The Micropayments and the Ad:Tech conferences in NYC

A mountaineer who takes cover during a storm or avalanche doesn’t feel a great sense of accomplishment when he returns to where he last was in his ascent. Although it’s great to survive, it’s not really progress. That was my feeling too yesterday while attending the Micropayments Conference in New York City. As a reporter for one of the online trade journals privately told us, “There’s nothing new here, except that there are a lot of people here after many years of absence.”

Likewise, Rebecca Lieb of JupiterMedia, who was attending the Ad:Tech Conference elsewhere in NYC, wrote, “The crush of where-have-you-been-for-the-past-three-years attendees were largely disappointed by the opening keynote …. In what appeared to be a warmed-over management presentation, the interactive industry endured a talk long on … but skimpy on details of … interactive strategy or execution.”

It sounds like both conferences were about the same: There was (a) nothing new except that (b) the attendees have survived the recession and (c) now need to figure out what to do to make progress online beyond where they were three years ago when their bubble burst.

I’m not attending the multi-day Ad:Tech event this year, so we can’t report about that event. You’d best read the Internet Advertising Report or MarketingWonk.com for Ad:Tech coverage. But we can report about the Micropayments Conference, a one-day event.

It was organized by Peppercoin, a microtransaction systems vendor. Though that had led some of the speakers and panelists to worry that the conference might be simply a captive sales pitch for that vendor, it didn’t turn out that way. Peppercoin’s CEO did give an opening welcome speech and a professor, who was one of that company’s founders, did give a keynote, that was almost the extent of Peppercoin’s involvement in the presentations. Fortunately, the professor was Ronald Rivest of MIT, who’s best known as one of the inventors of RSA open-key encryption and is generally worth a listen (though his keynote was a bit simplistic for the conference’s audience).

The opening panel featured Matt Kleinschmitt of the Ipsos-Insight survey firm; David Lawrence, host of the Online Tonight! radio program; and WNBC TV 4 Internet Analyst Omar Wasow. Kleinschmitt presented what he said was his company’s “comprehensive, quantitative survey on the micropayments market” (a survey of just 1,100 individuals). Its findings were that more than 4 million Americans have purchased ‘digital content’ for less than US$2 apiece during the past year and it projected that 30 million Americans are at least somewhat likely to purchase content for less than US$2 during the next twelve months. Because there is very little content sold online for less than US$2, I think this survey was rather pointless. Kleinschmitt note that the primary reason consumers have not yet made an online purchase for $2 or less was that problem. Waslow called that the real problem today with micropayments. He believes that new forms of content must be developed before online micropayments will generated great revenues — and excellent and on-target point (see Je Suis Content, written more than a year ago). Lawrence’s presentation was devoted to how his implementation of BitPass‘s beta software increased his site’s earnings from US$300 to $1,500. (Yes, you read those figures correctly. I’m still not sure why Lawrence was invited to speak.)

I moderated the next panel, New Business Models in Online Publishing, which featured Craig Calder, VP of Marketing for New York Times Digital;
Scott Fedewa, COO & Executive Producer of BillOReilly.com; Lynne Johnson, New Media Manager of VIBE/SPIN Ventures; Chris Peacock, Executive Editor & VP of Fortune.com; Mike Skagerlind, SVP & GM of Nickelodeon Online; and David Vogler, editor of CelebrityRants.com. Calder talked about the success NYT has had selling the answers to its crossword puzzles online, but also about how the news itself is to much of a common commodity to be charged for online. Fedewa explained how he’s been about to create revenues by bringing fans of Fox TV political commentor Bill O’Reilly into an online community. Johnson talked about how VIBE’s and SPIN’s microtransaction focuses will increasingly be about serving ringtones and other content to mobile phones, and how her company sees its Web sites as mainly ways to generate print subscriptions. Peacock mentioned that Fortune‘s lowest priced service costs US$99 (“Hardly a micropayment”) but how there might be some potential in micropayments for magazines. Skagerlind outllined how Nickelodeon TV must be very careful marketing itself to children but earning online transaction revenues from parents. And Vogler told about using any means (legally) possible to earn revenues on his one-person site about celebrity goofs and rants. In other words, no new ground or progress was made on my panel about new business models in online publishing.

Things were a bit livelier during the subsequent panel, New Business Models for Digital Music, which was moderated by David Card of Jupiter Research and featured Richard Burgess, Director of Marketing for Smithsonian Folkways Recordings; Brian Cullinan, VP of Emerging Technology at Sony Music; David Goldberg, VP & GM, Music at Yahoo!; and Howie Singer, VP ofTechnology & CTO for Warner Music Group. Their general concensus was that the introduction of Apple iTunes’ onine sale of songs for US$0.99 with little or no restrictions has reshaped the online music industry. Goldberg went so far as to predict that within the next few years the major music recording companies will place no restrictions on personal use (except re-distribution) of music bought online.

After lunch, a panel entitled The Delivery System was held. It was about “What are the complementing technologies and services required to bring new business models to life?’ But its moderator, David Leibowitz, Managing Partner of CH Potomac; and panelists Scott Crowder, VP of Business Development at Entriq, Rex Fisher, COO of Digonex Technologies; Jonathan Potter, Executive Director of the Digital Media Association; Elliot Mazer, SVP of New Business Development for RCS, Inc. (and a famous record producer); and Steve Potash, President & CEO of OverDrive, Inc., talked about already existing technologies, which can’t really be said to be bringing new business models to life.

Sun Microsystem’s CTO Greg Papadopoulos gave an interesting afternoon keynote speech about how the mirotransactions industry should embrace peer-to-peer technologies and earn revenues from the sharing itself of content. He also noted that only when micropayment systems are developed that are fully automated and can transact $0.01 payments will microtransactions truly be feasible and widely used.

Although Peppercoin didn’t invite any speakers or panelists from Yaga, Javien, Clickshare, or other direct competitors, the conference did feature a panel consisting of Peter Ashley, Senior Manager of Business Development for PayPal; Niki Manby, Director of Market & Technology Innovation for Visa USA; Brad Singer, VP of Marketing for PaymentOne; Steve Manning, Senior Product Manager of VeriSign; and Peppercoin Founder & VP of Strategy Perry Solomon. There wasn’t much new either from this panel, which tried fairly successfully not to make their presentations sound like PR pitches for their own companies.

Over the course of the day, attendees from each industry would depart the conference an hour or two after the panel about their own industry. Most of the publishing industry attendees were gone by noon; most of the music industry attendees by 3 p.m., etc. The result was that only about 40 of the 150+ attendees were still there when the final panel, New Business Models for Online Games, was held. It was moderated by Jimmy Guterman,
Editor-in-Chief of Ziff Davis’ Gaming Industry News, and featured Steve Byrd, SVP of STATS; Thomas Kurz, Chairman & CFO of the Themis Group; and Dave Madden, EVP of Sales, Marketing & Business Development at WildTangent. Online games are one of the few places where micropayment are working, so this was an interesting panel, but not one that yielded any new ideas to other industry sectors.

Overall, the Micropayments Conference was a worthwhile event, although not one that yielded any new ideas, new concepts, or new strategies — which are what the online industry now needs. Nevertheless, we thank Peppercorn and the Harvard Club of NYC for hosting this event.