[extropy-chat] A nickel and dime economy?

[Hal Finney]

Kevin Freels writes:
> I was wondering if anyone had followed this through to the future. Does
> anyone here see a possible future where nearly everything is fee based?
> Will we be able to get rid of taxes entirely and instead have every trip
> down every road deducted according to that road's "value". Will that $75
> payment for 500 worthless channels in TV become a thing of the past,
> instead allowing us to pay for each program as we watch it? Will the
> subscription services fall to the wayside as we are able to conveniently
> download the news directly to our phones...at a cost?

It's an interesting idea, and variants have been around for a while.
The pre-web Xanadu proposal envisioned an Internet publishing medium
based on micropayments, where authors could link to and include other
pages but there would be royalty payments and commissions involved.
A number of payment systems have been proposed to make micropayments
(defined as payments too small to be handled efficiently by existing
systems like credit cards) work better.  But generally these concepts
haven't succeeded.

Back in 1996, occasional list member Nick Szabo wrote his analysis
of why micropayments wouldn't work: The Mental Accounting Barrier to
Micropayments, http://szabo.best.vwh.net/micropayments.html .  He argues
that it is generally too much work to keep track of whether each tiny
action is worth its cost.  A classic example was internet access; back
then, many companies still charged per minute!  People hated it.  Today
everyone uses a flat fee.  Phone calls are moving in the same direction.

As Kevin points out, there are some systems today where micropayments
are being used successfully, such as the online music download services
with songs costing less than a dollar.  However other competitors are
offering subscription based services where you can listen to as much
music as you want for a fixed monthly fee.  The catch is that when
you discontinue the service, you lose all the songs you've downloaded,
unlike iTunes et al where you get to keep your music.  It remains to be
seen which model will prevail.

Micropayments do have advantages in principle.  They can be more
efficient economically by providing more information about the value
of each increment of service.  I envision a time when smart agents
will assist people with the "mental accounting" that Nick refers to,
so that micropayment systems are easier to use.  You could have Kevin's
universal toll road system, perhaps with charges varying per location and
time of day, and some software that would plan your trip given various
constraints you put in about total cost and desired time of travel.
It would try different routes and times and figure out which was cheapest,
like travel agent software programs do today for air travel.  This could
give us the economic advantages of fine granularity without imposing
excessive mental costs on users.

Hal