I lied (so many posts ago)
Ooops. On funding, I previously said that:
"Let's assume that we can discount the tip jar if we're working with $1m+ budgets, so we're left with micropayments--which doesn't really have a viable infrastructure "
Well, I was wrong. Actually, I contend that I was half wrong and half right, so bear with me and I'll try and explain what I mean. Some parts have a highly developed micropayment system: it's the GSM network. Typically, this works with the SMS (short message service) system that GSM provides--the facility where a mobile devices can send and receive short messages of up to 160 characters. Way back (if memory serves me correctly) in 1998, the UK's GSM networks decided that they might as well shelve the differences that they had and allow SMS interoperability--mobile devices on one network could send and receive SMSs to a mobile device on a different network. At the same time, pay-as-you-go payment methods started being popularised (I think BT Cellnet as it was then was the first to introduce a PAYG billing system) that allowed people to get on the mobile comms bandwagon without having to worry about shelling out for monthly subscription fees. Shortly after, network operator subsidies bought the cost of handsets down so that the cost to the end user was virtually nil (and on some plans, it still is).
The situation that the network operators found themselves in after a short while was that handset adoption had hit a startlingly high figure in a short amount of time (from around 20% of the populatino to over 50% in the space of two years). It quickly became apparent that the main moneyspinner was the use of SMS messages sent by end users - typically, users are charged ~10p to send a message and nothing to receive. As an example, mmO2 (nee BT Cellnet) processed 1,768 million SMS messages in one quarter. The cost to the network operator for transporting SMS messages is negligble due to the size of the data being transmitted.
If you're with me so far, then here is where we get to the core of the micropayment issue: the operators quickly realised that there might just be a chance that users might pay to receive SMS messages (reverse billing), or that there could be a variant form of premium SMS messages. Charges for reverse billed SMS messages come straight out of the monthly subscription (or, in PAYG cases, straight out of the account). Conversely, premium SMS services use the SMS system to pay (via the mobile account) for goods: one example is the Vodafone m-pay bill service, designed for purchases under £5.00.
All very well and good--but would people actually be willing to pay to receive information or to use SMS to pay for gods and services? Basically, can you make money from people sending you SMS messages? The answer is an equivocal yes. It's clear that provided you get the content right, the potential is there to make a killing. Viewers voting for this year's Big Brother on the UK's Channel 4 spent at least £850,000 voting out contestants. With revenue sharing agreements in place with network operators, it's obvious that for Channel 4, there was a not-inconsiderable revenue stream in the form of SMS voting.
What needs to be understood is that for the first time, payment via SMS reverse billing has opened up a whole new market of tweens and teenagers who otherwise wouldn't be able to wield payment details on the 'net. These are people without credit cards and without debit cards that will allow them to make online payments, but at the same time it's recognised that children and teenagers possess a large monetary pull--that of their parents. You might not feel happy with enticing children to squander their allowances on paying for your content, but for the first time it's possible that they could do so.
How does this relate to micropayments for immersive fiction genre gaming? The problem is that SMS penetration really hasn't caught on yet in the US, and it's debatable whether it ever will. Obstacles to the SMS micropayment system in the US are that mobile phone penetration is still relatively low compared with the sky high penetration in Europe (10-18 year olds who don't own mobile phones compose a very small minority), that SMS awareness itself is still low (cross-network SMS delivery was only implemented this year) and that crossed with the (eventual) roll-out of 3G (and the encroachment of wifi on that space), it's not even clear whether SMS will survive before MMS or another form of instant messaging takes off. Countering the fact that SMS awareness is at a low, though, is the fact that newer US handsets are shipping not only with SMS capability (at least, the ones on GSM networks), but with AOL Instant Messenger capability, which is far more visible and known to teens--and AOL IM services on handsets are chargeable, plugging the SMS gap.
I'd argue that right now, the lack of penetration is what would kill SMS billing for content right now in the US. Most likely, it could be used as a method to supplement a subscription model, but it really doesn't seem viable to provide complete funding for multi-million dollar productions.
1. Blurring the lines
2. I've got a theory
3. Once more, with feeling
4. Give me an axe and show me where to point it
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