The two Freakonomics gods of economics, Stephen Dubner and Steven Levitt, have now joined in the debate about whether or not micropayments are the future of newspapers, a debate I first pointed to last week.
Unfortunately, so far they have only sampled views from the people I’ve already linked to. I hope that means they are getting ready for their own economic analysis of the issue. A lot rides on it.
Personally, I still think that the Kindle and its ilk point to the future. Technically, it is not a micropayments platform yet (micro = thousands, not hundreds, of a dollar at a time). But it begins the process of news publications charging modest amounts for a new reading experience, and that is what this is about.
Hannibal and Me: life lessons from history 
Well in the International System of Units “micro” means millionths, not thousandths, so a literal interpretation of micropayments is probably not workable. There is no doubt a genuine distinction, nonetheless, between the kind of system often cited by micropayment skeptics (tiny metered payments for virtually everything we read) and the Kindle/iTunes approach (much bigger payments for the most valuable content, everything else free).
The skeptics are probably right that the “mental transaction costs” (in Clay Shirky’s words) of penny-sized payments are higher than the transaction itself, making these types of systems unworkable. Even existing analogies like cell phone use offer payment plans so that most customers can avoid making go/no-go decisions about every call and text message.
But in the original Greek, mikros just means small, and in this sense I totally agree with you: micropayments a la Kindle are the way of the future. I doubt we’ll see any payments under $.30 or so, maybe $.50.
(With special thanks to Wikipedia for making me seem smarter than I am.)
Amateur mistake on my part. Correct would be: “millipayments”, micropayments and nanopayments in that order. 😉