them a monthly bill.

Sounds like a good idea, so why hasn't anybody done it?

First, tracking is expensive. By most estimates, the cost of tracking a user's activity on a website and doing the appropriate accounting is quite high. This might seem wrong to anyone who's played with website statistics tracking, but you can't just dump data into a database. You have to do significant verification, archiving and accounting in order to be able to send someone a bill.

Second, people don't like to pay for what they currently get for free. Part of the phenomenal growth of the internet can be attributed to its low cost. A user pays his internet access fees and gets an incredible amount of content for free. Who wouldn't sign up for some of that? That sucks for a business that wants to charge for access because people just aren't used to paying for access. On top of that, there is nothing new under the sun, and chances are any website that would like to charge for access already has a competitor that gives their content away free.

A Solution

In thinking about all of this, it seems to me there's an alternative that might be able to solve some of these problems. Imagine a system (let's call it KarmaNet) where a user pays a monthly or yearly fee for membership. Webmasters also join KarmaNet and embed a piece of tracking code into their websites. KarmaNet would track unique IPs via the embedded code and establish a count of visitors to each website in its network. KarmaNet would then dole out a percentage (80 or 90%) of it's monthly membership fees proportionally (by hit count) to webmasters.

But wait, you say, why should a user pay KarmaNet? Well, KarmaNet would have to have an API for a webmaster to check his own user accounts against KarmaNet accounts. Some kind of handshake between the user, the webmaster's site and KarmaNet would take place where the user provides their username and password and KarmaNet authenticates the login to the webmaster. The webmaster would then be responsible for enabling/disabling features on their site to benefit KarmaNet users. As a bonus the webmaster could pull user profile information from KarmaNet so that the user doesn't have to enter it in each time.

Hold on, you say, why should a webmaster treat KarmaNet users specially, if they just get paid by hit counts? KarmaNet would weight each website's percentage by the services it provides. For instance, a website that only KarmaNet users can access might get a factor of 100, a website that hides ads from KarmaNet users might get a factor of 10, and a website that does nothing more than pull profile information might get a factor of 1 (why not 0? because KarmaNet want's webmasters to sign up!).

The Bright Side

Users get single-sign-in on websites. They get access to features and content on websites that they otherwise wouldn't be able to. KarmaNet would probably also have a portal that would allow users to find member websites, etc.

Webmasters get paid without having to put ads up, plus they get easier account management.

The growth of KarmaNet is scalable in that the first webmasters to join would probably do little or nothing, but as they got checks in the mail, they'd want to increase their factor by implementing more exclusive features.

The Not so Bright Side

There are still inherent problems with KarmaNet.

Would such a system be subject to abuse? Probably. Firstly, KarmaNet would have to count sessions from unique IPs, not page hits. This would prevent most kinds of abuse, but adware or otherwise could get around this benchmark. KarmaNet would have to ban any website that appears in a popup.

What's to prevent KarmaNet for screwing the webmasters? Nothing. Webmasters who feel screwed would just have to quit KarmaNet.

How would the factors be calculated? KarmaNet would have to have account managers on staff that would refactor a website after checking for features and ensure that webmasters haven't turned around and disabled after a month.

How would KarmaNet get it's first paying users? That's the tricky one, and it's really dependent on what kinds of initial websites KarmaNet could get to sign on. One thought would be getting high traffic websites like NYTimes, Slashdot (or even Amazon*) on board early by KarmaNet putting up a million dollar subscription pool right at the beginning. Another would be to have enough cool features on KarmaNet itself that some would think it's worth paying for all by itself (albeit with poor value for money, but the value goes up as more users and websites sign up).

* - Perhaps Amazon or other online stores could give discount or reduced shipping to KarmaNet members?

Conclusion

I'd love this to catch hold. I think it would foster better web content without the advertising orgy that is the current state of the internet. Advertising is all well and good, but I think a lot of people would agree that they're sick of it. Just ask anybody about pop-ups. I'd love to have an alternative when creating websites and content.

So, anybody want to take this one on? If you have a couple million you'd like to invest, send me an email :)