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Requiscat In Pass

If you follow webcomics at all, I’m certain you’ve seen the announcement, but here it is anyway:

Dear Valued Bitpass Merchant,

We want to thank you for your past business, however due to circumstances beyond our control, we are discontinuing our operations.

We have partnered with Digital River to provide operational support during the period prior to shut down. As of today, January 19, 2007, all Bitpass Buyers with US dollar denominated accounts are being notified that they will have seven (7) days to spend any amounts that currently exist in their Bitpass Account.

During this seven day period, US Buyers will not be able to add additional funds into their account.

On January 26, all US Bitpass Buyer accounts will be closed and we will begin the process of refunding all unspent monies to the accountholder.

Bitpass Merchant Accounts will be available for viewing until February 28, 2007. At that time any funds that you have on account or owed to you will be refunded or paid. All account records and materials will be retained for 60 days and available upon request.

Again we would like to thank you for your business and support.

Matthew Graves
Chief Operating Officer
Bitpass Inc.

Or maybe you hadn’t; at the time of writing, the Bitpass home page featured nothing in the News section more recent than last October. With Bitpass going the way of the non-avian dinosaurs, that leaves IndieKarma to process small payments in a (semi-) transparent way. Since IndieKarma has, as of this writing, managed to sign up a total of 1140 people (despite the promise of one free dollar of credit to the first 5000 accounts) since founding last May, don’t expect micropayments to suddenly rise from the ashes like a phoenix.

Want to know why Bitpass failed? I think the answer lies in a poll at Goats (where, it must be said, Jon Rosenberg has been notably unimpressed with the concept of micropayments for some time now). He’s got some surprisingly kind words to mark the passing of BitPass, and asks how people will be spending the money they get back. The results (as of 11:00am GMT – 5:00) are:

  • 14% (22) 1/10 of a lapdance
  • 4% (6) 3 pages of a novel
  • 6% (10) 0.5 Tootsie Rolls
  • 1% (2) Lots and lots of interweb comics
  • 73% (113) I never got a Bitpass account

Highly unscientific, but it’s about as good as you’re going to get, and that last number has been holding steady at about 72 — 73% even as the number of votes has gone up. And speaking of highly unscientific surveys, the deadline for getting in on the traffic/income analysis is next week, and we’re still only halfway to the 100 responses I’m looking for. Maybe with a few more hard numbers, BitPass might have fared better.

I also don’t think Bitpass had a chance in hell of succeeding, but given that the Goats poll was obviously intended to further illustrate Jon’s disgust concerning micropayments rather than actually inquire into the usage habits of his readers, don’t you think including that amounts to little more than knife-twisting? ;)

As I said, “highly unscientific”. But knife-tiwsting or not, of the 191 people who’ve added their votes (as of now), 75% are saying that they’ve never had a Bitpass account; the other answers, while jokey and dismissive of Bitpass, still only come to 25% of the responses.

Now those responses are clearly skewed in favor of Jon’s readership, but as he has one of the larger readerships in webcomics (participate in the survey, creators!), and one that is diverse in its reading habits, they’re probably slightly more inclined to have a Bitpass account than, say, the average PvP or Penny Arcade reader.

And since Jon’s readership has no motivation to claim an account (or deny one) based on his biases (in fact, they seem to take delight in tormenting him on occasion), I think that regardless of his motivation, the poll results are valid (within the bounds of statistical error, which is likely much larger than your standard +/-4.3%).

Bitpass failed because there wasn’t enough motive to get an account! You need to have some massively popular, highly in-demand content if you are going to convince lots of people to sign up, not a handful of smaller vendors that only appeal to a handful of folks.

Niche audiences only add up to something when you have bucketloads of niche vendors, and in order to attract that many vendors you need the kind of brand-awareness that comes with being used by a big name.

Actually, if anything, that poll will bias in favour of bitpass, as those of us unable to resist a joke answer* will be clicking stupid shit regardless of whether they actually had an account or not.

*ie me.

the problem is that a high-traffic in-demand content doesn’t need micropayments. You make more money from macro payments and advertising.

Why buy the cow when you’re getting the milk for free?

Nobody’s selling the cow. They’re selling merchandise BASED on the cow, and ad space on the side of the cow, so that all the people looking at the cow for free will see their product or service and want to purchase it.

The product or service may or may not be cow-related.

But lots of people DO buy the cow! Look at all the folks who buy book collections of webcomics, even when the entire contents are available online for free.

Of course, to buy a book online, you probably don’t have to open up an account with a new online financial service and load it up with money first.

Now if a bitpass account was something that everyone already had, then maybe more people would be inclined to use it. But it never had that one backer that made it ubiquitous. There was no ebay to bitpass’ paypal.

Bitpass (and by extension, this generation’s best hope for the micropayment model) failed because it tried to compete with other, less intrusive models.

“Advertising is less intrusive?” you ask incredulously. Well, yeah. I don’t have to decide to spend money. Ads intrude on eye-space, but not brain-space, and the internet has already taught me how to cordon off a chunk of eye-space. Heck, Television taught me similar tricks thirty years ago.

Merchandising is similarly non-intrusive. I don’t have to make the “buy this stuff now” decision if I don’t want to. I can just read, and move on, and sometime in the next few years the artist will get one $20 lump from me when I finally decide to plunk down change for a book.

As long as there are ad-supported and merch-supported comics out there I believe micropayments are going to remain a tiny niche. They will always be disproportionately significant when “how much we talk about them” is compared to “how much they actually matter.”

First off, there’s nothing wrong with a little bit of knife-twisting.

Secondly, I would guess that the only respondents to the poll that have Bitpass accounts are the ones that picked the fourth option, as Nic says most folks are unable to resist a joke answer. That would align closer with the numbers we saw when we offered a Bitpass comic.

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