How will micropayments change business models similar to iTunes?
Blockchain payments make small transactions feasible, which will revolutionize countless industries.
Before iTunes, people thought selling individual songs was dumb.
Why sell one song when you could sell the entire album?
iTunes showed the market the power of letting people buy ONLY what they want, and the music industry was changed permanently.
The payments part of iTunes is a problem though.
It’s not cost effective to use a credit card for a $1 transaction, so the orders get batched and processed as a group.
Micropayments using a blockchain currency with extremely low fees (fraction of a penny) will remove that friction.
Subscriptions have their own form of friction.
Why can’t I watch ONE movie on Netflix without having to join for a month?
While I was researching this piece, I read an article that prompted me to join the site for an entire month.
Why can’t I just pay for the article?
One reason is it is not financially feasible to allow that.
But micropayments that use a smart contract could easily enable the purchase of an article for $0.50.
Micropayments will also introduce the concept of streaming payments.
This is a neat idea to remove counter party risk.
Let’s say I hire you to do a project.
If I pay you upfront, I risk you being a flake and not doing the work.
If I pay you after, you are at risk if I am a flake and don’t pay you.
A better option would be to have my funds in escrow (confirmation I have the money), and the funds are paid out to you while you are doing the work.
The streaming model could also be used for services where the amount of time needed isn’t known upfront.
A short term car rental situation where I am billed by the minute while I have the car.
Micropayments are a feature in the Lightning Network that runs using Bitcoin.
However, one risk with a currency like BTC for payments is many people don’t want to spend their tokens.
If you believe your $20K token is going to be worth $100k, why would you spend it on an article or a car rental?
Micropayments are ideally suited for a stablecoin there the users don’t see the token as a long term hold asset.
This tech prefect for impulse purchases like iTunes songs where people don’t overthink the payment.
In the future, you might like this thread so much you give me a $0.25 tip via a micropayment option.
While that might not seem like a lot, many new revenue streams will open up through this innovation.
