Saturday, January 20, 2007

Breaking: Bitpass, Too, Shall Pass

This is the journalistic equivalent of a pencil sketch. I'd love to supplement this piece with more recent quotes from Michael Graves, Scott McCloud, Patrick Farley, Jon Rosenberg and Clay Shirky, or as many of them as I could get, but until the Broken Frontier webcomics thing gets underway I just don't have the time.

An era of e-commerce may have ended yesterday with the loss of the most prominent provider of micropayments, Bitpass.

On Friday, Bitpass COO Michael Graves mass-mailed Bitpass account holders, informing them that the company was discontinuing service. This is a complete shutdown. Bitpass account holders have seven days to spend any cash in their account.

The word "micropayments" literally means "small payments," but the micropayments concept is that those small payments will come from many hands to make up a significant total. Finance charges made small payments difficult in the early days of the Web, but companies like Bitpass have made them much more feasible. Attracting the many hands has proven a tougher problem.

Micropayments have been a much-discussed commercial option for online cartoonists. Bitpass in particular became a rallying point, thanks largely to its endorsement by the influential Scott McCloud, who had already become one of micropayments' most prominent enthusiasts after the publication of his Reinventing Comics (excerpted here). Bitpass' own site lists numerous cartoonists as clients today.

However, its comics client list has changed little since June 2004. More significantly, Bitpass' most commercially successful clients besides McCloud himself, R. Stevens and Jonathan Rosenberg, soon abandoned the model. McCloud's own reported sales of his Bitpass-enabled, 25-cent comic were less than impressive, too [scroll to final item]. In more recent interviews, McCloud has been more guarded about micropayments and Bitpass:

[Advertising and merchandise] have worked well for some people. [They're] part of the solution, and there are some who insist [they're] the only solution. Until I have a good answer to that, I’m going to devote myself to more constructive things. I’m watching and I’m waiting and we’ll see how things evolve. I gave it my shot; I assume I’m one of thousands of people who have ideas for how the industry can evolve online.

Bitpass' direct competitors, ClickandBuy and Peppercoin, continue to operate, but have never attracted an indie-cartoonist clientele like Bitpass'. And the company was far from a small-business-only venture: it also enabled United Media, Disney, Time Warner and Microsoft.

The news for micropayments isn't all bad. Apple's iTunes Music Store has broken the old pricing structure for music down from the 15-dollar CD to the 99-cent song, and its success has changed the nature of the music industry. The East has proven friendlier to the concept than the West: Japanese video game portal Hangame has also succeeded with micropayments. But Apple and Hangame have integrated micropayments into a large infrastructure with huge resources. Small business owners, such as independent cartoonists, are unlikely to replicate this success any time soon. McCloud's vision of a "micropayments economy" for independent comics has never looked further away.

Updated: Thanks to Erik for the correction and Stuart for the clarification.

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8 Comments:

Erik said...

I'd like to advice some caution with the report about itunes sales for the first half of 2006. In the macworld keynote Jobs claim that itunes store sales are up.

http://www.playlistmag.com/news/2007/01/09/sales/index.php

http://www.apple.com/pr/library/2007/01/09itunes.html

January 20, 2007 10:16:00 AM AST  
Stuart said...

ClickandBuy has "attracted a clientele like Bitpass'" We have over 7,400 merchants across Europe and North America. We work with Apple iTunes, Electronic Arts, Skype, Kiplinger's and Disney Toontown.

January 22, 2007 2:54:00 PM AST  
T Campbell said...

Not quite what I meant, Stuart, but I can see how that could be misleading. Fixed.

January 22, 2007 3:06:00 PM AST  
Stuart said...

Hi, Thank you for the clarification.

January 22, 2007 4:34:00 PM AST  
Smilodon said...

For all the good of letting people spend any money left in their accounts they started charging a $5 fee in December for all accounts that were dormant for longer than 90 days (most I'd guess.) In the case of acouunts with less than $5 they would just take what remained.

January 22, 2007 8:34:00 PM AST  
Nicholas said...

Was there porn you could buy on these services? Porn watchers are notoriously early adapters

January 23, 2007 8:37:00 AM AST  
T Campbell said...

Heh, good question. I doubt that Bitpass itself would advertise such a thing, but since it was fairly easy for anyone to become a Bitpass merchant, the odds would favor it.

January 23, 2007 8:42:00 AM AST  
Monty said...

Come to think of it, porn already has a micropayment model in existence in the form of those booths where you pay 25 cents for some short period of a movie. It seems like that model could port directly over onto the internet.

That doesn't help webcomics that much, though.

January 24, 2007 3:00:00 AM AST  

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