Posted by: danreich | June 19, 2008

Online Monetization: Beyond Advertising and into Microstransactions

Let me start by saying this: I firmly believe online advertising is and will continue to play an essential role in the economic ecosystem of the internet (so much so, that I am working at Lotame). With that said, is online advertising the only answer?

Arguably No.

Microtransactions: According to learnthat.com

Microtransactions Definition

Microtransactions are small transactions, perhaps of the order of a cent. They are being considered for digital content on the web (a magazine selling an article (unbundled) rather than an entire issue (bundled with additional information that may not be of interest to the consumer). This may then open up additional revenue streams for the content providers.

As new web services, application, or any website for that matter becomes available, the priority typically lies with the user base and generating lots of eyeballs. Once that user base has reached significant mass, the service can leverage the base and monetize.

So if a company like twitter were to offer subscription based premium services, they could, in theory, generate revenue from their loyal users. But what happens if they applied a micro transaction type revenue model? What if they generate revenues based on individual actions (using a feature of the service), or premium actions (using a premium feature of the service), and charge users a fraction of a penny for the action. Granted there would have to be a standardized pay-pal like model behind this type of system, but the amount of volume or interactions that exist online, could yield significant revenue. Make sense?

There are definitley issues surrounding this idea (haven’t though them all through), but the premise is there.

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Responses

  1. Very thoughtful post & an interesting one too. Ive read on micro-transactions in some article regarding facebook recently too.

    Cheers! Jay
    http://www.promediablog.com/
    http://www.prodigitaltips.com/

  2. Thanks Jay. What have you heard regarding facebook and microtransactions?


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