Micropayments on the internet have been a major topic of discussion since the mid-1990s. The internet supposedly creates a “liquid economy” in which products and services can flow easily around the planet. Yet a foundation for any business is the ability to get paid. Most transactions are done through credit cards, with Paypal a rising alternative, yet these systems are either not appropriate for very small payments, due to high transaction fees, or are not widespread enough. As such, it is almost impossible to charge for anything worth less than a few dollars. That’s fine for relatively expensive items such as books, but makes everyday content such as news, analysis, and humour very hard to charge for.

Bill Gates said today at the World Economic Forum at Davos that Microsoft is launching a points-based micropayments system. As Robert McLaws and Dean Collins have pointed out, similar systems have already been implemented by Microsoft for Xbox Live to enable simple online transactions. Not for the first time, a concept tested in the gaming community is now reaching the broader community. Mary Jo Foley harks back to Passport, Microsoft’s aborted attempted in 2001 to create a “digital wallet” amid a suite of online services. Today, as then, Microsoft’s power cuts two ways: many get exposed to Microsoft’s offerings and view them as credible, yet there is strong reticence at Microsoft’s power. The more limited scope of the current offering, where consumers buy a portfolio of points for $10 or $20, then spend them online, will make this a far more palatable offering.

As Donna Bogatin and a number of others have noted, a good micropayment system could disrupt Google’s Adwords program. Publisher may be able to make better money by charging tiny amounts to visitors to read their wares, than they can by putting up advertisements. There are two big uncertainties here. One is whether people will be prepared to pay even small amounts for content, now that an everything-is-free mentality has built up. Even if that turns out to be possible, Microsoft’s challenge is to become the de facto standard for online micropayments. In this domain more than most, network effects reign – online one micropayments systems is going to win. I believe that in the long run a micropayments system will be central to the internet. But I’m not convinced that either of the two conditions will be met for a good while. It is an idea whose time is coming, but may not yet be quite here. Publishing will definitely be transformed when micropayments are part of the general infrastructure, by creating a better business model to encourage high-quality, targetted content. Let’s see how this one pans out.

Are mass media dinosaurs, or rock-solid incumbents that will still rule the roost for decades to come? I was asked to write the “Yes” case to a debate featured in the December issue of Marketing magazine on “Are the days of mass media over?” Below is my case – remember that as a debater you have to take an extreme view! Unfortunately I can’t republish the “No” case, written by John Sintras, COO of Starcom Worldwide, however you can probably imagine what a large media buyer would say on the topic…

Are the days of mass media over? YES!

The days of mass media are numbered. We are rapidly shifting into a world of highly targetted media, distributed over a multiplicity of new channels. The bastions of mass media as we know them – free-to-air television, AM and FM radio, and newspapers – will still exist, but not in the forms we currently know them. In order to adapt to the winds of change, they will have to shift so they are no longer true “mass” media.

The first nail in the coffin of mass media as we know it is the proliferation of new distribution channels. In particular Internet Protocol, or IP, provides an almost infinitely flexible platform for distribution of content in any form. As consumers get wide bandwidth Internet access both to their computers, TV, and game consoles in their homes, and to their mobile devices wherever they choose to roam, they will be able to tap into any content they wish.

Legislation in almost every country in the world currently provides strict limitations on how TV and radio electromagnetic spectrum can be used. That archaic legislation can be transcended simply by distributing content over IP, a domain which legislation will never be able to fully control. We can already access news, radio, video, or anything else we want, from anywhere on the planet.

Telecoms firms are eager to provide great media content to their mobile phone customers. While the screens of mobiles are too small for viewing most video, these will be swiftly supplanted by new technologies. Video glasses provide quality video viewing anywhere, anytime, even while you’re walking or doing other activities. I virtually never watch TV, but I frequently watch programs on my video glasses. E-paper allows us to unfold or unroll large screens that can be kept in our pockets. We can read news or watch entertainment as and when we please.

The real death-knell for mass media as we know it is advertisers’ desire for targetted advertising with measurable outcomes. Broadcast is an extremely apposite moniker – it throws its net widely, and catches many unappetising and worthless fish for every one that is potentially of value. Moreover, you have no idea what you have caught or even whether you have caught anything. For advertisers, this is extremely wasteful. New media distribution technologies allow advertisements to be shown only to those who are likely to be interested, and then allows immediate interaction. A conversation and a relationship is created. Mass media affords no true relationship with the audience. The rapidly eroding value of sending undifferentiated message to millions means that mass media will rapidly fragment, and the majority of content will be distributed through direct, immediate, targetted, interactive channels.