A combination of free and premium content will probably strike the best balance for earners and spenders alike in most cases. For some, however, simple per-item pricing of one's content could be fair and effective. In each case, the user needs to be convinced that they already want what's being sold, a factor favoring large players and known quantities. Still, with a low enough initial price thresholds and sufficient information about the content being sold, even small players and riskier experimental works might inspire enough users to pay the toll and open the gate.

• Pay-Per-View. The Pay-Per-View model is ideal for single complete works users already know they want. An animated short, a song, a short story, a RealAudio interview, an online comic. Some form of preview will usually be necessary; traditional movie previews and streaming song samples being two familiar examples. This approach would be especially suited to well-publicized events such as the infamous Victoria's Secret webcast, or viral hits like the "Star Wars Kid" which would otherwise risk server crashes and bandwidth overrun bills. In the case of new and unknown talent, one of the hybrid or donation protocols listed below might be more effective, but for well-known or established creators, a simple price for access could work.
  
• Pay-Per-Play. In the case of online games, a cheap pay-per-play option could serve as an entry point for players reluctant to commit to a subscription. As in the arcade scene, some players may spend far more money in the course of the year "dropping quarters in the slot" then they would have with a single subscription fee -- yet the cost of a subscription may continue to seem too high an investment for many months. Pay-per-play might also support innovative smaller game sites unable to generate the critical mass to justify a subscription at all.
• Software. Although major applications may always carry a higher price tag, plug-ins, utilities and small specialized programs could benefit from the kinds of low prices not supported by credit cards or even PayPal. Shareware, in particular, could be offered for a tenth of its usual "suggested" donation levels (which few users honor unfortunately) and still make far more in the long run. Cheap add-ons could also be offered for users of stripped down "lite" versions of popular downloadable software.
• Site Subscription. Subscriptions have been tried far and wide with limited success in the last few years. The difference between "Free" and "$20-40 per year" is still insurmountable in the minds of many users. Although micropayments' chief contribution to the solution may be in enabling some of the alternate a la carte sampling methods discussed below, the option of small payments can be used to support subscriptions directly as well. After several instances of purchasing a 25 cent "day-pass", a user may be better able to justify the larger expense. Micros could provide the "ramp" that rises gently to the level of the subscription "wall". Intermediate durations could also be supported such as a $1.25 "week-pass." Whatever the audience's threshold of reluctance, there should be a pricing plan situated just inside. Micros make this possible.
  Remember that people like to try things before they commit to them, and virtually no one "tries" something for $40. Subscriptions without micropayments is like marriage without dating.
• Information Services. Credit Reports, Matching Services, Investigation, Server-Side file processing... Whatever a user may be looking for, if the task is small enough -- or can be broken down into its component parts -- the price for that one-time service may be in the sub-dollar range. And for more expensive services, sub-dollar pricing could still be used for first-time accounts and promotions.

Free/Premium Hybrids

Blending free and premium content is an area rich with possibilities for innovation. The Web is awash with free content of all kinds. So long as a piece of content is perceived as a commodity, the free will always trump the priced -- even when that price is a single penny. But when content is differentiated by its quality, expressiveness, depth or range, charging a little more will seem fair. At the interface between that ocean of free and the small beachhead of quality premium content is the hybrid work: A free and open version of a work paired with an enhanced premium version. Here are just a few of the many possible applications of this idea.

• Streaming > Download. Real time streaming content offered for free; archived downloadable content for price. Example: A nightly talk show is offered live for free using Real audio, but if you'd like to download and keep an MP3 of the show later on, it'll cost you 25¢ per hour or 50¢ for the complete 3 hour broadcast. Although both forms of content are digital, the downloadable file has the practical value of convenience (it can be listened to offline and at a later date) and the perceived value of being less ephemeral; a discrete "object" saved to your hard drive.
  [Most applicable to audio and video]
• Demo > Full-Featured. The free version is disabled or stripped-down in some way, while the paid version has all the features intact. This is a familiar split in downloadable software. Micropayments add the further option of multiple intermediate levels of functionality for small additional charges, or small charges for small increments of time during which the software can be used. The user may, quite literally, only need to use the program for 30 minutes. Doing so for 30¢ may be an agreeable arrangement for user and developer alike.
  [Most applicable to software and games]
• Brief > In Depth. A brief information piece is offered for free, but users wanting an in-depth exploration of the subject are asked to pay a dime or two to read it. This approach doesn't compromise the seamless user experience. Casual readers can scan a blog or news site from beginning to end without interruption. Only those motivated to learn more would be prompted to support the extra effort. At 10-20¢ per "deep" article, it would only take one read every day or two to add up to $20-40 a year, the price of many annual subscriptions – and the barriers to trying such a feature would be far less steep.
  [Most applicable to news sites and maybe weblogs]
• Abridged > Complete.
  Free: Read part of the story, hear part of the song, view part of the video.
  Priced: Read it all, hear it all, see it all!
  [Most applicable to prose, comics, music and video]
• Low Res > Hi Res. A low resolution image or highly compressed sound or video file is offered for free; users wanting a higher quality version of the file can get it for a price. This could apply both to online enjoyment of the work or to a downloaded file. Examples abound: A royalty-free photo archive allows free downloading of low resolution images, but requires payment for hi-res versions suitable for print; an online comic can be read in black and white for free or in full color as a premium; an online animation can be viewed in a small window for free, or as a full screen QuickTime for 99¢.
  [Most applicable to photos, music, video, comics, animation, art, multimedia]
• Current > Archive. The latest installment of an online comic strip, radio show, or news site is available for free while the archive can be accessed for price. Users can still access all the information for free if they check in everyday, but one missed installment and they'll want to access the archive – if the price isn't too steep. Here, the idea of a day-pass can be particularly useful, though per unit pricing could also be worth offering as a supplement.
  [Most applicable to news sites, comics, prose, talk shows, video]
• Text > Rich media. Bandwidth-light information like text would be free while multimedia or other bandwidth-heavy information is charged for – at cost or above. Example: A major news site such as CNN.com may offer text versions of major news stories for free, but charge a dime or a quarter each to view video clips. Many such sites currently require a years' subscriptions to view even one such rich media item. The price of a subscription is almost always too steep to be justified by what, in most cases, is an impulse buy.
  [Most applicable to news and other text-heavy sites]
• Online Text > PDF. Similar to "Streaming > Download", a printable version of a free online text is offered as a print-ready pdf or other format that users can print and read at their convenience offline.
• "The Time Machine". An approach unique to serial fiction, such as a weekly video drama or daily continuity-based comic strip; readers could, for a small premium, experience their favorite stories' next installment immediately -- as if they had jumped a day or week into the future!
  [Most applicable to comics, video, prose]

Bits on the Side

The idea of keeping the main event free while subsidizing its creation by selling side items or special premium features related to the main event is already in play on several popular sites. With the addition of micropayments comes the new dimension of a much lower price threshold, increased flexibility, and the ever-popular aspect of instant gratification.

• The Gift Shop. Especially useful with daily free features, a sidebar gift shop offering all manner of digital goods related to the main feature could be used to support that feature and to keep it free. Such items could be similar to the thank you gifts listed under "incentive donations" below, though in this case there would be a fixed price for each and there would be no practical limit on the number of items offered. Examples include desktop patterns, hi-res poster pdfs, custom icons, postcard images, sound files, side stories, etc...
• Portfolios. A site offering a large variety of free content could organize some of it in a way that might be more attractive and convenient for its users and sell those "albums" or "portfolios". Example: A photography site offering works by many individual photographers could also sell albums of a single popular photographer's work, or of a particular subject or model.
• Special features. Content aimed at a general audience could be supplemented with specialized content of interest to insiders, professionals and devoted fans. Similar to the special features on DVDs, such areas could offer how-to guides, professional tips, commentary and rough drafts. Also, going beyond DVD-style extras, web sites could offer a degree of interaction and community with the creator(s) of the work (see "invitation only " below).
  
• MicroAds. Micropayments could, in the long run, contribute to the reduction or elimination of advertisements on some web sites. Meanwhile, however, small-sized or short-duration advertisements could be enabled by a nickel-and-dime subeconomy. With many message boards ghettoizing "hype" posts, the existence of a reliable descendant to the newspaper classified section could be of benefit to sellers and buyers alike, and paid placement in such sections would favor the inclusion of more serious offers. Smaller, less intrusive advertisements on otherwise free web sites would also be a welcome change for users weary of being pummeled every day by huge banner ads and pop-ups (witness the success of Google's modest text-based "sponsored links").

The Kindness of Strangers

"Information wants to be free". "Artists want to be fed". "Users don't want to be jerks". "No one should have to beg".
Donation-supported content on the Web is an idea we would all like to see mature, but so far, it's been a mixed bag. Here are a few ideas that might help.

• The Site Donation. Although similar to conventional "tip jars", the addition of micropayments could offer customizable donation levels all the way down to a penny. The option of contributing very small amounts to a favorite site can overcome the anxieties associated with higher amounts. Donation clearing houses could be formed, allowing users to contribute to several sites simultaneously. The total contributions, when comprised of pocket change, could add up to a reasonable enough amount in the eyes of the user.
• Incentive donations. A "thank you gift" or other incentive is offered in return for a specific donation, in some cases tied to the donation amount. This is the equivalent of the thank you gifts offered by public broadcasters during pledge drives, but unlike those premiums, such digital incentives could be delivered instantaneously and at virtually no cost. Example: On my Morning Improv comic, readers can donate anything between one and ninety-nine cents to support that free daily feature and, when doing so, use their pennies as votes to help choose which of 10 reader-suggested titles will be used for the next Improv. Other approaches might include offering alternate tracks from a musician, deleted scenes from a filmmaker, desktop patterns, icons or even just an elaborate custom "thank you" page.
• The Cost-Plus Tip. Half-way between a donation and pay-per-view; in this variant, users are asked to pay only for bandwidth up front (which, even in the case of large files, might be only a penny or two). Then, at the conclusion of the work, they're given the opportunity to "tip" what they believe the work was actually worth. This protocol has the advantage of appealing to our sense of fair play and community-based solutions, and it might, if the work warrants it, inspire some to give more than they would have otherwise. (And some less of course -- but that could make for an interesting experiment in human nature at least!)
  

Community Dynamics

Personal connections can be the main event sometimes, not just prepared content. Here again, some form of scalable pricing can enable new patterns of growth that would have been impractical in the $3.00-plus economy.

• Membership Dues. Not every organization needs to boast annual budgets in the millions. The formation of a web based guild or Academy might only need a very modest budget to carry out its mandate (something as simple, for example, as creating a web-based awards ceremony). in such cases, the membership dues for that organization might be as little as 50¢; just enough to indicate that the Member in question is at least minimally devoted to the cause without being a financial burden. As with everything on the Web, such organizations need to be flexible and may evolve quickly in unexpected directions. Micropayments could increase that flexibility greatly.
• Invitation only. A small price is charged for access to an online discussion or mailing list. This could be a charity event, similar to buying one's way into a celebrity fund-raiser; an elite chat room; or something as prosaic as an online third-party tech support service. In each case, though, the "goods" being sold would be the interactions between the user and other human beings online.
  

Sincerely,

--Scott McCloud

Oh, yeah! If you've found the above info helpful, feel free to send 25 cents my way by checking out The Right Number, my online comic about math, sex, obsession and phone numbers.