GETTING VIEWERS TO PAY FOR VR CONTENT - WHY NOT?
Erik Goetze of VirtualParks discusses his experience with BitPass.
by Erik Goetze
I recently decided to start charging small amounts for people to view my “premium content” wilderness panoramas. The main reason is a slow motion “success disaster” - in recent months my VirtualParks webserver has logged over 32GB/month of panoramas going down the wire. If traffic keeps growing as it has, I’ll definitely have higher ISP charges. The method I choose for charging for premium content is the BitPass micropayment system, which is optimized for small payments (a penny to a few dollars). In this column I look at the bigger picture around users paying for VR content.
There has been a gradual shift in people’s willingness to pay for content on the Internet. For instance, the Wall Street Journal and Salon both have noteworthy online subscription bases. Apple’s iTunes proved that online music could be sold by the song, racking up 10 million song sales in four months. Back in 1997, Ultima Online established that gamers would pay to play, and now boasts a quarter of a million subscribers. NCsoft’s Lineage game claims 4 million subscribers, mostly in Asia. Sony’s EverQuest has 470,000 subscribers paying $13 a month. RealOne has half a million subscribers to its RealOne Super Pass service. ConsumerReports has 880,000 subscribers to its collection of product reviews and comparisons. Match.com has over half a million subscribers. Ancestry.com has three quarters of a million subscribers. Classmates.com has 1.6 million subscribers. If surveys are to be believed, the majority of Internet users refuse to pay for anything on the net, but the minority who would consider paying constitute a big crowd: 24 million people in the US, and 100 million worldwide (figures from Content Matrix).
Beyond big media company sites charging for content, there has been a surge in the use of “tip jars” on sites to facilitate contributions. I’ve seen little hard data, but many anecdotal reports of successes with this method of encouraging users to help support the efforts of many otherwise non-commercial websites. Most of the reports claim donations of between $100 and $1000, for sites with thousands of daily readers. While some may feel negative connotations by asking for a “tip”, perhaps it is just a bad choice of words. NPR stations use the voluntary contribution approach to fund much of their programming, while the award-winning TidBITS site has received the support of 1179 people.
According to Jupiter Research, people are least likely to pay for commodity content such as news, sports scores, or movie reviews. As can be seen from the prior examples, people will pay for high quality niche content, and they will contribute to support a site they like. Jupiter forecasts consumers spending $2 billion on online content in 2003, with the total growing 20% each following year. The most successful topic areas people are willing to pay for include sites offering ways to save time or make money, or providing exclusive material or services not found anywhere else.
Businesses like newspapers seem to view pay-for-content as an either-or proposition. However, Vin Crosbie points out the “all-or-nothing” approach risks alienating most of your users and only satisfying a few. I think a viable strategy is to keep providing free content in areas, while using micropayments and subscriptions for exclusive or high-end content. While initially I am putting new material into the premium content section of VirtualParks, my goal is to have two or three versions of each panorama: a smaller pano that is free, and a pay-per-view high-resolution fullscreen movie with added features, such as geo-encoding, sound, integrated map, or annotations.
Sites that start charging to access content can look forward to reduced numbers of site visitors. For instance, Slate lost 95% of its viewers when it switched to a subscription firewall around its content. That translates into reduced ad income. However in my case I have no ads, so I have nothing to lose from trying out micropayments and subscriptions. In fact in the entire month of August 2003 I was heavily promoting premium content on VirtualParks’ homepage, and yet viewership dropped only slightly: 1% drop in pageviews, 2% drop in hits, 5% drop in total data transfer, and 0.5% drop in unique hosts.
I am still getting started with setting up my site for micropayments-there is much work to do building a critical mass of content so that people will feel it’s worth it to put a few dollars into a BitPass card. I have done no off-site marketing yet to publicize the new content. BitPass is still in beta, with a limited population of people who have signed up to use it. Given all that, how have I done so far? I have had about half a dozen sales of wallpaper, and over 50 VR views. In my opinion, it’s too early to judge whether 1) micropayments are going to be a viable way to pay for site expenses; and 2) BitPass succeeds. I would give such a new system at least 6 to 12 months test, because it is in a very early stage right now. How long did it take PayPal to take off?
What has been the reaction to offering pay-per-view on VirtualParks? I’ve gotten a few emails, all of which were supportive. On the flip side, some corporations used to sponsoring sites and placing ad banners seem less than enthusiastic about a payment system that would eliminate the middleman between creator and buyer, and reduce the influence of ads or sponsorships.
A common question from people is “why don’t you just use PayPal?” BitPass does a few things that PayPal does not: it provides gateway software on your web server that delivers the content upon payment. Some buyers like the anonymity that BitPass provides. Not only that, but for a US$1.00 item, Paypal would charge me $0.33 for payment processing, while BitPass only takes 15%. If all your items are under a dollar, the difference can really add up.
One barometer to see if this incarnation of micropayments can work is Scott McCloud’s webcomics. Scott was involved with BitPass since last year, and had excellent publicity including being mentioned in a NY Times article in July. He reports 1500 buyers of his 25-cent Flash comic strip, which seems like a promising start to me.
Clay Shirky recently stirred up the discussion about micropayments with another article condemning them to perpetual failure. Scott McCloud rebuts Clay’s criticisms of micropayments:
... Also I found this “rant” by the editor/publisher of Modern Tales interesting.
So will people pay to view VRs? Which begs the question; do people see value in VR? We probably all have different opinions about that, but I think the most likely model for payment success with VRs would be a flexible payment options site offering a critical mass of high-quality VRs covering a subject niche not already available for free. For instance, I’d willingly pay to view a site that organized and virtualized a significant collection of all historical panoramas (over 20 years old). While micropayments have an uphill battle to achieve widespread adoption, I think sooner or later they will become a key component of online payments.
 For daily coverage of news and trends in the VR world, read Erik's VRlog . View Erik's photography and read his articles at VirtualParks.
Read more about Erik Goetz
Email Erik Goetze: erik@virtualparks.org
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