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Has iTunes Made Micropayments Acceptable?

Saw a link on Paidcontent links to a NY Times article that describes how micropayments--transactions less than, say, $5--are becoming an increasingly accepted means for consumers to pay for products and services.

I read an article by Clay Shirky a few years back that argued that micropayments would not work because of the high cognitive load placed on the consumer when making the decision. Basically, it was too much trouble for a consumer to think about the value she placed on an item that she was considering purchasing versus the amount she was being asked to pay for it, and the resulting anxiety would cause her to decide not to purchase in more cases than not.

But, the Times article insinuates, the iTunes music store has made customers more comfortable paying a small amount (in this case, 99 cents) for a service. I wonder if people are more willing to pay for music because it's entertainment and likely unique (compared to the perception that content is content and can be obtained elsewhere without cost or cognitive load)? Are these purchasing decisions unique to the iTMS, or does this price point see success for music on any service? Would people pay for other types of content that informs rather than entertains? Are what are the upper and lower dollar-value micropayment thresholds that people can purchase without the anxiety overhead that Shirky describes?

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Comments (Post | Latest)

1. Mike D. said on Jan 3 2005:

I wonder what percentage of things bought at the iTMS are individual songs though. I've bought a few things there but mostly albums. For me, it is an accounting thing. The thought of cluttering up my Quicken registered with manually entered items of only 99 cents in value is enough to keep me from downloading an individual song in most cases. It's the same reason I don't put packs of gum on my credit card.

I think that long-term, iTMS's best strategy is to let people load up their account with, say, $20-$100, and then spend it in whatever denominations they want after that. I think you can already do this (maybe with PayPal?) so maybe I'll check that out.

2. kareem said on Jan 3 2005:

The albums vs. individual songs question is a good one. I'd guess that based on the notion that people buy albums so they can get the hits they hear on the radio, offering singles for 99c obviates the need to purchase the whole album, and thus a significant number of purchases were single songs (the hits).

Looking further... this press release says that over half of the songs downloaded in the first week were albums... which means that a not-insignificant portion were singles. This was only in the first week though; I'd be interested to see if those proportions have changed over time.

What I found fascinating about the article was the possibility that a piece of software could change consumers' attitudes towards micropayments, and whether the nature of the content being consumed (digial music) or the purpose (entertainment) had any affect on making the purchasing decision easier.


Hi, I'm Kareem Mayan. I co-founded eduFire, an online video tutoring company.

I've done time at ESPN and FIM.

I advise WorldBlu, helping them build democratic companies.

I moderated a council for Creative Good.

And, I helped bring Barcamp, a technology un-conference, to LA, which is where I live. I am now living and working in cool cities around the world.

More about me.

Opinions stated here are mine alone.

Contact: blog -at- reemer


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