"Premium" service won't work (was: Question for Clay and others)

[Clay Shirky]

> A mechanism must surely already exist under which you can pay to
> periodically top up a shared account which is then debited by
> various micropayments to premium content site et al. I'd have
> thought the pron mongers would have invented such a thing if a
> vacuum had existed...

They have of course invented such a thing, and of course, like
*everything* associated with micropayments online except gambling, it
didn't work.

In fact, the porn biz is the perfect avatar of the failure of MP for
content online and the move to subscription. The pornography industry
mastered micropayments offline, honest-to-god voluntary pay-as-you-go
micropayments in real time. The peep show industry lives off of a
stream of quarters, fed into the machine or booth one at a time. The
house will even make change, converting dollars to quarters or tokens,
thus forcing cutomers to transact in smaller amounts than they were
interested in spending overall.

Furthermore, going virtual in the narrow sense (replacing live women
with video) did nothing to change the payment structure. The house
created a situation where the next N minutes would consistently be
worth more than a quarter even where the same user making the same
calculation might not feel that N*4 units were worth a dollar.

So we have a place where users are willing to feed the meter a quarter
or a token at a time to watch a video. This is good, yes? A business
made for the web -- dial up this 900 number/give us your CC -- and
laissez le bon temps roulez.

This business in fact launched. In the early days of video streaming,
many people did the 900 number + peep show math and launched 'pay as
you go' systems online. And what happened? Total flameout. Instead,
the previously mentioend AdultCheck model won out.

What changed online was not the product -- peep shows had gone video
years before -- but the competition. By the time a user was in a
booth, the switching costs were high, high enough in fact that any
given establishment was a kind of geographic cartel. Online, though,
the switching costs are low, and when 'all you can eat' systems
launched, the entire micropayments model collapsed in the face of user
preference for predictable pricing.

What RT wants is *more* predictability and less hassle. Micropayments
offer the reverse.

-clay