A Simple Solution to the Micropayments Problem?

Includes: AAPL, AMZN, NYT
by: Jeff Bercovici

This morning's news that Amazon.com (NASDAQ:AMZN) is going to start selling e-books to be read on the iPhone and iPod Touch (NASDAQ:AAPL) has got me thinking: What if the solution to making micropayments work is easier than we think?

Critics of micropayments as a possible savior for the newspaper -- such as our own Felix Salmon -- like to point to the first-penny problem: Lots of people who would be hypothetically willing to pay, say, 4 cents a piece to read articles from The New York Times (NYSE:NYT) simply aren't able to clear the initial psychic hurdle of handing over their credit card information. "I don't think that micropayments will work, largely because I haven't seen any indication that the technology exists to make them work," says Felix.

But what if it did? What if, that is, your method of payment and your method of reading were one and the same, allowing for a seamless, painless transaction? In Japan, the practice of using cell phones as credit cards is widespread. For various reasons, that innovation hasn't made it to the United States yet and may not for years to come, but it's far from inconceivable.

If and when that happens -- adios, psychic hurdle. Right? If you're reading nytimes.com on your iPhone (or, perhaps, on your iPod Touch, which is wirelessly communicating with your iPhone) and you want to view some premium content, you'll be able to do so with a single click. Check the little box that says "Charge me automatically in the future" and you can forget all about it for the rest of time. It's even better than the "iTunes for news" that David Carr recently envisioned.

I fully expect to hear that someone else has already mooted this scenario, and that Felix or someone else in his micropayment-hating clique has already shot it down. In the meantime, it's a hope to cling to, no?