Micropayment problems solved by iCopyright.com

Removing flat fee per transaction makes the difference

This week's E-Business Secrets completes my four-part report on the secrets I learned from my private conversations with speakers at the Global eSubscription Symposium, sponsored by Sandlot in Salt Lake City on May 15.

One of the biggest challenges for e-commerce, in my opinion, has always been the unprofitability of charging small amounts for discrete chunks of information or service. I was glad to learn at the symposium that this problem has largely been solved by one of the featured guests, iCopyright.com.

iCopyright CEO Michael O'Donnell explains that his company has negotiated deals with Visa, MasterCard, and American Express to pay only a percentage of each sale, rather than a flat fee plus a percentage.

"When we first checked into this with them," O'Donnell says, referring to Visa and MasterCard, "the charge was 15 to 30 cents minimum per transaction, plus a percentage ranging between 2 and 3 percent." Because of the volume represented by iCopyright's 300-some participating publishers, he adds, the company was able to eliminate the credit card processors' minimum flat fee.

This enables iCopyright to offer online publishers the ability to sell articles, documents, or other content for as little as $1 per unit. If a publisher wishes to price a product at less than that, such as 50 cents, iCopyright simply keeps the original purchase on file until the same customer makes another purchase that pushes the total to a buck or more -- even if that's weeks later.

O'Donnell admits that his company often forgives (never charges for) such small receivables. This is preferable, he says, to taking the chance that a customer would object to a $1 charge that showed up on a credit card bill months later.

But that doesn't happen often, apparently. "Almost everybody in our database has bought multiple articles from multiple publishers," O'Donnell says. In this case, "almost everyone" means 80 percent of iCopyright's users. In addition, 10 percent of the customers who purchase an article -- which is usually licensed by a publisher for a limited number of reprints or months of use -- come back to pay for additional reprints or months of use, the CEO states.

To encourage Internet surfers to download online content in a form that's the most useful for them, iCopyright converts Web pages into several automated formats. These include customized Web pages that are stored on iCopyright's own servers, e-mails that are formatted as HTML or plain text, and PDF files. The routine for each format scours publishers' Web pages, eliminating ads and navigational bars to include just the editorial content. (For a tip on how to make PDF files something like this yourself, see my News Pick #9, below.)

Why don't Internet users simply print the pages they want copies of for free? Many corporations have strict copyright-adherance policies, O'Donnell says. Using iCopyright's services allows publishers to give these users a way to gain reprint permission immediately.

One-third of iCopyright's publishing clients don't even charge a fee for their reprints, according to O'Donnell, they merely want some control over who is reproducing their documents. Others charge nothing for a single or noncommercial use, but request fees only for multiple use.

iCopyright negotiates fees of 30 to 50 percent of each publisher's revenue generated from the content-repackaging service, O'Donnell says. iCopyright charges publishers about 30 cents per download for free products. O'Donnell says his clients pay these fees gladly because they might have been earning no revenue before discovering his automated service.

With publishing clients such as the LATimes.com and Primedia.com (the publisher of Seventeen and numerous other magazines), iCopyright seems to be pioneering in a most important area of e-commerce.

ICOPYRIGHT NEGOTIATES NO-FLAT-FEE CREDIT CARD PROCESSING

http://www.icopyright.com@n6.be/?4e5f

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LIVINGSTON'S TOP 10 NEWS PICKS O' THE WEEK

1. Amazon agrees not to help anyone fake their results

http://www.nytimes.com@a2.tc/?427

2. Microsoft adds charges for POP3 messages in Hotmail

http://www.theregister.co.uk@th.gs/?80f

3. Yahoo launches a redesigned home page in beta test

http://www.news.com@5a0.tc/?bf7

4. What are the hidden costs of an e-commerce site?

http://www.ecommercetimes.com@31.dk/?fdf

5. Quick overview of third-party credit card processors

http://www.webmasterology.com@e.la/?13c7

6. Think your CRM is bad? Read some of these stories

http://www.clickz.com@836.as/?17af

7. eBay starts cell phone service for auction bidding

http://www.infoworld.com@a6r.ms/?1b97

8. Are you still building semi-browsable Web sites?

http://www.wired.com@3n.be/?1f7f

9. HTML tips: Automate your Web content into PDF files

http://hotwired.lycos.com@54.vg/?2367

10. So-called family filter posts new adult sites daily

http://www.kuro5hin.org@1c.to/?274f

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WACKY WEB WEEK: CONGRESS THREATENS TO LEAVE D.C.

Go, team! The U.S. Congress has threatened to move its players out of Washington, unless it gets an all-new, taxpayer-funded, state-of-the-art facility, complete with retractable roof for daytime sessions.

Wait, this story is from TheOnion.com, that satirical site that sometimes makes up stories. They AREN'T TRUE!

But I guess you never know. Reuters reports that Beijing's largest newspaper, Evening News, translated the entire Onion story into Chinese and printed it as a genuine news article. The wire service quotes an Evening News editor as saying, "If it's indeed fake, I'm sure there will be some form of correction." I can't wait to see it ...

THE ONION REPORTS ON CONGRESS' DEMAND FOR NEW FACILITY

http://www.theonion.com@n6.be/?c38f

BEIJING EVENING NEWS RUNS THE ONION STORY AS FACT

http://asia.reuters.com@a2.tc/?d717

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E-BUSINESS SECRETS: Our mission is to bring you such useful and thought-provoking information about the Web that you actually look forward to reading your e-mail.

ABOUT THE AUTHOR: E-Business Secrets is written by InfoWorld Contributing Editor Brian Livingston (http://SecretsPro.com). Research director is Vickie Stevens. Brian has published 10 books, including:

Windows Me Secrets:

http://www.amazon.com@isbn.at/?0764534939

Windows 2000 Secrets:

http://www.amazon.com@isbn.at/?0764534130

Win a gift certificate good for a book, CD, or DVD of your choice if you're the first to send a tip Brian prints. Mail to: Brian@SecretsPro.com.

Copyright © 2002 IDG Communications, Inc.

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