Low transaction costs are a wonderful thing if you're in the transaction business. They're wonderful for consumers too, making it cheaper and easier to buy things and creating new things to buy. All this is especially true now that the Internet provides a direct connection between sellers and millions of consumers. But this isn't a normal situation. This is the Internet, where any legitimate idea is immediately taken to ridiculous limits.
Press reports about micropayment schemes extol their virtues in breathless wonder.
Micropayments might be important in some limited areas, but most of the hoopla is very poorly thought out. To see why, consider Slate, which recently decided to remain free to users for now. But imagine that, several years hence, Slate is trying to decide among micropayments, subscriptions, and remaining free. Joe reads every bit of every issue of Slate. Somewhere in the middle is Tom Average, who reads Slate just as much as the average user does.