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Microtransactions are the perfect solution, if you have an economic theory that assumes near-zero transaction costs. Technology can achieve low technical costs,

Microtransactions are the perfect solution, if you have an economic theory that assumes near-zero transaction costs. Technology can achieve low technical costs, but the problem is the human cost of a transaction. The mental overhead of deciding whether I want to make a purchase to consume every piece of content, and whether I got ripped off, adds up, and makes microtransactions exhausting. When someone on the internet tries to sell you something for a dollar, how often do you really take them up on it? How many microtransactions have you actually made? To problem with microtransactions is they discourage people from consuming your content. Which is silly, because the marginal cost of serving one reader or viewer is nearly zero. The solution is bundling. I make a decision to pay once, then don’t pay any marginal costs on each bit of content. Revenue goes to creators proportionally based on what fraction of each user’s consumption went to them. People feel hesitation toward paying for the bundle, but they only have to get over the hump once, not repeatedly for every single view. Advertising-supported content is one kind of bundle, but in my opinion, it’s just as exhausting. The best version of bundling I’ve experienced are services like Spotify and YouTube Premium, where I pay a reasonable fixed monthly fee and in return get to consume many hours of entertainment. The main problems with those services are the middlemen who take half the money.

johanyc 1y ago
> the problem is the human cost of a transaction. The mental overhead of deciding whether I want to make a purchase to consume every piece of content […] > When someone on the internet tries to sell you something for a dollar, how often do you really take them up on it? It depends on how micro they are. Your example of $1 is quite big. It should be cents or even less. Several examples. When using chatgpt api, do you really worry how much a short q&a session will cost you? Do you stress whether to turn on the light in your room or not (electricity cost is also micro-transaction if you think about it)?
- ashdksnndck 1y ago
  For the examples you gave, there is a lot of marginal cost to provide more of the product. ChatGPT and your utility would be bankrupt if they gave infinite usage. Although ChatGPT’s consumer product is flat rate (users greatly prefer that model), rumor is that they lose money if you use the big models a lot, and they do cap usage.
- selfhoster11 1y ago
  $1 is not a micro-transaction, it's just a regular transaction. It's not micro until it's only several cents at most. I'm not the parent, but when I use the OpenAI API (not ChatGPT API, that stuff is very cheap in comparison), I do keep an eye on my spend. For the more variable models like o3, o3-pro, GPT-4.5, expenditure can quickly exceed what you decided to spend. I'm glad you can set spending limits if you choose to do so.
davkan 1y ago
I would pay for YouTube premium in a heartbeat if they didn’t also include YouTube music, which I have zero interest in paying for.
- ashdksnndck 1y ago
  The whole point of bundling is that you combine many things together because the marginal cost is zero. If you pay for YouTube premium, you are also paying for all of the videos on YouTube that don’t interest you. That’s irrelevant as long is there is enough content you want. The fact that the bundle includes a music app you don’t care to use is the same way, it doesn’t detract from the value proposition.
  - davkan 1y ago
    Well in my case the value is not there at their price which includes YouTube music as a separate service that must be maintained and I assume separate licensing as well. I’m not interested in paying for access to that side of the service. I have little doubt that the access to YouTube music adds to the sticker price of their bundle. They are not simply passing along bundled costs, they are also targeting what they think consumers are willing to pay. I think they’ve miscalculated in this case.
    - onesociety2022 1y ago
      I normally would subscribe to Apple Music, but I switched to Youtube Premium because I get Youtube Music with the added benefit of no ads on regular Youtube. It seems like their bundling trick worked on me as they expected.
      - davkan 1y ago
        I wonder if that makes up for the money they are losing as I continue to abuse their service with ad blockers and sideloading modified ad free clients.
Saline9515 1y ago
While I agree with most of your comment, there is a pitfall - bundling is often used as an extractive pricing strategy, where you force the consumers to buy goods they do not want to access the one they want. This is problematic when the seller is a monopoly, and has a strong market power that prevents the consumer to seek alternatives. https://www.concurrences.com/en/dictionary/bundling https://www.concurrences.com/en/dictionary/bundling
__MatrixMan__ 1y ago
I disagree, bundling is the problem. That strategy created the fragmented landscape that we now see in streaming video, which is pretty much universally hated. The ideal solution would involve a flat rate which I pay monthly, and at the end of the month that money goes towards the content that I consumed during that month. If I only read a single blog, they get all of it. Then we build a culture around preferring to share content which is configured to cite its sources, and we discourage sharing anything which has an obvious source with which it doesn't share its inbound microtransactions. We already need to do our due dilligence re: determining if an information source is trustworthy (and if its sources are trustworthy, and so on). Might as well make money flow along the same structures.
- BlueTemplar 1y ago
  So, Flattr 2.0 ? https://www.ctrl.blog/entry/flattr2.html https://www.ctrl.blog/entry/flattr2.html
  - __MatrixMan__ 1y ago
    More or less, yeah. When it's all grown up though, I'd hope for more transparency into where the money is going. Suppose a journalist has risked life and limb to expose some important information and two news outlets publish stories about it. I don't want to pay the news outlets under the assumption that they'll then pay the journalist. Instead I want to decide which story to read based on whichever one triggers my client to compensate the journalist the most (because I care more about the investigative work than the writing, though other users might configure their clients differently).
- eddythompson80 1y ago
  It's not an ideal solution because any fixed cost solution is begging for a middle man/reseller to be introduced. Like I pay the $5 monthly flat fee (or $500, $5k, $500k, whatever it's known fixed cost for me) for the system, turn around and resell all content for a $1 monthly flat fee. There is a real cost to the content you're consuming with that flat-fee. So either the flat fee is more of "credit" system or it's relying on a middle man to do the oversubscribing calculation/arbitrage or whatever to balance the cost. And no, introducing any form of rate limits or "abuse reduction" doesn't work because it's basically changing your flat-fee into a credit based system. A credit system has advantages over pure micropayment system (in terms of mental overload. I know I charged my "internet content" card with $50 for this month. A movie on Netflix is selling for $2 tonight. Normally it's $0.5 a movie, but it's Valentines and everyone is "Netflix and Chilling" so surge charging)

johanyc 1y ago

> the problem is the human cost of a transaction. The mental overhead of deciding whether I want to make a purchase to consume every piece of content […] > When someone on the internet tries to sell you something for a dollar, how often do you really take them up on it? It depends on how micro they are. Your example of $1 is quite big. It should be cents or even less. Several examples. When using chatgpt api, do you really worry how much a short q&a session will cost you? Do you stress whether to turn on the light in your room or not (electricity cost is also micro-transaction if you think about it)?

ashdksnndck 1y ago
For the examples you gave, there is a lot of marginal cost to provide more of the product. ChatGPT and your utility would be bankrupt if they gave infinite usage. Although ChatGPT’s consumer product is flat rate (users greatly prefer that model), rumor is that they lose money if you use the big models a lot, and they do cap usage.
selfhoster11 1y ago
$1 is not a micro-transaction, it's just a regular transaction. It's not micro until it's only several cents at most. I'm not the parent, but when I use the OpenAI API (not ChatGPT API, that stuff is very cheap in comparison), I do keep an eye on my spend. For the more variable models like o3, o3-pro, GPT-4.5, expenditure can quickly exceed what you decided to spend. I'm glad you can set spending limits if you choose to do so.

davkan 1y ago

I would pay for YouTube premium in a heartbeat if they didn’t also include YouTube music, which I have zero interest in paying for.

ashdksnndck 1y ago
The whole point of bundling is that you combine many things together because the marginal cost is zero. If you pay for YouTube premium, you are also paying for all of the videos on YouTube that don’t interest you. That’s irrelevant as long is there is enough content you want. The fact that the bundle includes a music app you don’t care to use is the same way, it doesn’t detract from the value proposition.
- davkan 1y ago
  Well in my case the value is not there at their price which includes YouTube music as a separate service that must be maintained and I assume separate licensing as well. I’m not interested in paying for access to that side of the service. I have little doubt that the access to YouTube music adds to the sticker price of their bundle. They are not simply passing along bundled costs, they are also targeting what they think consumers are willing to pay. I think they’ve miscalculated in this case.
  - onesociety2022 1y ago
    I normally would subscribe to Apple Music, but I switched to Youtube Premium because I get Youtube Music with the added benefit of no ads on regular Youtube. It seems like their bundling trick worked on me as they expected.
    - davkan 1y ago
      I wonder if that makes up for the money they are losing as I continue to abuse their service with ad blockers and sideloading modified ad free clients.

Saline9515 1y ago

While I agree with most of your comment, there is a pitfall - bundling is often used as an extractive pricing strategy, where you force the consumers to buy goods they do not want to access the one they want. This is problematic when the seller is a monopoly, and has a strong market power that prevents the consumer to seek alternatives. https://www.concurrences.com/en/dictionary/bundling https://www.concurrences.com/en/dictionary/bundling

__MatrixMan__ 1y ago

I disagree, bundling is the problem. That strategy created the fragmented landscape that we now see in streaming video, which is pretty much universally hated. The ideal solution would involve a flat rate which I pay monthly, and at the end of the month that money goes towards the content that I consumed during that month. If I only read a single blog, they get all of it. Then we build a culture around preferring to share content which is configured to cite its sources, and we discourage sharing anything which has an obvious source with which it doesn't share its inbound microtransactions. We already need to do our due dilligence re: determining if an information source is trustworthy (and if its sources are trustworthy, and so on). Might as well make money flow along the same structures.

BlueTemplar 1y ago
So, Flattr 2.0 ? https://www.ctrl.blog/entry/flattr2.html https://www.ctrl.blog/entry/flattr2.html
- __MatrixMan__ 1y ago
  More or less, yeah. When it's all grown up though, I'd hope for more transparency into where the money is going. Suppose a journalist has risked life and limb to expose some important information and two news outlets publish stories about it. I don't want to pay the news outlets under the assumption that they'll then pay the journalist. Instead I want to decide which story to read based on whichever one triggers my client to compensate the journalist the most (because I care more about the investigative work than the writing, though other users might configure their clients differently).
eddythompson80 1y ago
It's not an ideal solution because any fixed cost solution is begging for a middle man/reseller to be introduced. Like I pay the $5 monthly flat fee (or $500, $5k, $500k, whatever it's known fixed cost for me) for the system, turn around and resell all content for a $1 monthly flat fee. There is a real cost to the content you're consuming with that flat-fee. So either the flat fee is more of "credit" system or it's relying on a middle man to do the oversubscribing calculation/arbitrage or whatever to balance the cost. And no, introducing any form of rate limits or "abuse reduction" doesn't work because it's basically changing your flat-fee into a credit based system. A credit system has advantages over pure micropayment system (in terms of mental overload. I know I charged my "internet content" card with $50 for this month. A movie on Netflix is selling for $2 tonight. Normally it's $0.5 a movie, but it's Valentines and everyone is "Netflix and Chilling" so surge charging)