On 9 Nov 95 at 15:47, Vladimir Z. Nuri <vznuri@netcom.com> wrote:

Subject: the revolution of microcurrency

the topic of "microcurrency" has come up on this list ...<snip> touting it as a revolutionary change in the economy. I ...<snip> agree with this wholeheartedly. the possibility that people can ...<snip> will all contribute to a REVOLUTIONARY effect on culture.

my key idea on all of this is that the whole idea of copyright is going to melt when you introduce cash, not be strengthened.

I don't think so.

there are a lot of people out there who think that one has to try to put a lock and chain on web pages or whatever that one is "selling", and the horrible problem of the net is that anything can be copied. and these people are feverishly working on specious "solutions" to this "problem" right now.

What's happening is that while some people try to impose book and magazine notions onto the Web, others gleefully splatter the landscape with everything from the interesting to the awful but are generally stopped short of making a living at it by the absence of workable means of asking for and receiving nominal sums. Meanwhile, some other people are realizing that today's $30/yr newsletter of 20,000 circulation will become tomorrow's 25-cent-per-copy newsletter of 2 or 3 hundred thousand "circulation," making more total money and reaching and influencing far more people. A much larger volume of information will be worth a penny or less for a peek. When those transactions become close to transparent and of unnoticeable latency, *then* we will see the explosion that will put present Web growth into perspective as the baby crawl that it is. This doesn't amount to putting locks and chains on Web pages any more than newsstands put locks and chains on newspapers or magazines. When it's cheap enough and the transaction is a no-brainer, the buyer gets easy access while the publisher has reason to be there publishing, and neither worries too much about the value of the single copy.

says, "you have to protect what you are selling from other people or you won't make any money". this theme

No, the point is that you have to have a way of making something or you won't have any incentive to generate the information or make it available to others. The news for today is that the way of making something on small amounts of low-value information is almost at hand.

I submit that things like the release of public domain standards and products like Java and Netscape for free are not merely blips at this moment but increasingly are going to be the marketing plan of the future. the idea is that you give away your product for FREE,

Standards are not the product. Standards are what help make a market possible for products that must interface with other products. The closed-system people may have seen this in the momentary light of their extinction.

and then people pay you if they like it.

Don't hold your breath.

this new ideology will be relevant to products that are not "things" but in fact are more in the realm of intellectual property, i.e. writing, software, cyberspace web pages, etc.

Intellectual property is not new. What's new are distribution and fee collection systems with the potential for incremental costs approaching zero. Most of the infrastructure for that is in place, in fact has been in place for quite a few years. What has been missing has been the critical mass of users actually participating, and near-zero cost payment mechanisms. I'm spectacularly disappointed by the initial ecash and payment offerings, since they seem to miss the whole point and be aimed at web-transacted business no different that the high-overhead transactions that take place face-to-face in retail stores and by phone and mail.

the beauty of this system is that NO LONGER is "unauthorized" distribution" the "enemy". it is your FRIEND, a key aspect of profit!!

Freely-distributable shareware has been around for 10-15 years, and has grown from being the computer field's butt for bad jokes to a maturing distribution methodology that supports an increasing number of author/publishers offering some quite substantial and solid products. It did this, by the way, without substantial benefit or contribution from the Internet or the Web.

product to "authorized users". (i.e. those who pay in advance). our entire society thinks within this paradigm,

A big part of what is happening with microtransaction evolution is that the buyer will be able to consider, decide, and pay, all in the space of a second. You can forget about anything based on paying in "advance," and all those draconian mechanisms -- they won't exist because they won't need to exist. Instant payment at very low prices collapses whole ranges of problems that no longer need be addressed.

a rather extraordinary new economy can replace this, that of voluntary payment.

We have "voluntary payment" now in most transactions not involving the government.

you DISDAIN things like copyright, because they prevent your "product" from reaching the eyes of potential customers. your goal is actually to distribute the product as far as possible, in a sort of pyramid-like scheme. you want your "customers" to distribute your product to their friends, so that those "friends" potentially become customers in an endless cycle.

You don't actually collect anything, though. I guess you make it up in volume, right?

this approach works amazingly with writing. imagine that if John Markoff suddenly QUIT the NYT and just wrote articles on his own. and imagine that at the bottom, you see a message, "for more of the same, send .5c or more to markoff@liberated.com". I submit that in the future, Markoff will probably be able to make more money than he does at NYT, because he is eliminating the middleman. the newspaper company is primarily built as a *distribution* channel. suddenly he doesn't have to pay anything out of his own salary, so to speak, for distribution. distribution is *free*. he doesn't require anyone else to do it for him. he puts his article in an apropriate place on the net and it circulates like a VIRUS if it is well received. the more people that see the article, the more people that pay him money.

You've got *part* of an idea here, but it's mixed up with another idea. It is already common for people with service or product to sell to offer "free" information in the form of articles, papers, small utilities, demos that may actually have some use, and occasionally, fully functional products. In the field of intellectual property in the electronic age, the incremental cost of a copy approaches zero, so there is no great investment in doing this. There is, however, always something larger FOR SALE, something that is being promoted by the favorable exposure. What is being given away is not the final product one hopes to sell -- it is a loss leader, something that in the field of information costs precious little to run off.

in an information system, individual objects have no value. what has value is the FLOW of quality information. if Markoff continues to flow with that good information, people will continue to pay for it. they will perceive that "by paying him, the quality information flow from him to me continues or increases".

People as marketplace players do not think like that.

this same idea works with software. you don't see software as an end product. you see it as something that is evolving over time. and whenever you send money to a company for software, in this new system the idea is that "I like this software, and I want to see it grow. here is my contribution to that".

People as marketplace players do not think like that. The way some of them *may* think is, "I like this product; it will evolve; my payment for a $1 license today entitles me to new versions for a year; so this is a Smart Move." <click!> Also: "I like this digest article. I like the way this author thinks and expresses himself. It's a no-brainer to pay 20 cents for a copy of his full newsletter." <click!>

another interesting area is that of patents, and I see this dissolving in the same way. a patent is like trying to put a lock on an idea. but gradually people will realize, only ideas that are implemented have any value. you can't profit and lock an idea at the same time.

"Lock" and "no value" are not how patent is generally viewed. Xerox, Polaroid, IBM, Dow, duPont, et al would be amused at your view.

*dissemination* of ideas is what leads to profit, not locking them up.

You first. Dissemination of *something* leads to exposure, establishment of credibility, *reputation*, in a word. That, in turn, gets you in the door for actual sales, whether of yourself, your funding proposal, or your actual product or service. *That*, in turn, *may* lead to profits, assuming you have a whole bunch of other ducks in a row and manage your business well.

hence there will be an economic incentive to an inventor to give away his ideas for free, at first.

Yep, yep, I'm sold, just show me where to dump all these great ideas so I can get rich, quick.

in the old system, where one thinks of an idea as a "thing", this sounds preposterous.

Uh, um, in a word, "Yes."

but in a new culture where ideas are seen as things that need to be cultivated and grown to work, it will seem eminently sensible. the inventor is releasing his idea to the world, saying "I can expand on this idea, even turn it into a reality, if you send me money".

It was late, right? You'd been up for a long time, right? You were getting the aching-back, numb-fingered madrugada sillies, right? You mailed this in the afternoon because you'd slept it off by then and forgotten what you'd written, right?

other people can of course steal the idea, but there is no value in the idea itself:

No, of course not!

the value is in the development of it

Which only the originator can do, of course.

into evolved new states, or the intellectual expertise of the inventor.

Yeah, history really shows this to be an effective principle on which to peg the survival of inventors.

in short, microcurrency could have quite a liberating and revolutionary effect on economics as we know it.

Yep. Liberating it clear away from planet Earth. Revolutionary, as in, "orbital."

in the current system, people are not paid for tiny contributions to the whole. the contributions have to be "packaged up" into something like a magazine before individuals can get any profit. a new system may allow people to be compensated directly for things that are hard to quantify.

This *is* part of the point, V. Physical manufacture and distribution of printed magazines have inherent floor costs and necessary economies of scale that are blown away in electronic media on the Web. Just plug in a way for quick and easy micropayment and the real revolution will be off and running.

how much was Markoff's last article worth in the NYT? that's impossible to figure out. but if you had a microcurrency, you can calculate exactly how much money people sent to Markoff for his last article. say, across the world, it totalled $843.16. such a sum is not inconceivable. and over time it would be enough for him to make a salary over the whole year on, perhaps!! I'm arguing that this is increasingly going to become VIABLE over the next few years with cyberspace and microcurrency.

Yes, but not with payment after the fact on the honor system. Sit down with *any* of the numerous vendors from whom you presently buy living space, food, municipal services, phone service, Internet access, car repairs, etc., and try convincing them that you should get the product first, and if you like it you will pay. Later. Right.

the microcurrency situation can even be set up in a company. "whoever codes this computer problem will receive [x] dollars from the company". the whole economic system becomes a fluid, pulsing entity that filters down to the tiniest fraction of value and gives each individual a quantitative value on his contribution. companies talk about "incentive systems" today, but perhaps the entire economy will become an enormous incentive system in this way in the future!!

I believe this is called "The Free Market," and it has little to do with any concept of "pay what you think it's worth after you use it." The Internet is exploding in part because it is the *only* free market in the world, though a market in tenuous and vaporous ideas and information propagated for many reasons other than direct pecuniary benefit. A micropayment mechanism will allow the net to mature into a fully functioning free market in information and services of value on which many of the participants will support themselves. Many of those products and services do not presently exist as such. "Companies" will be quite virtual and non-geocentric, and will form and disband in the ether. Too, everyone's low-cost opinion soapbox will sprout a 1-cent sign on it, and the ones with something to say that others want to read will make something on their expression of thoughts, research, and other information while the ones no one cares to pay for will wither or preach to themselves.

in this system, ultimately, I think the whole concept that someone "buys a product" will dissolve into the idea that "one rewards intellectual productivity to bring more of the same". it's as fundamental and intuitive as the difference between atoms and bits.

I disagree. I believe you're right about the imminent revolution that will take off when the micropayment mechanism falls into place, and several of the underpinnings you present in support of that view, but I think you've misread what this is about and where it's going. The crypto relevance is that everything is in place for profound new growth in a new form of commerce, awaiting only an effective mechanism that will allow one to make a fraction-of-a-second decision and click on something to at once authorize a micropayment and navigate somewhere. Web page designers will work out how to best use it and how to package the information it buys. Storable pre-authorization tokens would be nice, so that one can make a decision that persists through subsequent accesses and only pops up for review if the price changes. And it's got to be smooth enough for Grandma to use it. ------------ http://www.phoenix.net/~tjunker ------------ | Your freedom is on the auction block. What do you bid? | --------------------------------------------------------- Unofficial Wang VS Information Center