In a previous post (see: “How should newspapers price online content?“) we noted that because micropayments have not yet emerged, old school media companies cannot provide competitively priced online content.

For the past few years, PayPal has been uniquely positioned to provide micropayments to masses of online retailers but have so far failed to deliver. Instead, they charge a fixed 30¢ for every transaction made, limiting retailers’ options for competitive pricing.

Now, according to the Wall Street Journal, Google might be entering the field with their own payment service. Is this the beginning of the micropayment era?

Ebay has one advantage over Google: the trust model. Ebay users give each other a “trust score” according to how trustworthy they have been regarding a transaction. Millions of Ebay users have put much effort into gaining a high trust score and will be reluctant to switch platforms. Google does not have this “sticky” factor but is constantly trying to build one by integrating GMail, GTalk and other services into their personalized home page.

Competition from Google in the electronic payment space might prod Ebay into expanding their trust system to all electronic business transactions - not just auctions. Furthermore, the newly aquired Skype can provide Ebay users with an extra trust factor: personal contact. If Ebay has the courage to take this step, they might eclipse players such as Google in the next ten years.

Lets at least hope that competition from Google will provide content providers the means to charge a reasonable price for online content. A feasible platform providing micropayments for the masses is long overdue.

This entry was posted on Tuesday, February 7th, 2006 at 7:05 pm and is filed under Business, Pricing, The Web as a platform. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.