The money in micropayments

I have contemplated this exact issue while playing Gunbound when it first came out. Then recently, I’ve thought about this quite a bit as of late due to some conversations on IM with my friend, Tdavid over on how Microsoft uses their Marketplace.
So here’s a bit of foreground. We were discussing why Microsoft has finally figured out micropayments with their Xbox and Xbox 360 models. While I differ on the belief of the Adcenter issue (the integration of the ads would need a redesign of their current interface to be non-intrusive and not just thrown in), Microsoft has at least realized in the preliminary rounds how to achieve using micropayments and succeeded in gaining first-in-market placement.


Yet, this is not something new. Take a look at something closer to home first. The Apple iTunes store is a multitude of micropayments. Who wouldn’t buy a piece of music for 99 cents. It’s a buck. Everyone has one. Even those that complain about the DRM that Apple uses have nothing to say about why the following is so loyal that it would make anyone trying to copy Apple’s success puke. It’s not without its own problems, but it’s an example of a good micropayment model.
The other huge success are the Asian MMORPG markets. Currently, there are a whole multitude of games that are purely based on micropayment models. And they rake in the money like you wouldn’t believe. Every single MMORPG that I have played recently cost a whole lot of nothing. Yes, you read that correctly. Zip. Zilch. Nada. Anyone can play, and those that did pay would get more out of the game itself. You won’t believe how four dollars here and four dollars there can add up extremely quickly.
What does this mean exactly? This means that American game markets need to take heed as to why quantity works. Because it’s such a minimal investment, players will invest a lot more over time since psychologically it doesn’t seem like much. Places like Microsoft’s Marketplace need to remove their subscription model quickly. This is because the moment the asian model hits this side of the hemisphere, any subscription model will suffer from trying to fight with “free”.
Can this be applied elsewhere? Absolutely. Music and games are easily distinguished commodities when it comes to downloadable anything. But if someone did the same for applications? television? movies? what about animations? art? photographs? name your media here? The answer is in how cheap are you willing to go to attract the users to a point where they’re willing to drop the money as an impulse buy. Once you reach that point, you’ll have found your golden touch.