24 January 2009

+ Size Doesn't Matter

Micro transactions. The new media business model that is going to save at least two industries and possibly cure cancer. Tying in nicely with the long tail, micro transactions work perfectly for a pirate ridden Gen Y and where traditional business models have failed.

Gen Y want everything free, but are happy to pay a small amount for instant gratification. If it's worth paying for, we'll pay for it.

Here are some examples...
+ iPhone Applications
While most applications for the iTouch and iPhone are free, some are priced incredibly cheap. Enigmo, a puzzle game priced at just $2.49, has made $1.8 million in sales.

+ iTunes Music
Apple's attempt to overcome piracy hasn't been 100% successful, but charging $0.99 for a song has certainly helped. Cutting out a number of middle men, both Apple and the artists have earned far more than through traditional sales of singles and albums. Television series and movies are slowly building momentum under the same model.

+ Second Life Avatars
While Second Life is now quieter than the audience of an Eddie Murphy movie, at its peak, 15 year old programmers were making enough to put themselves through college selling $0.40 avatars.

+ Ricky Gervais Audiobooks
Podcast turned Audiobook, for just $10 you can buy hours and hours of hilarious content that has made the Ricky Gervais trio millions.

+ Guitar Hero Downloads
Later versions of Guitar Hero allow you to jump online and download your favourite tracks to play against, in a somewhat similar fashion to the Apple Store. Aerosmith have more from Guitar Hero than from any of their album releases.
Micro transactions, with the ability to cut out any middleman, will be the way we produce, distribute and consume content in the very near future. What other examples are there?

8 comments:

  1. maybe off on a tangent, but what about the companies who don't even need a product to earn millions from micro transactions? they just facilitate transactions or on-sell products and take a tidy fee for themselves. hello paypal and webjet.

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  2. nice post, i agree that there micro transactions are the future, think about anyone who has an iphone or itouch and how they have gone from downloading music from friends/torrents to buying the latest albums online because its so quick and easy.

    The other issue is that itunes was so successful because it offered such a great range and is starting to release albums before you can buy it in stores. Services need to be more proactive and supplying content and im sure their market share will continue to grow.

    The big downfall is the payment charges, if your bank/paypal is going to charge 1-2% to the merchant and to the seller it reduces the incentive and if like qantas are going to charge $7.50/booking it will kill the market.

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  3. Max said he can't believe you didn't mention Habbo Hotel or X-Box Live.

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  4. @ Stan

    Ah yes, Habbo Hotel you buy cheap furniture and what not, right? Explain X-Box Live to me.

    Tell Max I want him to write a guest post on my blog.

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  5. Hey great post with some great and simple insights which tell stories beyond the given example.

    Keep it up,
    Steve Sammartino

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  6. Xbox Live is a service you subscribe to on a yearly basis that lets you play other people online.

    Then, if you're a member you can buy old games on Live.

    It's about 80 bucks a year, and the reason that Xboxes are so much cheaper than PS3s (Sony gives away the service for free).

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  7. Pureprofile is built on micro transactions, but in reverse, paying customers to view ads and answer research surveys. Interesting interview with Pureprofile on the most recent episode of Love Digital.

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  8. the issue with pureprofile is the people who view the ads or take the surveys are motivated purely by the 2c or whatever they get paid ... how robust are the survey results? how qualified/interested is the audience that view the ad

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