ZIFFPAGE TITLEMicrocommerce 2


Microcommerce 2.0

In the physical world, microcommerce can boost the speed, size and frequency of sales, as in the case of McDonald's. But in the online world, entirely new business models become feasible. Book publishers can offer services where consumers can "rent" pages or chapters instead of buying entire books. Researchers can create buy-an-answer services where customers pay to have their complex queries answered by experts. Television networks can sell their newscasts, soap operas and other shows online, and charge by the episode.

Many companies are already forging ahead with their cashless initiatives. Incredible Technologies Inc., the $60 million Arlington Heights, Ill.-based maker of the popular Golden Tee Golf video game, has more than 100,000 Golden Tee video units in hotels, bars and airports around the world, with millions of devoted users. According to Andy Kniaz, the company's executive director, more than 400,000 people carry the game's loyalty card, which offers express game check-in and advanced online stat tracking. Kniaz has a hunch those players will be willing to pay for games with their credit cards, too. Incredible Technologies plans to go live in the U.S. early this year with a new system that will allow just that. Kniaz says that the sheer volume of transactions—he estimates that Golden Tee players spend as much as $5 per game, to the tune of $400 million annually—enabled the company to negotiate its own rates with credit card vendors.

Kniaz hopes that a predicted 20 percent increase in game play will translate to a similar lift in sales of individual game units, which go for $6,000 each. "The way to increase sales is to prove that our machines earn a lot of money," Kniaz says. "The amount of business we will gain is absolutely huge."

Random House Inc., the world's No. 1 trade-book publisher, based in New York City, announced in early November that it would launch its own pay-per-view digital-content system in 2006. Keith Titan, vice president of New Media, says the idea is to offer Web surfers the ability to search through digitized books and buy pages online—for roughly $.04 per page, though pricing models vary. "We believe this model has great potential," Titan says. "Digital content for publishers could certainly become a very big part of the business."

Random House is still working out how users will pay for the service, whether through a stored-value card or through a direct-payment service model where the per-page charges might be added to, say, your monthly America Online bill, or other Internet service or mobile provider. "We are in talks now with a number of partners to build this business," he says. "We have a lot of people who are spending their time evaluating all these opportunities."

Even for physical retailers, microcommerce can facilitate new business models. McDonald's was so thrilled with the success of its cashless payment system that, in late November, it launched its new Arch card—a prepaid debit card that customers can buy in denominations of $5, $10, $25 and $50. "Our cashless and debit options have become the foundation for the launching point of many other initiatives that will let us do more for our customers, like the Arch card and WiFi access," says Frank Liberio, vice president of information services at McDonald's.

This article was originally published on 01-06-2006
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