Why Micropayments?

In the digital age, it is extraordinarily easy for an artist or musician to send a file to their audience. I could make a song on my laptop, or shoot a video on my phone, and send it to you, for free, a dozen different ways, in seconds. Media distribution is a solved problem. It doesn't require a tech company or a studio.

Do you remember Napster? Napster is what happens when you solve the distribution problem really well, and forget about the payment problem. The advantage of this system is that copyright lawyers get plenty of work.

Napster and services like it were the dominant way to get music around 2003-4. Then iTunes surprised everybody by showing that customers were actually willing to pay for media; it just needed to be made simple. iTunes made songs available for $0.99 each and revolutionized the music industry.

The dominant business models for online video now are advertising, and subscription video on demand (SVOD). Do we need an in-depth critique of advertising as a business model? Can we just all agree that we hate it? Viewers don't like it, because it interrupts their enjoyment. Artists don't like it, because their art is put next to commercial jabbering.

It has driven scary and pervasive surveillance capitalism by companies like Google and Facebook. And it has caused the quality of content to spiral down into clickbait. My definition of clickbait is content that delivers what the advertiser wants (i.e. more page views) while screwing over the customer. This is bound to happen when the advertiser bankrolls the whole production.

Netflix is the major success story of the SVOD model. Netflix users pay about $10 per month, in exchange for which they get unrestricted access to all of Netflix’s content. The good thing about this model is that it shows that people are in fact willing to pay for content; content doesn’t have to be pirated or ad-supported. The user is bankrolling it, so the studio is incentivized to satisfy them with quality. The disadvantage is that subscribing is an all-or-nothing proposition, and people have no interest in 90% of the shows they paying to watch.

We propose micropayments as a third way. The viewers simply send money directly to the content creator, in exchange for the digital file. The viewer has fine-grained control over where their money goes, and the content creator has a direct connection with his/her audience. Neither of them have to endure an advertiser - the advertiser is cut out - and so we avoid the clickbait problem.

Micropayments can provide the best experience for users; ad-free, with voluntary control, and cheap. Netflix and other SVOD services proved that people will pay about $10 a month. A heavy user of the POP Network might watch a couple of dozen videos per day, paying a cent or two for each (or fraction thereof), potentially landing them in the region of $10 a month, which we know people will pay (especially for content they actually want to watch).

I repeat: sending video in the 21st century is the simplest thing in the world. One guy makes a video, sends it down the tubes, and another guy watches it. It can, and should, be that simple. The only trick is to send money along with it; that has been made possible with the advent of cryptocurrency. Cryptocurrency is code, and it is also money. This makes it possible for the first time to treat money the same as any other piece of code, transferring it along with the media file.

The artist does his art, the audience gives a bit of money. This is the simplest, and best economic model. There is no middleman except for maybe a little dog.

That’s what we’re building at PopChest: a simple interface to upload and stream video, with micropayments straight from the customer to the artist baked right into the code. There is no need to rely either on a company like YouTube, nor on a payment processor like a bank. Payments of a penny or less can be sent with minimal friction and fees from the viewer’s cryptocurrency wallet directly to the artist.

This not only means more money for artists, with fewer hands in their pockets, it also changes the social scene. Creators and fans have a direct financial relationship. The audience hold the pursestrings. Compare this to YouTube, where the platform can cut off the creator’s funding, and the money ultimately comes from some outfit that’s hawking soap or whatever. The audience pays for content they like, and doesn’t pay for content they don’t like, and this gives the audience more power than they’ve ever had before. They have direct control over what gets funded.