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.

The Independent is a newspaper here in the U.K. which is in many ways progressive. Its front page design is often quite original and it was the first British newspaper to change its “broadsheet” format to a smaller size, which resulted in a spike in its sales.

For a newspaper that seems unafraid of taking risks and challenging the norm, it’s a shame that they’re not more progressive when in comes to pricing their online content.

The newspaper equivalent of reading a blog is following what a columnist has to say. For a Simon Carr enthusiast who does most of his reading online for example, there are three options:

1. Subscribe for a year for £50,
2. Subscribe for a month for £10 or,
3. buy a single column for £1.

Mr. Carr writes roughly 20 columns a month, which comes to a total of 240 columns a year. The cheapest subscription option for this column is £50 pounds for 240 columns or about 20 pence a pop. In the newsstand The Independent costs 60 pence.

Embracing micropayments is not something the Independent should do because it is progressive or inventive. They should do it because it is the only way a traditional media company, that bases its revenue on written content, can survive.

The Independent is not about to remove its paper from the newsstand and force those who want to read it to subscribe. Why are they doing it online?

The availability and feasibility of micropayments is another matter. Jakob Nielsen advocated for them as early as 1998 but they still haven’t materialized fully.

According to a news item in the Financial Times, upmarket retailers here in the U.K. outperformed others in the industry during the Christmas period.

In “So Long Apple Nay Sayers”, Om Malik highlights the difference in performance between Apple and Dell, where Apple plays the role of the upmarket retailer.

Apple invests large sums in product design and with creative talents such as Jonathan Ive on board, its products seem more like designer wear than hardware. Business Week dissected the Apple Nano recently and estimated that before marketing and distribution costs, the profit margin on the Nano is around 50%.

So which business model is more volatile: Apple with its high end designer-ware or Dell with four times more sales of affordable but slightly dull products?

Instinctively one might say that Apple is more volatile since its revenues are subject to fashion trends, which can be fickle. But both are subject to general economic trends and in the U.K., where the economy is slowing down, it seems that Dell-like business models suffer while the Apple-like upmarket ones continue to prosper.