From: "Thomas Junker" <tjunker@phoenix.phoenix.net>
Date: Sat, 11 Nov 95 01:04:46 PST
To: cypherpunks@toad.com
Subject: Re: the revolution of microcurrency
Message-ID: <199511110904.DAA12059@phoenix.net>
MIME-Version: 1.0
Content-Type: text/plain


On  9 Nov 95 at 15:47, Vladimir Z. Nuri <vznuri@netcom.com> 
wrote:

> Subject:       the revolution of microcurrency

> the topic of "microcurrency" has come up on this list
> ...<snip>
> touting it as a revolutionary change in the economy. I
> ...<snip>
> agree with this wholeheartedly. the possibility that
> people can
> ...<snip>
> will all contribute to a REVOLUTIONARY effect on culture.

> my key idea on all of this is that the whole idea of
> copyright is going to melt when you introduce cash, not
> be strengthened. 

I don't think so.

> there are a lot of people out there who
> think that one has to try to put a lock and chain on web
> pages or whatever that one is "selling", and the
> horrible problem of the net is that anything can be
> copied. and these people are feverishly working on
> specious "solutions" to this "problem" right now.

What's happening is that while some people try to impose
book and magazine notions onto the Web, others gleefully
splatter the landscape with everything from the interesting
to the awful but are generally stopped short of making a
living at it by the absence of workable means of asking for
and receiving nominal sums.  

Meanwhile, some other people are realizing that today's
$30/yr newsletter of 20,000 circulation will become
tomorrow's 25-cent-per-copy newsletter of 2 or 3 hundred
thousand "circulation," making more total money and
reaching and influencing far more people. A much larger
volume of information will be worth a penny or less for a
peek.  When those transactions become close to transparent
and of unnoticeable latency, *then* we will see the
explosion that will put present Web growth into
perspective as the baby crawl that it is.

This doesn't amount to putting locks and chains on Web 
pages any more than newsstands put locks and chains on 
newspapers or magazines.  When it's cheap enough and the 
transaction is a no-brainer, the buyer gets easy access 
while the publisher has reason to be there publishing, and 
neither worries too much about the value of the single 
copy.

> says, "you have to protect what you are selling from
> other people or you won't make any money". this theme

No, the point is that you have to have a way of making 
something or you won't have any incentive to generate the 
information or make it available to others.  The news for 
today is that the way of making something on small amounts 
of low-value information is almost at hand.

> I submit that things like the release of public domain
> standards and products like Java and Netscape for free
> are not merely blips at this moment but increasingly are
> going to be the marketing plan of the future. the idea is
> that you give away your product for FREE, 

Standards are not the product.  Standards are what help
make a market possible for products that must interface
with other products.  The closed-system people may have 
seen this in the momentary light of their extinction.

> and then people pay you if they like it. 

Don't hold your breath.

> this new ideology will be relevant to products that are
> not "things" but in fact are more in the realm of
> intellectual property, i.e. writing, software,
> cyberspace web pages, etc.

Intellectual property is not new.  What's new are
distribution and fee collection systems with the potential
for incremental costs approaching zero.  Most of the
infrastructure for that is in place, in fact has been in
place for quite a few years.  What has been missing has 
been the critical mass of users actually participating, and 
near-zero cost payment mechanisms.  I'm spectacularly 
disappointed by the initial ecash and payment offerings, 
since they seem to miss the whole point and be aimed at 
web-transacted business no different that the high-overhead 
transactions that take place face-to-face in retail stores 
and by phone and mail.

> the beauty of this system is that NO LONGER is
> "unauthorized" distribution" the "enemy". it is your
> FRIEND, a key aspect of profit!!

Freely-distributable shareware has been around for 10-15 
years, and has grown from being the computer field's butt 
for bad jokes to a maturing distribution methodology that 
supports an increasing number of author/publishers offering 
some quite substantial and solid products.  It did this, 
by the way, without substantial benefit or contribution 
from the Internet or the Web.

> product to "authorized users". (i.e. those who pay in
> advance). our entire society thinks within this paradigm,

A big part of what is happening with microtransaction
evolution is that the buyer will be able to consider,
decide, and pay, all in the space of a second.  You can
forget about anything based on paying in "advance," and
all those draconian mechanisms -- they won't exist because
they won't need to exist.  Instant payment at very low
prices collapses whole ranges of problems that no longer
need be addressed.

> a rather extraordinary new economy can replace this,
> that of voluntary payment. 

We have "voluntary payment" now in most transactions not
involving the government.

> you DISDAIN things like copyright, because they prevent
> your "product" from reaching the eyes of potential
> customers. your goal is actually to distribute the
> product as far as possible, in a sort of pyramid-like
> scheme. you want your "customers" to distribute your
> product to their friends, so that those "friends"
> potentially become customers in an endless cycle.

You don't actually collect anything, though.  I guess you 
make it up in volume, right?

> this approach works amazingly with writing. imagine that
> if John Markoff suddenly QUIT the NYT and just wrote
> articles on his own. and imagine that at the bottom, you
> see a message, "for more of the same, send .5c or more to
> markoff@liberated.com". I submit that in the future,
> Markoff will probably be able to make more money than he
> does at NYT, because he is eliminating the middleman. the
> newspaper company is primarily built as a *distribution*
> channel. suddenly he doesn't have to pay anything out of
> his own salary, so to speak, for distribution.
> distribution is *free*. he doesn't require anyone else
> to do it for him. he puts his article in an apropriate
> place on the net and it circulates like a VIRUS if it is
> well received. the more people that see the article, the
> more people that pay him money.

You've got *part* of an idea here, but it's mixed up with
another idea.  It is already common for people with
service or product to sell to offer "free" information in
the form of articles, papers, small utilities, demos that
may actually have some use, and occasionally, fully
functional products.  In the field of intellectual
property in the electronic age, the incremental cost of a
copy approaches zero, so there is no great investment in
doing this.  There is, however, always something larger
FOR SALE, something that is being promoted by the
favorable exposure.  What is being given away is not the
final product one hopes to sell -- it is a loss leader,
something that in the field of information costs precious
little to run off.

> in an information system, individual objects have no
> value. what has value is the FLOW of quality information.
> if Markoff continues to flow with that good information,
> people will continue to pay for it. they will perceive
> that "by paying him, the quality information flow from
> him to me continues or increases".

People as marketplace players do not think like that.

> this same idea works with software. you don't see
> software as an end product. you see it as something that
> is evolving over time. and whenever you send money to a
> company for software, in this new system the idea is that
> "I like this software, and I want to see it grow. here
> is my contribution to that".

People as marketplace players do not think like that.  

The way some of them *may* think is, "I like this product;
it will evolve; my payment for a $1 license today entitles
me to new versions for a year; so this is a Smart Move."
<click!>

Also: "I like this digest article.  I like the way this 
author thinks and expresses himself.  It's a no-brainer to 
pay 20 cents for a copy of his full newsletter."  <click!>

> another interesting area is that of patents, and I see
> this dissolving in the same way. a patent is like trying
> to put a lock on an idea. but gradually people will
> realize, only ideas that are implemented have any value.
> you can't profit and lock an idea at the same time.

"Lock" and "no value" are not how patent is generally
viewed.  Xerox, Polaroid, IBM, Dow, duPont, et al would be
amused at your view.

> *dissemination* of ideas is what leads to profit, not
> locking them up.

You first.  Dissemination of *something* leads to exposure, 
establishment of credibility, *reputation*, in a word.  
That, in turn, gets you in the door for actual sales, 
whether of yourself, your funding proposal, or your actual 
product or service.  *That*, in turn, *may* lead to 
profits, assuming you have a whole bunch of other ducks in 
a row and manage your business well.

> hence there will be an economic incentive to an inventor
> to give away his ideas for free, at first. 

Yep, yep, I'm sold, just show me where to dump all these 
great ideas so I can get rich, quick.

> in the old system, where one thinks of an idea as a
> "thing", this sounds preposterous. 

Uh, um, in a word, "Yes."

> but in a new culture where ideas are seen as things that
> need to be cultivated and grown to work, it will seem
> eminently sensible. the inventor is releasing his idea to
> the world, saying "I can expand on this idea, even turn
> it into a reality, if you send me money". 

It was late, right?  You'd been up for a long time, right?  
You were getting the aching-back, numb-fingered madrugada 
sillies, right?  You mailed this in the afternoon because 
you'd slept it off by then and forgotten what you'd written, 
right?

> other people can of course steal the idea, but
> there is no value in the idea itself: 

No, of course not!

> the value is in the development of it 

Which only the originator can do, of course.

> into evolved new states, or the intellectual expertise of
> the inventor.

Yeah, history really shows this to be an effective 
principle on which to peg the survival of inventors.

> in short, microcurrency could have quite a liberating
> and revolutionary effect on economics as we know it. 

Yep.  Liberating it clear away from planet Earth.  
Revolutionary, as in, "orbital."

> in the current system, people are not paid for tiny
> contributions to the whole. the contributions have to be
> "packaged up" into something like a magazine before
> individuals can get any profit. a new system may allow
> people to be compensated directly for things that are
> hard to quantify.

This *is* part of the point, V.  Physical manufacture and
distribution of printed magazines have inherent floor costs
and necessary economies of scale that are blown away in
electronic media on the Web.  Just plug in a way for quick 
and easy micropayment and the real revolution will be off 
and running.

>  how much was Markoff's last article worth in the NYT?
> that's impossible to figure out. but if you had a
> microcurrency, you can calculate exactly how much money
> people sent to Markoff for his last article. say, across
> the world, it totalled $843.16. such a sum is not
> inconceivable. and over time it would be enough for him
> to make a salary over the whole year on, perhaps!! I'm
> arguing that this is increasingly going to become VIABLE
> over the next few years with cyberspace and
> microcurrency.

Yes, but not with payment after the fact on the honor
system.  Sit down with *any* of the numerous vendors from
whom you presently buy living space, food, municipal
services, phone service, Internet access, car repairs,
etc., and try convincing them that you should get the
product first, and if you like it you will pay. Later. 
Right.

> the microcurrency situation can even be set up in a
> company. "whoever codes this computer problem will
> receive [x] dollars from the company". the whole economic
> system becomes a fluid, pulsing entity that filters down
> to the tiniest fraction of value and gives each
> individual a quantitative value on his contribution.
> companies talk about "incentive systems" today, but
> perhaps the entire economy will become an enormous
> incentive system in this way in the future!!

I believe this is called "The Free Market," and it has
little to do with any concept of "pay what you think it's
worth after you use it."  The Internet is exploding in
part because it is the *only* free market in the world,
though a market in tenuous and vaporous ideas and
information propagated for many reasons other than direct
pecuniary benefit.  A micropayment mechanism will allow
the net to mature into a fully functioning free market in
information and services of value on which many of the
participants will support themselves.  Many of those
products and services do not presently exist as such. 

"Companies" will be quite virtual and non-geocentric, and
will form and disband in the ether. Too, everyone's
low-cost opinion soapbox will sprout a 1-cent sign on it,
and the ones with something to say that others want to read
will make something on their expression of thoughts,
research, and other information while the ones no one cares
to pay for will wither or preach to themselves.

> in this system, ultimately, I think the whole concept
> that someone "buys a product" will dissolve into the
> idea that "one rewards intellectual productivity to bring
> more of the same". it's as fundamental and intuitive as
> the difference between atoms and bits. 

I disagree.  I believe you're right about the imminent
revolution that will take off when the micropayment
mechanism falls into place, and several of the
underpinnings you present in support of that view, but I
think you've misread what this is about and where it's
going.

The crypto relevance is that everything is in place for 
profound new growth in a new form of commerce, awaiting 
only an effective mechanism that will allow one to make a 
fraction-of-a-second decision and click on something to at 
once authorize a micropayment and navigate somewhere.  Web 
page designers will work out how to best use it and how to 
package the information it buys.  Storable 
pre-authorization tokens would be nice, so that one can 
make a decision that persists through subsequent accesses 
and only pops up for review if the price changes.  And it's 
got to be smooth enough for Grandma to use it.


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