Boston, MA
July 2004

The Whole is Greater than the Sum of its Parts?
Paid Content and Micropayment Models


Online content is one area of the Internet experience that has developed a perception of how it should be and that is ‘free’.  Without realistic models of payment for news articles, images, and downloads, vendors on the Internet have been forced to give away their wares for many years now, using advertising as a means of drawing revenue from their sites.  With ad revenues dropping, many of these sites are now attempting to put the genie back in the bottle and asking their users to pay for content, much of this valued at under a couple of dollars.  This is where micropayments come in.

Nick Holland, Director of the Emerging Technologies Advisory Service at Mercator Advisory Group and co-author of the report comments:

“Clearly there is a huge untapped market opportunity for paid content as the Internet reaches middle age and users are realizing that online, as with the real world, there is no such thing as a free lunch.  However, the market for micropayments is not going to be an easy one to pursue.  The short but busy history of e-commerce is littered with examples of companies that thought they had found the secret formula to micropayment riches but unceremoniously imploded after a couple of years in business.”

Online Content 2003 by Revenue Recurrence
One of Four Exhibits included in this report

The report contains:

  • An assessment of the current scope of the US market for Online Content including ringtones, music downloads, online gaming and other sectors.

  • A definition of the Micropayments market, its evolution and reasons for the time being right now

  • A summary of the various options available for paying for online content

  • Case studies of the major micropayment providers including: BitPass, Peppercoin, Firstgate, PaymentOne and E-Gold

  • Critical analysis of the case for micropayments

Holland comments:

“Micropayments will indeed continue to grow significantly.  iTunes has opened the floodgates and shown it can be done, but whether there will be a piece of the pie for a third party micropayment providers is another matter…”

The report contains 4 exhibits and is 26 pages.

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