Why Micropayments Fail Online

This is taken from a comment I made on a G+ post, in a conversation about Micropayments. Thanks Kevin G, Andrew K. 

The motivating comment was:

“Hey Kevin, you’ll have to explain Stack Exchange to us then.. cos the only people benefiting financially are the owners of Stack Exchange, the rivalous advertisers, and power-house search engines like Google. How does “virtual reputation” help me answering questions all day long? Who’s doing all the moderation of mundane duplicate questions? Are they getting “rewarded” for their effort? 

It’s a great free resource, but myself and others wouldn’t bother asking even one question there, because our question might run into more and more specific questions (we might even want to strike up a dialogue) and we don’t like “using” people for free like that.

Aren’t there any more equitable examples on the web by now?”

—

I agree wholeheartedly with Kevin that you’re not using people if their volunteering. It’s abundantly clear by now that people don’t require micropayments to add to and maintain massive, quality stigmergic media http://en.wikipedia.org/wiki/Stigmergy#Applications, and further that the attempt to include micropayments can actually derail them. People chase the money and game the system, or are annoyed by the introduction of money and abandon the system, or are simply demotivated by it.

I’ve been reading about Self Determination Theory (http://en.wikipedia.org/wiki/Self-determination_theory). It talks a lot about intrinsic and extrinsic motivation, and how extrinsic motivation crowds out instrinsic. I think Dan Pink’s theories about Mastery, Autonomy and Purpose (http://www.youtube.com/watch?v=u6XAPnuFjJc) come from this (although they talk about Relatedness instead of Purpose, which seems a bit more social). Contributors to Stack Overflow and Wikipedia are instrinsically motivated, introduction of money would probably destroy them, *particularly* wikipedia (why do you think they’re so dead against even advertising on the site?).

I understand the problem you’re trying to solve with micropayments. You’re seeing that there’s work to be done / being done, and no one paying, and it’s potentially displacing paid work even as we speak. So extend this into the future and everyone’s pecking away at stigmergic media for free, and no one’s getting paid, and we all starve. Clearly the old jobs model isn’t translating into this environment. So we need something to replace it.

Unfortunately (fortunately), this isn’t a designed change, it’s an expression of radical human environmental change springing out of the technology. Rapidly lowering transaction costs (in the sense of Coase) approaching zero are leading to this alternate family of methods of human organisation (roughly, stigmergic and other massive technologically enabled forms) which beat out hierarchical forms and which generally seem not to be amenable to payments.

Why wouldn’t they be amenable to payments? To understand that you’ve got to understand Coase’s theory of the firm.

Coase, writing in the 30s, wanted to know why firms (ie: hierarchically organised groups, ie: at least a boss with money and subordinates with labour) would form at all in a free market. Why wouldn’t individuals just trade on the free market? It’s already a way of organising complex effort, why subvert it with a different form, a mini command economy, which is what a company is?

His answer was that transaction costs make it useful. Transaction costs are every cost to do with being able to make a transaction, which aren’t the direct transaction itself. So finding buyers/sellers, determining the right price point, moving stuff around, etc. He proposed that these costs were high enough that firms could do better, by performing a lot of related functions in houses, coordinating internally under the direction of an entrepreneur (boss). Provided that the entrepreneur was relatively good at this direction, they could beat the high transaction costs of the open market, and retain a lot more profit. This had limitations (the internal costs get higher as you get bigger), and so you get many firms.

Now we’ve got digital networks that we organise over, and transaction costs are becoming very low for information “goods”. Search at a minimum lets us discover things quickly. Distribution is ridiculously cheap per unit. But critically, they are lowered differently depending on how we organise.

The surprising thing seems to be that down in the area we’re in now, just using money at all keeps the transaction costs relatively high. If you require people to pay for information, you introduce a friction to the consumer that they usually wont tolerate. Think newspaper paywalls, or imagine a paywalled encyclopedia trying to make its way. People know there are substitutes that are cheaper (free!) and easier (no financial transactions to think about) that deem such paid resources irrelevant.

Further, down at the transaction cost levels we’re seeing, that can actually be true of the producer, too. Wikipedia lets you make an edit relatively frictionlessly. Hit edit, type, save it. Wander off. Whereas a paid service is going to require creating an account, putting in bank details, etc etc, all for micropayments which are likely going to be next to nothing anyway, ie: not worth the effort, especially as that service probably isn’t going to succeed.

And why isn’t it going to succeed? Because we all intuit the rules above, and understand that these micropayment systems aren’t viable. The service that is skewed by micropayments is going to be trumped by those that aren’t, and so it wont get traction. Without traction, the micropayment system is pointless anyway.

And on top of this is the demotivating effect of introducing money into an environment like this.

The other assumptionwich about stigmergic media, which isn’t quite right, is that people aren’t being paid. They are, they’re just not being paid with money. Instead, consumers are getting information they need. Producers are getting maybe reputation, or maybe internal autonomy/mastery/control rewards, or maybe some of both. Whatever it is, there’s a reason people participate, and keep participating. That only motivates a subset of people, of course; probably a fairly small percentage, but given that they seem to be some of the best people (hypothesis: the motivations that stigmergic media rely on are the same ones that people need to achieve excellence?), and that the number of producers and consumers are unrelated (“he who lights his [candle] at mine receives light without darkening me”), that’s ok.

Now there is one excellent example of micropayments working in recent years, and that’s the Apple iPxx App Store. But to do that, stigmergic alternatives (eg: a giant store of free “apps” and equivalent) have had to be purposefully discouraged, to the point that their transaction costs are too high, by chasing out attempts to build it (punishing free apps in various ways, eg search listings), retaining strict control over the environment (thou shalt have no other appstore before myself, plus capricious enforcement), and making the web a second class citizen. And of course they’ve also brilliantly created products that disproportionately attract “payers”, people with both money and the belief that ticket price reflects actual value (so for example freebies are worthless). So they’ve been able to control all parts of the environment, *including* the consumers who are allowed into their shopping mall!

I doubt that anyone’s going to be able to pull off that combination of factors again. Like the Wall Street Journal’s paywall, Apple’s appstore is an anomaly.

I hinted above that the primary motivation for the idea of micropayments is that the old system’s breaking, so we need a new system. But I think that’s got another fundamental flaw, the idea that we’ll get one type of new system. What we’re seeing, in fact, is many niche specific local solutions slowly replacing a general solution (doing stuff for pay).

The low transaction cost solutions are heterogeneous. Wikipedia and Stack Overflow and Open Source / Free Software and the Arab Spring and #Occupy and 4Chan have some things in common, but they mostly have a lot that’s fundamentally different. You can’t apply Open Source to everything, because it’s very specific (it works to organise massively interdependent technical work which can be broken into very small pieces, and doesn’t require a high level of overall coordination/design). You can’t organise everything like a modern decentralised protest movement. You can’t (and really really shouldn’t try to) organise everything like /b/ .

So there’s not going to be one answer to this question. The real question to my mind is “Capitalism is failing, what now?” and the answer seems to be “Everything, all at once, hang on to your hat”.

But we all still need to be paid.

I think the very short term answer to that is “hello massive unemployment and depression 2.0”. That’s happening. But what societies need to be doing is something we were on track to do through the 20th century, which was derailed in the 80s, which is to shorten the working week, and to move toward a universal basic income. The latter means really just repurposing our welfare systems in most of the western world, removing the element of punishment, though in the US it means something a lot more profound and probably socially inconceivable. So the US will likely fail at this unfortunately.

Longer term, these new forms of organisation are going to begin controlling serious resources, because they work better. As they do that, new ways of distributing those resources will arise. Also, the value that abundance is better than scarcity is spreading, watch for the technology to begin providing it in more areas than just information.

Really, if you’re looking at abundance and thinking “omg, disaster”, you’re doing it wrong. Surely.

The Wild Rumpus!

I struggle with motivation.

I’m not much of an external motivation guy. I hate being told what to do, and I hate being held to external deadlines.

I want to do my own thing.

But of course, when I’m free to do my own thing, what do I do? Awesome projects? A bit. Play Starcraft II? Oh yes, a lot. A lot.

Of course I look productive to the outside world, but that’s just because you can’t see all the time I squander.

And, after all these years, I’m good with that. It’s a Wild Rumpus, and it’s better than everything.

—-

Some time back, I wrote this post on intrinsic motivation: Self Motivation for Cat People. I didn’t think all that much about it at the time, but I had some positive feedback about it, and it’s come back to my mind since.

There’s more to say on it. But, the tone wasn’t quite right. “Cat people” is a bit anaemic, and “self motivation” isn’t quite right.

More recently I thought about approaching this again, and ended up slightly side tracked, writing This post is for the Wild People.

I know that doesn’t read like your standard self-help book, but it’s key, because I’m trying to describe an unusual type of person. A type I am myself. A person who is both called to create, to make, to actualise, and is often singularly unable to, due to the assumptions we make about how to Get Stuff Done in our world.

The people I’m thinking about tend to be some or all of:

• smart
• eccentric
• non-joiners
• rebellious
• unreliable
• under achievers

If you’re not this person, you know someone who is. You wonder “that person has amazing potential, why don’t they realise it? They just play games / lie around / smoke dope all day. What a waste”.

What’s really going on here, I think, is that this type of person, a Wild Person, works in a way that runs counter to the most central assumptions of our culture. Being creatures of that culture, they end up messed up, unable to quite function, struggling and self doubting and often self loathing.

But there’s no need for that. You just need to understand yourself, and go with it.

—-

The first thing to know about being Wild People, is that we are called to walk our Road of Glory. Each road is unique, is invisible to everyone else, is full of obstacles. Most problematically it is not a road, it is not predestined. It’s a road in hindsight, which we create, because we are creators.

We walk the Road of Glory with our Wild Works. What are they? They are the things we are called to make and do and discover. They show up in our minds unannounced and Will Out, and there’s nothing much to be done except to make it so.

But, they don’t show up with a plan, and let’s face it, if they did we’d set fire to it and piss on the ashes. We’re not really plan people.

So, it’s hard to know how to proceed. And there’s your first mistake. Proceed is a mistake.

We are not trying to meet a schedule, make a deadline, satisfy a KPI. We’re not trying to Proceed. We are trying to be glorious. Glorious! There’s a difference.

—-

Let’s extract the meat from the “Cat People” article. Because of course when I said Cat People I meant Wild People, I just didn’t know it yet. In any case, I outlined four basic rules of thumb for self actualising:

• Keep it short
  • Our focus, FOCUS!, is strong and fleeting. We burn hot and bright and short. So, we need to keep the chunks of focus short, just enough to sustain a period of interest/inspiration/mania. Giant works need to be broken into smaller pieces that make sense on their own, so you can get that feeling of achievement from each piece, and so if you never revisit the work, half done, it is still something. Break the works down to managable chunks, then ideally throw out all the chunks except the first one (more on that later).
  • Update – Here’s an old post on the idea of keeping it short: https://point7.wordpress.com/2009/10/09/mr-squiggles-guide-to-project-management/
•  Eat your icecream before your vegetables
  • We trade entirely on intrinsic motivation. That is the irrational need to do some specific amazing thing, that whips us and drives us and taunts us. We burn hot and bright and short. We mustn’t waste it on boring, horrible stuff, just focus on the glory! Trust your wild mind to know what needs doing and make it the amazing stuff. Trust it to paint the pointless stuff in boring colours. If you do the boring thing first, your fire will go out. If you do the great things, your fire will burn hot, and you might find a way around the boring stuff, or you might discover you need to be on another track entirely, or you may find your interest piqued by previously boring things that now seem important and interesting.
•  Procrastination is ok, in fact it’s useful
  • Procrastination is you trying to tell yourself something; you’re doing it wrong, or the wrong thing, or there’s something you haven’t considered. Wild People must know that their works incubate for extended periods in the recesses of their minds. They wont be forced. The flame burns hot and bright for a reason, and that reason is that you must stop when the incubated parts of an idea are exhausted, you’ve learned more by doing, and now more rumination is required.
• Have many Works
  • The problem, of course, with fleeting hot inspiration, is that there are great periods of downtime between moments of furious activity on any Work. So, make sure you have many Works! Many, many works can be bubbling away in your mind over time, your capacity is great. The more you have, the more likely it is at any moment that one will be flaring and you will be engaged. Plus, they all interact. Sometimes they are related in ways you don’t realise. Sometimes they spawn new works. Sometimes a procrastination block on Work can lead to the rise of another.

I’ve got some ideas to expand on here that help me.

Write it down, let it go

The picture I paint above is of many Works, most of them dormant at any moment. You let your interest take you where it will, as it will, and don’t force it if you don’t have to.

But, this can be difficult. Firstly, you can worry that you’ll forget your great ideas, and feel that you have to keep them all loaded in your head all the time, mind iterating over them, keeping them alive. Caught in a non-creative loop.

You must find a way to let them go totally dormant when they are not needed. Luckily, there’s an amazing invention, possibly the most momentous invention of all time. It’s called writing.

For Krom’s sake, write your shit down. Many people keep notebooks where they write their ideas, it’s a time honoured approach. I think they even teach people to do this in engineering. But you don’t have to be structured, you can keep records as crazily as you like, just write stuff down.

And then, I don’t know, burn them if you like. It’s up to you.

I used to write notebook after notebook full of crazy ideas for games, stories, code. And really, I hardly ever revisited them. Nowadays I’ve switched to blogs (most notably this one!) but it’s the same thing. Actually the blog is a bit cooler because you can search it, and because other people sometimes read it and talk to you about it and that’s brilliant, even when they’re telling you you’re a crock.

But none of that is the point at all.

The point is, you have to get that stuff out of your head.

Wild works, that are supposed to be in their dormant phase, will sit in your head and take up capacity you should be using for other things. They also go a bit rotten as you iterate and iterate and iterate on them. You might be surprised to know that you’re actually a kind of uplifted monkey, with a mind made of weird meat, of all things, and that it’s just not very good at what it does. Unfortunate. Why do you think we’re all such weirdoes in the first place? Anyway, you don’t have mass storage to put things away in for long periods in there, just whacky dodgy hypercompressed associative “memory” stuff that you don’t trust (because it often just makes up any old thing), and more short term kinds of memory that you also don’t trust but hey, what else are you going to work with? But Wild Works that are in there when they need to be dormant sort of rant and rave and go twisted, and don’t allow other things in.

Writing them down is really the only way to give yourself permission to fully forget them. You write it down, then you let it go, erase erase.

Getting into this habit is amazingly helpful. You get the idea out, you don’t let it go rotten. You become more inspired, as if by magic! And, when you come back and read your old writing (assuming no burning was involved), you often get inspired again, at a whole new level that you couldn’t imagine before, simply because your mind is limited and could only hold the original idea. Written down, you don’t need to load the whole thing back into your head (just the gist) and more, new things; extensions, enhancements, leaps; can fit in there too. It’s really quite excellent.

That’s what I’m doing even now.

Simplicity

Unfortunately, I do get into monomaniacal phases where I can almost literally only think about the one thing for a period of weeks. So all ideas revolve around whatever it is, I obsess, I can’t think well about other things. Some bits of that time are productive, often it’s procrastination and anguish and first person shooters. All part of the process.

That’s normal for us, btw.

So there’s a little rule I have, really a habit, and it’s this:

Don’t schedule more than one thing per day.

That’s really hard! Life is full and varied and there are a million bits of thing you have to do. But to survive the monomania, to be able to use the gaps, to be able to use those periods of hot burn, I find I just have to keep it simple simple simple.

Everything scheduled is something that will interfere with you letting your mind work as it must.

I do sometimes have more than one thing. For instance, on Tuesdays I have work, then choir in the evening. That’s a rough day for me, a write-off, but so far a necessary evil.

But generally, I let as much of my time be reactive as I possibly can.

Also, don’t schedule into the future. I have an horizon of about two weeks. Anything after that, forget it for the most part.

Here I must give massive credit to my darling wife, who handles the future schedule that I refuse to interface with, and who deals with a lot of the minutiae that I’m more or less incompetent to deal with. If I were on my own, or with someone less phenomenally competent, maybe I’d do things differently. Possibly I’d automate it as much as possible?

Interestingly, I keep trying to get into the habit of using an online calendar, google calendar, but it never sticks. I guess I’m on the maker schedule, and diaries and such are just too patchy to be maintained. What I mean is, if you live out of your daily diary, 10 things before breakfast, it’s probably really easy to maintain, but if you have a thing to schedule every other week, or every other month, then the diary just isn’t something you’ll pay enough attention to to use well, will fall into disrepair, and end up being worse than pointless (being full of wrong things).

Rambling. Anyway, simplicity. Few things, and minimal unusual scheduled things. You actually want a basically predictable life (like wake/eat/work/eat/work/eat/play/sleep).

This becomes the rhythm of your stride along the road. We walk the Road of Glory, and we need rhythm to our walk. Find your rhythm, find simplicity, let it underpin everything else.

Smash the big works

One of the worst blocks for Wild People is the Bigger than Ben Hur project. We imagine large. But we tend not to be joiners. So a lot of our work is individual.

So we bite off waaaay more than we can chew.

If I were to list out all the dormant Works I’ve got sitting around, it’s probably more than I can address in a lifetime.

Just thinking about one of these Works can paralyse you. You want it to be magnificent, Glorious. But maybe that is years of work?

Fix this by retaining the vision, but letting go of the detail.

If you’re paralysed, write down a list of the things you could do now, in a short burst (4 hours?). Pick the one that stands out (you know which one it is) and do it.

Still enthused? Repeat. That includes removing now irrelevant things from the list, and adding new things you didn’t think of before.

No longer enthused? Let it go. You’ve got the big vision, you’ve got the small next steps, you really need nothing else. Let it go.

Most of my works involve software. I’m a bit wild by nature, a bit anarchic, but I’m learning to use issue/feature list software to be this list. I just shove in everything that could be a next step. Then when I’ve got a bit of time, if I don’t feel strongly compelled by something, I pick up some dormant project’s list and just do one thing. Fix a bug. Might be 5 mins.

It’s enormously relaxing to just do 5 minutes work and achieve something. The next 9 hours on the xbox feels virtuous. That’s glory!

Conscientiousness is dangerous propaganda

Do you stress about lacking conscientiousness? Do you say you’ll do something , then you don’t follow through? Do you tell people about the play you’re going to write / app you’re going to build / thing you’re going to invent, then it never happens?

Your lack of it is a strength. Let me explain.

If you’re going to have a zillion Works, and they stretch from here to Shangri La, and you can’t possibly hope to do them all, then conscientiousness will cripple you. You’ll grind and grind and grind and in the end, well in the end I don’t know because I’m not that person.

The Road of Glory is filled with your Works, from the beginning to the end. But at the beginning the road is wide, at the end it’s a dusty goat trail. Not all the Works make it from the beginning to the end, in fact the great majority don’t.

They don’t make it because they are found wanting. They might become all boredom. Or they might have been hiding an insoluble contradiction, and be doomed from the start. Or, they might just not be as glorious as the alternatives.

Lacking conscientiousness means being able to let your Works die. It means being able to let them die regardless of public pronouncements you’ve made, obligations you feel, commitments you’ve made. If something sucks, you put it to the sword. Let it go.

When I talked about simplicity, about not scheduling, about being able to be reactive to what your mind wants when it wants it, this was the other, darker part. To be conscientious is to be continually bound by the expectations of other people, and by your expectations of their expectations, and the whole social web that binds us together, in a painful tangle. And you know that this is anathema to how you need to be. Why do you think you’re not a joiner? Why are you cagey about committing?

It’s because you know what it leads to. It leads to those needles in your mind. Stuff you *should* be doing but you’re not going to. It jabs at you. And people jab at you for it. It scratches away, scratch scratch scratch. Overcommitment happens in the blink of an eye. And then there is no Road, and no Glory, and no promise of Shangri La.

And to top it all off, you rebel against all that and screw up all the commitments anyway!

What you have to do, is don’t get into this trap. Don’t be bound by commitments where you can possibly avoid them. Don’t agree to periodic, scheduled things, except where utterly unavoidable (like paid work).

And where you do get into a bind, give yourself permission to shrug it off. This is the worst option, it wont make you any friends, but you have to be able to do it. It’s just who you are, it’s how you work.

Allow yourself to neglect works until they die. Allow yourself to slay them brutally. Allow yourself to cut them down, and let the onlookers cry out gasping.

—-

Now that’s it. The flame dims, the focus fades, slumber calls. Thank you for reading, Wild people, and may your day be Glorious!