If it prices each section at a dime, each man will opt out of one section, paying a total of 20 cents. If the newspaper aggregates all three sections together, however, Curly, Moe and Larry will all agree to pay 25 cents for the whole, even though they value the parts differently. Aggregation thus not only lowers the mental transaction costs associated with micropayments by bundling several purchase decisions together, it creates economic efficiencies unavailable in a world where each resource is priced separately. Subscription A subscription is a way of bundling diverse materials together over a set period, in return for a set fee from the user. As the newspaper example demonstrates, aggregation and subscription can work together for the same bundle of assets.
Subscription is more than just aggregation in time.
Furthermore, producers value predictability no less than consumers, so producers are often willing to trade lower subscription prices in return for lump sum payments and more predictable revenue stream. Game theory fans will recognize subscription arrangements as an Iterated Prisoner's Dilemma , where the producer's incentive to ship substandard product or the consumer's to take resources without paying is dampened by the repetition of delivery and payment. Subscription also serves as a reputation management system. Subsidy Subsidy is by far the most common form of pricing for the resources micropayments were meant to target. Subsidy is simply getting someone other than the audience to offset costs.