Friday, July 8, 2016

I Can't Stop Thinking About Micropayments

Disclaimer: I am not a professional businessman. However, I have taken several business, economics and accounting courses.
Recently, I came across an article by Scott McCloud, a comic creator who I respect for his analysis of the comic book medium. The article, "Misunderstanding Micropayments", was basically complaining how people were misunderstanding his ideas for micropayments. The articles didn't explain his ideas about the subject. After searching a while, I managed to find two comics explaining his ideas: I Can't Stop Thinking # 5 and 6 (although it is mostly in 6). I wanted to write a response to these strips.
To support his ideas, Scott proposes this scenario:
"Online cartoonist Scott Kurtz reported how his comic strip PVP Online with its 30,000 regular visitors was costing him $600 a month to maintain, due to his need for a dedicated server to handle all the traffic. If those same 30,000 readers had been paying him just 25 cents a month, those quarters would've added up to a monthly gross of $7,500. Subtract a ten percent processing fee, as well as that $600 charge, -- and our "dangerously popular" friend would be making $73,000 a year after expenses!"
There are several problems with this. Firstly, not all 30,000 of those people are willing to pay for the comic. That combined with the numerous free comics on the web would mean a shrink in the reader base. Secondly, this does not take into account how much revenue Kurtz is making. Making $73,000 in net income sound nice. However if he is already making more than that, making $73,000 seems like a terrible idea. Even if he is making less than $73,000, he would need to analyze the cost of the change would incur (such as redesigning his website, get a service to handle the transfer of money, loss of advertising revenue and so on) and see if the benefits of the change outweigh the costs. This is why cost benefit analysis is important.
There is a question that Scott never answers: what is the customer actually buying? Are the micropayments for a time based subscription, downloads of comic pages, the ability to view on the comic, all the above or something else? Scott never elaborates.
Now, let's look at the impact micropayments have had on video games. It's only fair since they are the only other medium that uses micropayments. Micropayments have become infamous among gamers for how abusive and horrible they are used. We have allegedly "free" game that go out of their way to punish players who don't play. For example, the Runescape wiki claims that only 20% of the entire game is accessible to non playing players. Then, there are instances were paying players have been screwed over. Infamously, Street Fighter X Tekken had 12 complete characters that were intentionally made unusable unless you paid extra money for them.
How does this relate to web comic? Well, I can imagine greedy creators using similar technique to unfairly make more profit. If the comic uses a time based subscription or per page based payment system, the creator could thin out the content per page to increase the total page count or time wasted to make them more money. Creators could leave out chunks of the story unless you pay extra.
Some of the positives Scott lists don't seem that positive to me. One example is him saying "maybe -- just maybe -- they could put a few hundred well-paid corporate lawyers out of a job". What? While I do realize that there are selfish and amoral lawyers, you are saying people losing their ability to financially support themselves and any dependents they have is good. Scott claims micropayments "would get rid of the Ad Banners!" I currently read several webcomics (Monsterkind, Alice and the Nightmare and Kidutus among others). All of them have ad banners, which never bugged because these banners are easy to ignore and not intrusive. Scott claims micropayments will make viable "professional surfers", who are people who "keep an eye out for cool new art and music". So, we can help support people who do exact same thing that many websites (YouTube, Pinterest and Tumblr among others) already do for you for free.
To reiterate, I respect Scott McCloud. I personally own his books Understanding Comics and Making Comics. However, I disagree with his ideas on micropayments.

No comments:

Post a Comment