Micropayments haven’t materialized.  My guess is that’s because of a combination of two reasons.  First, there are the technological/network externality barriers.  Nobody as of yet has put forth a system for micropayments that is easy and compelling enough to spur widespread adoption.

The second reason is that micropayments may not actually be the most efficient way to achieve their purpose.  A monetary payment is a one-to-one transfer of value from payor to payee.  Right now many of the online transactions that micropayments would facilitate are actually financed with a more efficient means of payment.  Advertisements are the best example.  You want to watch a video on YouTube, you have to watch a little bit of an ad first.

This is a transfer of value:  you lose some time, the advertiser gains your attention.  But this transfer is not one-for-one because your opportunity cost of time is not identically equal to the value to the advertiser of your attention.  And given the widespread use of advertisements in markets where monetary payments are possible, we can infer that this transfer is actually positive-sum.  That is, the cost of your time is lower than the value of capturing your attention.

Microbarter is more efficient than micropayment.  So we should expect to see even more of it.  And we should expect that even more efficient forms of microbarter will appear.  And indeed we soon will.  Google has apparently figured out that information can be an even more efficient currency than attention:

Eighteen months ago — under non disclosure — Google showed publishers a new transaction system for inexpensive products such as newspaper articles. It worked like this: to gain access to a web site, the user is asked to participate to a short consumer research session. A single question, a set of images leading to a quick choice.

Once you think in terms of microbarter and positive-sum transactions there are probably many more ideas you could come up with.  But a few questions too.  Why is there not already a market which enables you to sell your valuable asset (attention, information etc) for money?  After all, if it could be monetized and the market is competitive then the usual arguments will imply that at the margin the exchange will be zero-sum and the rationale for barter disappears.

(Ghutrah grip:  Mallesh Pai)

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