Micropayments are key to content charging success

The European micropayments market needs to consolidate if companies are to have any chance of making a profit from charging for...

The European micropayments market needs to consolidate if companies are to have any chance of making a profit from charging for broadband content, analyst firm Datamonitor said this week.

In order to overcome the main inhibitor to growth in the broadband content market - consumer unwillingness to pay - users must be able to utilise "pay-as-you-go" payment services easily and quickly, said Adrian Drodz, managing analyst at Datamonitor.

"There needs to be consolidation as there are too many different micropayment strategies in Europe at the moment," he said. "Having so many different services defeats the point of micropayments, which are supposed to make paying for online content flexible and easy."

Selling online content for less than £5 is not usually a viable option for online service providers because of credit card charges, but micropayment services were supposed to alleviate this problem by allowing consumers to spend as little as 5p at a time.

However, take-up has not been widespread, largely because of a lack of awareness among consumers, Drodz said.

"Micropayments have not been pushed enough, which is a shame because there are some good services out there," he said. "BT has a service [Click and Buy] which allows you to put your details in once and then not have to re-enter the data again." The consumers pay on a monthly basis.

Despite the slow growth in broadband content charging to date, Datamonitor still expects the European market to be worth £2.15bn by 2006, a tenfold increase on expected spending in 2003.

During 2006 the average western European broadband user will be spending about £50 every year on content, largely on gambling, gaming and music services, Drodz said.

To date, the music industry has largely focused on closing downloading services such as Napster, but if the large record labels collaborate on legitimate online services, consumers will pay, he said.

"The problem at the moment is that the different record labels are doing different things which just causes problems for users wanting to download a range of music," Drodz said. "They will have to get together at some point. We have seen this happen with the film studios in the US which is a good benchmark."

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