Music

Traditionally, micropayments have been considered unviable for any sort of transaction because of both mental costs and processing fees; but downloadable music has now proven that people are willing to pay under a dollar per song while the music industry still makes a profit.

Micro billing is increasingly being used as an alternative to credit card transactions where the purchase is for low value items such as such as concert tickets, software downloads, magazine subscriptions, music MP3s or CDs etc.

For example, Brilliant Digital Entertainment (BDE) owns the peer-to-peer (P2P) service provider Altnet. It uses the file-sharing system of Kazaa and would like to facilitate more revenue by introducing telephone sales rather than merely relying on the use of credit cards over the Internet.

The music industry is understandably concerned with this pirating and efforts are underway to stifle MP3 distribution sites. Geffen Records has issued hundreds of legal threats to hosts of MP3 sites, including MP3.com, ordering them to desist in their illegal copying. But the next step may be to imitate the pirate sites. With MP3 players emerging on the market that can play re-recordable, downloaded music much like a walkman, a niche market in Web music may explode, forcing major music labels with the to sell music by the track at a significant discount. A report by Forrester notes that MP3.com had 90,000 unique visitors a day downloading 50,000 tracks from 75 bands. And it predicts that the downloadable music market will capture five percent of music retail revenue in the next five years. If music companies can successfully introduce trusted systems in songs, reducing the price of music to under a dollar per song could open up a massive new market with significant marginal returns.

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