So, my Seed cohort Christopher and I just read this article over at O’Reilly: http://radar.oreilly.com/archives/2006/05/lindens_as_micropayments.html
Neither of us are Second life participants, but we have been watching some of the more high profile events within it with interest.
At first glance, the Second Life community is slightly bizarre (at second glance as well). SL is not a game, it’s solely a virtual space in which your avatar roams, buying land and goods and generally behaving as one would in any modern society. It has its own economy, and a currency that has a real-world valuation (300 Lindens is approximately 1 US Dollar). There are people who make their real-world living by selling virtual property and goods in Second Life.
Micropayments are held by many as the holy grail of selling content on the web. If there was an efficient way to charge a reader 5 cents to read your blog post, or 10 cents to read your essay, content producers could put their works behind a paywall so low that it wouldn’t be a barrier to consumption.
Currently micropayments don’t work because the cost of the transaction is greater than the value of the transaction. A transaction over the network that processes the major credit cards costs about a dollar a pop (this figure came mostly out of my butt, but I don’t think it’s that far off). PayPal is the closest thing we have to a universally accepted micropayment system, but at the bare minimum a transaction costs 5 cents. If you’re selling something for a dime, that’s 50% of your earnings.
The O’Reilly article is interesting in that it tells us two things:
1. A system exists that can efficiently facilitate payments of less than ten cents.
2. People are using it.
From the article:
The amazing thing about these transactions is that over 85% (just under 4.5 million) of them are conducted for amounts under a dollar; 57% of them are conducted in amounts under $0.07. Transaction amounts like that are not cost effective when you are dealing with credit cards and perhaps only slightly better when dealing with Paypal (however they still charge a $0.05 fee per transaction).
I have to wrap this up, but my question is this: Does an efficient, easy-to-use micropayment already exist in the form of Second Life?
You don’t need to be a SL subscriber to get a SL ID, meaning it could be as ubiquitous as IM. If the SL fees regarding deposits and withdrawls is reasonable, this could actually be a thing.