This morning, as I surfed blogs using Blog Explosion, I stumbled across this article: Another non-starter: Micropayments .

It notes, “Here's another non-starter: Micropayments. … There IS value in micropayments. They might work some day. But not any time soon. The problem isn't technology. It's the marketplace” It points to an article by Clay Shirkey, Fame vs Fortune: Micropayments and Free Content, which goes on to talk further about why Micropayment systems are failing. Clay points to an article by Nick Szabo about the The Mental Accounting Barrier to Micropayments. He goes on to talk about how most people are giving away free content, and why would people pay, when they can get the content free.

Perhaps the answer can be found in the streets of New York City. Wander through Grand Central, or Penn Station, and you will find a street musician, giving away his or her music. Usually, the guitar case is open, and people are throw money in. I’m told that a good street musician can bring in a fair amount of money. The same applies to those artists doing chalk drawings on the pavement. Think about the character Bert in Mary Poppins. The movie starts off with him performing as a one-man band and trying to make a few shillings here and there. Later, they hop through one of his chalk paintings.

You can give away content, and still hope for some remuneration. For the longest time, people have been putting up ‘Donate Here’ buttons on their weblogs. I’m not sure how much money people have had donated. I sure haven’t had much. In addition, they are now putting up Google Ads, where the host of the site gets something like three cents every time you click on an ad. The former has the problem of the barrier to micropayments that Szabo talks about. The later is really just getting paid for ads.

Here is where I think some of the micropayments can come in. People setting up a site to do micropayments are likely to fail, as everyone above has noted. However, there are some very interesting economies already developing.

First is Blog Explosion itself. Essentially, I am getting paid 1/2 a credit by Blog Explosion for each site that I visit. I am getting charged 1 credit by Blog Explosion for each person that visits me. They are making 1/2 a credit on each transaction. Probably a little less when you include the referrer overhead, etc. Credits can be used to buy banner advertising, and the advertising rate changes according to the demand.

In addition, you can buy credits at a price of a penny a piece (for small lots of 500 credits) down to less than half a penny a piece in large lots of 50,000 visits. Personally, I’m been fascinated by Blog Explosion and I’m coming up on 5000 credits earned. All of those credits have been spent sending traffic to my site.

However, I have suggested to Blog Explosion that they might want to add a feature so that credits could be given to blogs that are well liked. For example, it would have been nice to donate five credits to www.p2p-weblog.com because of their article. The folks at Blog Explosion are thinking about this.

The issue that then comes up, is what kind of secondary markets might evolve. The trading of platinum Everquest pieces on eBay illustrate this kind of secondary market. If Blog Explosion really takes off and there are a lot of credits kicking around, and there is a way to exchange credits, I could see a similar market developing for Blog Explosion credits.

Over in the Omidyar Network>, there is a lot of talk about currencies. In essence, Omidyar has its own currency, feedback points. People give feedback points, they earn feedback points, the spend them are starting groups and discussions. It is another economy with micropayments. There isn’t any secondary market in this sort of feedback, but it seems related to the credits in Blog Explosion.

Other systems have similar feedback points as well. To the extent that a system of exchanging feedback, whether it be BlogExplosion credits, Omidyar Feedback, and feedback in other systems like can be developed, a new economy and the ability to support Micropayments can emerge. This could even fit nicely with peer to peer networks and contributing to musicians whose MP3s you like.

Of course all of this depends on some way of establishing trust between organizations and inter-organization credit transfer could take place. Something like Identity Commons might provide a good structure for such interconnectivity, but that is a different discussion.

So, yes, Micropayments are starting to take place and I believe there is a good opportunity in this area. However, the approach that has been sought by the players mentioned in the earlier articles don’t seem to get how micropayments can and should exist in an open content gift based economy.