Micropayment, macropain

Micropayment, macropain
: At Friday’s MIT Media Lab meeting for some New York media types, Dan Ariely of the Media Lab and the Sloan business school gave a great presentation of his research on micropayments. I can’t summarize it fairly; I’ll just say that if you’re a media company looking at charging for content online, you should hire Ariely to consult; if you’re Clay Shirky or Rafat Ali, you should buy the guy lunch.

Ariely said first that the gap between zero and any price is gigantic. They offered fancy chocolates to students for 14 cents each and Hirshey’s kisses for 1 cent each; 80 percent chose the fancy chocolates. When they lowered the price to zero, 80 percent chose the kisses. It’s the money; it’s also the hassle; it’s the pain of payment. Ariely has been measuring that pain.

They then ran an experiment giving students $10 and telling them they had to stare at a screen for 45 minutes or buy content on various models: subscription; prepayment; micropayment. The results: They consumed 10 times more content on subscription basis than by micropayment. “The pain of payment has an unbelievably large effect,” Ariely said. But when asked what method they preferred — specifically, what method would yield the highest quality content for them — the subjects said micropayment. So business-model as they do, not as they say.

More from MIT
: A few other random notes from the MIT meeting:

: MIT and others are starting to analyze personality and opinion based on writing and a weblog is a good sample. What a great blog tool: Analyze my blog and analyze me. Analyze my blog and really make good Amazon recommendations. Analyze my blog and recommend friends. My blog is my avatar. My blog is an expression of the essential me.

: Esther Dyson mentioned the latest thing in search: social search. Eurekster looks at what your friends search for.

: I am dying for the passive friends network (and Technorati is a credible start): To whom do I link? What are their connections? What are my connections? The problem is separating positive links from negative, perhaps even grading the quality of links. I don’t want to spam my friends to enter networks. I’m already in networks; I want systems that measure and map that.

: The man next to me from New York Times said that when he and his wife were going on vacation, they kept searching on destinations to their dissatisfaction. So his wife started searches with “we stayed at….” and they found great recommendations.

: Walter Bender of MIT and Dan Gruhl, graduate now at IBM, said they independently did research on buzz on music online and they each found that online buzz presaged retail sales — up and down — by two weeks. We are influencers influencing buyers.

: Gruhl said a third of the Web is porn and half the remainder is copies of other pages, leaving one third as the meat on the bone.

: The Media Lab is working hard on something called Common Sense — the collection of the common-sense knowledge we all assume but computers don’t know — to help organize the Web and knowledge, better than the semantic web can (that is, without all the effort).

I do like these events; they’re cardiovascular work for the imagination.