This work is licensed under a Creative Commons License.
This accidental discovery may help artists sell downloadable work independently. I'm looking for community input to help improve this project, and decide where to take it from here. The design has been published on this site for anyone to use, but has not yet been implemented.
For example, a philanthropist or anybody who wants to support an artist, or support a particular song, video, image(s), or other work, will be able to buy any number of prepaid downloads, contained in a "smart Web link" -- which will allow that many people to download a copy of the work for free, while the artist still gets paid. Donors could send this link as a gift to their friends, who could pass it on through their social networks. If the prepaid downloads run out, people using that link will need to pay for a copy. But anyone who receives the link will be able to donate any number of prepaid downloads through it -- instantly recharging all copies of that link, anywhere in the world, making downloads free again.
A major donor could buy hundreds or even thousands of downloads, using a credit card or any other online payment -- when today he or she would probably buy just one, or a few to give to personal friends. People could buy a thousand downloads of a song or other art without needing to know a thousand people to give them to. Or they could buy 10 prepaid downloads to share with 30 people on their list -- and have any unused downloads expire in a month (or whenever), automatically returning the remaining money with no human attention required.
Donors could request a new smart link, in order to share the downloads they purchased with their own social networks exclusively. Or they could recharge a link already circulating, sharing through an existing network that included them. Or they could share through a public network open to anyone, by donating through a link published on the Web or elsewhere. Donors could buy many downloads at a quantity discount, then divide them up and share them in all three ways. In one action they can support the artist, buy gifts for any number of people, and introduce the artist's work to their friends and friends-of-friends, which could benefit both.
If the artist allows, donors will be able to submit their own message (text, sound, video, etc.) to be made available to anyone using a download they paid for, and who chooses to see the donor's message (maybe a few words of the message could appear as the Web link to click). Donors may compete with each other to get their message out, by buying more downloads from one or more of the circulating smart links. All these sales will benefit the artist.
Since the transaction processing cost in this system will be extremely low, probably less than a tenth of a cent per transaction, artists will get almost all of the sale price, minus the credit card or other payment fee. The act of free downloading itself will actually pay the artist, the instant the download occurs (until then, donors can take their unused money back). Instead of trying to force every end user to pay, this system will let those who can afford to pay more support artists by sharing their work with others, who can then share with their friends in turn.
The setup cost for an artist to begin using this system will be extremely low. We expect it will be zero, since the system could best support itself by charging a small percentage of sales, automatically deducted from the revenue stream, rather than by charging up front when there is no revenue. A single server will allow hundreds if not thousands of artists around the world to distribute their work this way. It will deliver services very efficiently, and not need to charge much to be profitable.
This example is only one possible use of the smart-account design. Some of the others are very different. It appears that most of the potential uses have not yet been imagined.
Below is the central idea of these smart accounts, in four paragraphs -- followed by examples of how it could be used. For more examples and details, see the links in "For More Information" below.
You can reach the author by emailing jjames (at) MicropaymentSmartCodes (dot) com (re-format the email address of course).
Online financial accounts could each have a control center (like the control center for maintaining a Web site -- or the Options section in software, sometimes called Settings or Preferences), where the account owner could change potentially dozens or hundreds of options and services, financial or non-financial, that have been programmed and made available on the server (the computer that manages the accounts). And the owner could also use the control center to have his or her account reproduce -- creating any number of children accounts that inherit the options and services of the parent (and can inherit money from the parent as well). These children automatically have their own control centers, so they too can change options and reproduce, through any number of generations (within any limits set by the financial organization that manages the server, or set by ancestor accounts). Therefore these smart (computer controlled) accounts can evolve on their own for various practical uses, within businesses or social networks -- creating family trees of ancestor and descendant accounts with unlimited automatic services, and making new business models feasible.
Account reproduction with inheritance is the key, because otherwise the open-ended multiplicity of options would be unmanageable. With account reproduction and evolution, most end users may never need to visit their control center or even know about it, because the options and services they need will already have been set up by other people in ancestor accounts, before their account was born.
These smart accounts could do micropayment (paying amounts too small to handle by credit cards), since the processing cost for each transaction is extremely low. But more importantly, these accounts will work very well with the credit cards and other standard payment systems that customers already use. Their most important use may be bringing an open-ended cornucopia of user-controlled services, both financial and non-financial, into accounts where money is frictionlessly available -- and encouraging sharing, paying artists without trying to extract a payment from every user.
Technical note: This system will be relatively easy to introduce, for several reasons. (1) It works entirely on the server and requires no special software on users' computers, so it can automatically be compatible with all Web browsers and operating systems (and even with ordinary telephones, for many purposes). (2) One server will support thousands of art, fundraising, or small-business projects around the world (they only need an account, not their own server), with probably no upfront cost to the artist or other user. (3) Multiple servers can easily be made compatible, if the organizations running them can trust each other. (4) Account reproduction, seemingly the most complex part of this system, is actually easy. It consists mainly of copying a record and doing obvious cleanup. (5) Some major uses of smart accounts will not involve money at all -- providing a stepping stone for software developers to gain practical experience before dealing with the responsibility of managing peoples' money. (6) The most important uses of this system will not require any critical mass of users, but will work equally well for the first artist or merchant as for the millionth, since their customers can use conventional payments like credit cards, and will not need to have of these smart accounts, or know anything about them.
Each of these smart financial accounts could inherit the ability to accept almost any credit cards or other online payment methods that customers wanted to use -- and also to generate any number of instant, public Web pages, each of which could download a different song, video, or other work, with little or no upfront expense. These Web pages will work internationally, letting visitors click a picture of a flag to rewrite the page in that language (translating standard instructions and business phrases at least, and sometimes other text as well). Prices will display in the corresponding national currency.
Artists will be able to customize this page in minutes, pasting texts, images, music, videos, or other information about their work into slots provided, even if they have no other Web site or Web experience. It will be much like setting up a blog -- although these pages are not designed to be used as blogs, but for other purposes, such as selling prepaid downloads that can then be shared for free (see Bulk Downloads section below). Each of these Web pages could distribute a particular song, or other downloadable art or information.
The artist could provide free samples by checking a box to make, say, the first zero through 60 seconds of the song or video free. Sometimes the whole piece will also be free (see below), but using the sample would not decrement the available prepaid downloads. The artist could replace the 'zero' and '60' defaults with other numbers, so that any excerpt of the song, of any length, could be the sample; the control center might allow any number of separate excerpts, if the artist wanted to use them. Similarly, free samples of text could be offered. Image samples could either be thumbnails, portions of the image at full resolution, or both. People would be encouraged to make their own compositions out of free samples, and share these with others, since that will be free publicity for the artists.
These Web pages are generated "on the fly" when a visitor clicks a "smart link" -- which looks much like an ordinary Web link, but contains the name of a smart account that can remember, for example, how many if any prepaid free downloads are available.
Donors who want to support the artist, the art, or the art movement could click on a payment page to buy dozens, hundreds, thousands, or any number of prepaid downloads for the associated smart link -- letting that many people click the link and download the work for free. Anyone could donate more downloads at any time, instantly recharging all copies of that link throughout the world -- or requesting a new link instead, to control who receives they downloads they paid for. Therefore many different smart links selling the same song or other work could be circulating around the world at the same time.
This system will let friendly donors buy 5, 50, 500, 5000, or any number of prepaid downloads they want, at bulk discounts selected by the artist -- when today the potential major donor might buy only one copy. Then anyone who has the link into which the artist put the donation could download for free, while the artist still gets paid.
Far from ripping off artists, these free downloads will instantly pay them almost 100% of the price paid by the donor (until the download happens, the artist does not have the money and the donor could take it back). These smart accounts will promote commerce by giving people a good reason to do want to do anyway, which is to download for free without payment hassles.
And as these smart links percolate through social networks (carrying the prepaid downloads as gifts, not ads) they will tend to flow into and identify new constituencies for the art, around the world -- even where nobody could have predicted that they would be found.
These smart accounts do not do copy protection. Instead they make pirate downloads compete against free, authorized downloads that do support the artist. It will probably be more stylish to get free copies by networking, which not only pays the artist but also may bring one into personal contact with others who share an interest in the work.
Note: A fake distribution that pretended to pay the artist, but did not, could be stopped by showing donors how to be sure they were dealing with a trusted server, before they made any substantial contribution. The server could be set so that accounts could accept limited amounts of money with little or no scrutiny up front (much like PayPal), allowing freedom for experimentation. But trust would have to be established before large sums could be received. The trusted server is the key to establishing the trust required for smart accounts to work.
Will philanthropists and others donate to artists in this way -- by purchasing prepaid free downloads of their work that will mostly be used by strangers? Ultimately it will probably depend on the artist, and the art. Probably some will be able to build constituency this way, and others will not. But note that those who obtain the paid art for free will not be total strangers to the donor, but usually will be connected by a few degrees of separation -- since both have a copy of the same smart link, which usually will be shared by email through social networks, rather than being broadcast to the public. And in any case, the principal beneficiary is the artist, who gets paid each time a free download is used.
Donors will benefit in several ways. (1) Their gift both supports and promotes the artist, the art, and the art movement. (2) The same gift also gives free prepaid downloads through friends and social networks. (3) The smart accounts can expire at any requested date and return any unused money to the donor totally automatically -- without the donor even needing to know about it, let alone do anything. (4) If the artist allows, donors can provide a message that will be made available to everyone who uses a download they paid for. The smart link will keep track of all donations separately -- in last-in-first-out order, so that a new donation will pre-empt and instantly change the message going out from that link all over the world -- setting the stage for competitions between donors that will sell more art. (5) Less importantly, donors can get increasing quantity discounts for large purchases -- plus special sales such as holiday discounts. Artists can set up these special offers in minutes at their account's control center -- either by checking off prepackaged sales suggestions provided by the server and perhaps changing starting and ending dates, or by composing their own special sales from basic options provided.
These accounts will also help commerce and art alike by doing many business tasks automatically -- such as not only computing but actually paying taxes, commissions, charitable donations, or other payments instantly if the artist wishes, as each sale become final -- and providing totally current accounting and other business reports (up to the minute and second) whenever the account owner requests them. These reports can also show exact time ranges in the past, so that the immediate influence of public events can be tracked with precision, even if their importance was not recognized at the time. Usually the artist will need to do nothing at all to get these reports, except to ask for them.
Even when these smart links cost considerable money to buy, they could be emailed "in the clear" with no security at all, since they will be hard to abuse. Because they could pay only for a particular song or other art, a thief could do nothing with them except to repeatedly download the same file -- or distribute the link to others, but that is what the link is supposed to be used for.
Artists with music or other downloadable work to sell will start the process by obtaining a smart account, probably from an organization that specializes in distributing music or art downloads. This account will hold the money received from sales and let the artist spend it -- so it must be kept secret, so that no one else can use the money. But it can reproduce certain children accounts (called "public codes" in our earlier writeups) that can be published, because they can only receive payment for the parent, and never spend any money. These public codes will be part of the smart links -- which might look like www.accountserver.com/mysong, where "accountserver" is the server that is managing this line of smart accounts, and "mysong" is the name of the public code. (The artist can choose the name, which cannot already be in use on that server.)
Using the control center of "mysong" (which the artist reaches through a back door from the secret parent account), the artist can paste descriptive text, images, and/or videos into the "mysong" Web page -- which is generated on the fly when needed.
These pages will work internationally, as noted above; users can click a flag to translate the language (at least for a set of standard phrases provided by the server in each supported language), and translate the currency as well. Artists may optionally provide their own translations of their text descriptions, into some or all of the languages supported by the server. If no translation is available, the description will be left in its original language -- or could be machine translated if the visitor wants.
At www.accountserver.com/mysong the visitor will see a simple page with the artist's descriptive information, a "free download" link (dimmed if there are no free downloads currently available), a separate link to a payment page, and a collection of flags that users can click to translate the language and currency. The payment page will let the visitor pay to download the song or other art, and/or buy any number of prepaid downloads to donate. Once the donation has been made, copies of www.accountserver.com/mysong all over the world will in effect be instantly re-charged, letting anyone click that link to get the download free.
The payment page will accept almost all credit cards and other online payment systems (unless deliberately blocked) through the server, which will function like the third-party organizations that accept credit cards for small merchants that do not have their own merchant accounts. The artist will receive the payment but never see the credit-card numbers, and therefore does not need to be trusted with them. The server only needs to set up a merchant account once with each payment system, and then all its smart accounts can inherit the ability to accept credit-card or other payment through any of those systems.
Artists could "prime the pump" for their work by creating a smart link holding any number of free downloads desired. Then they could send this link to potential supporters as a gift, not an ad -- and the recipients might pass it on as a gift as well. There seem to be no ethical issues of artists offering either too many of these free, undonated downloads, or too few, though either extreme could reduce sales.
Anybody will be able to share paid music or other downloadable art almost as easily as free art, just by emailing a link to his or her friends. You could buy 10 downloads (and request a new link), and send the resulting smart link to 100 people, who could also share it if they wanted, and at least the first 10 who tried could download for free. After that, anyone could buy their own copy of course -- or donate more copies at any time, instantly re-charging that link for all the others.
This business model breaks the inefficient, hassle-prone system of requiring each end user to pay for his or her copy. It encourages sharing, instead of criminalizing it (and therefore seriously impeding word of mouth -- no wonder entertainment corporations have problems). It allows prepaid music to flow freely through social networks around the world -- so artists' constituencies can develop naturally, outside the expensive, winner-take-all superstar system.
Note that this way of selling downloadable art does not need any critical mass of users; it will work just as well for the first artist using it as for the millionth. Customers do not need to have any of these smart accounts themselves, or to know anything about them. Everyone already knows how to click a Web link, click a button to download for free, or pay online (to buy a copy if all prepaid downloads are exhausted, or to donate bulk prepaid copies to the network of other people who have or will have the same link).
For fundraising, the instant Web pages discussed above could have different options selected at their control center, so that they would report progress of a campaign to the public -- not only in conventional accounting reports (but ones that change immediately when new donations come in), but also in animation, music, or multimedia. Donors could watch their own contributions or others' go into the pot -- as a colored drop entering a pool and making small or large waves, a color-coded shooting star in the night sky, an amount-coded musical theme so they can listen in the background while working, or their choice of potentially dozens of other such displays. These would not be pledges that would have to be followed up, but actual money in the smart accounts, which could write a check the same day.
With this virtual fountain (into which much more than coins are tossed), donors could form competitive teams like east vs. west, or red vs. blue, with perhaps 24 hours to mobilize their friends throughout the world to contribute the greatest total amount to the cause, with up-to-the-second results in full public view. Think of the scramble to get big donors to reverse a team's fortunes as the day goes on -- they can donate any time, but only money received today will count for the team, and of course they can pay by credit cards, PayPal, etc. People reluctant to ask for money will have a light and easy reason to do so. Onlookers may get caught up in the excitement and put their own donations in, partly to support a team they like. Important fundraising competitions could make the news, like sporting events.
Here is a different, more bizarre fundraising possibility. Archival servers (credibly endowed and administered to maintain public access to certain information for decades or even centuries, on the Web or its successors -- saved in "three continents, three operating systems, three political systems" etc.) could support digital collectables -- date-stamped and therefore scarce recordings of particular donations to historically important organizations or campaigns. The owner would control the public online display of historical material (provided at the time by the beneficiary organization, or by others) -- and added to by successive donors through history. Current owners will be able to choose to hide or display previous information, but not to delete it entirely. If these donations-as-collectables develop a market among collectors, with some of the controlling smart accounts selling at high prices in auctions, they would turn certain donations into investments as well, creating an entirely new incentive to give.
And this incentive would fit easily into existing fundraising. Certain donations (perhaps over some minimum amount -- and larger donations would probably become more valuable as collectables) would be acknowledged not only with the usual thank-you letter, but also with a separate page with the name of the smart account, and an explanation. (The explanation might begin, "This code could become valuable in the future. Save it -- and keep it private.") The new owner of the account could change the name at any time, ensuring exclusive possession. (But if the secret name got out, anyone who had it could fraudulently change the name as well, locking out the legitimate owner.)
If an organization had an important year, it could be critically important to donors to get their contribution paid by December 31. After that, the year would be closed -- no post-dated donations could be created, and the date could not be fudged because the server would have its own reputation to protect. So then the only way to get a donation/collectable for that year, or any past year, would be to buy one on the market, for whatever price sellers wanted to charge. And a collectable with the donation amount the donor may prefer, and perhaps a special date as well, might not be available at all. Fundraisers will be able to use these opportunities to increase the success of their campaigns.
Traditional micropayment (someone with a special account pays a small amount to someone else with one of those accounts) has a serious critical-mass barrier, since merchants have little incentive to use it unless many customers already do, and vice versa. This smart-account design welcomes all conventional online payment systems (since accounts can inherit the ability to receive credit-card, etc. payment through the server, and inherit any necessary limitations as well), and has many uses with no critical-mass barrier at all, including most of the examples in this writeup. These uses support business and encourage sharing by bringing an open-ended cornucopia of services to accounts where money happens to be frictionlessly available.
Here is an unconventional use of micropayment, which completely eliminates the critical-mass barrier. It also encourages sharing, eliminating almost all of the mental transaction cost, the other major problem with micropayment.
The prepaid downloads (described above for artists) could also handle extremely small payments well. For example, a page from a book might be priced at a nickel, a penny, or even less -- a way to sell books online by letting readers buy just the pages they read. They would also automatically receive a copy of only the pages they read, in the order the saw them -- an advantage in some ways over a copy of the whole book, since readers could more easily review their thoughts, or find sections that had moved them. Of course there would be options to buy the whole book as well.
Even if there were no donors wanted to prepay for pages to be used by others, most of the downloads would still be free -- because the minimum feasible payment for credit cards, PayPal, and most other systems would require anyone who did pay for a page to also pay for many other pages. For example, at 5 cents a page and $5 minimum payment, if somewhat more than 1% of readers were willing to pay, the system might work -- and up to 99% of the "mental transaction cost" (a major argument against micropayment) would go away. (Actual figures will be less impressive, because people usually read more than one page; the visitor who doesn't care about the money will leave an average of 50 free copies on the table, while a voracious freeloader may leave none. But on the other side of the scale, some readers who liked the book might be moved to contribute much more than the minimum payment, so that others could read it, and so that the organization selling the material could be supported.)
Enemies of the book or its vendor might use up the free downloads repeatedly to deny them to others. This could be thwarted by, say, a 20-second delay between pages -- little inconvenience to real readers, but at 5 cents a download, attackers could only burn up $9 per hour of their time (and the $9 is still paid to the vendor). The smart account controlling the process could turn on the delay (or an alphanumeric display that can be read by people but not by machines) only when Web statistics suggested that the site was under attack. Merchant could request this or other options, probably by checking a box at the account's control center.
Note that this unusual kind of micropayment could accept conventional payments like credit cards; customers will never need to have any special account. (But since all smart accounts could be born with the ability to accept any of dozens or even hundreds of different payment systems, customers who do have an account on some little-known system for paying online may be free to use it.)
This micropayment marketing works by encouraging and nudging people to share. Freeloaders will be expected, and indeed welcomed; if somebody in Zimbabwe, for example, is asked to pay and cannot, he or she can try again later, when free downloads will hopefully be available. If freeloaders clog the site because not even 1% or so of visitors are willing to pay, then that particular book or other material would not be marketed this way.
But also note something unusual in business or economics: if the marketing does not work because of too many freeloaders, it might be made to work by changing the price -- up, or down, or either one, but there may be no way to predict whether the price should be raised, or lowered, or either. A higher price means that anyone who does pay covers more who do not; a lower price means that more people will be likely to pay. Since the effect of raising or lowering the price may be unpredictable, the smart account could use a mathematical function to charge prices at random within certain ranges, compile statistics, and advise the seller on how to improve the price. Even better, the account could use the statistics itself to change the price function automatically as it gains experience -- both to maximize revenue, and also to make the distribution system more efficient in getting people the downloads they want (the seller could set a slider bar to weight these benefits). Of course a smart account would randomize or otherwise change prices only if the artist or other merchant clicked a box at its control center to turn this feature on.
Alternatively, these smart accounts will also be able to do conventional micropayment -- where one smart account pays another. The processing cost for each such transaction is near zero, allowing extremely small prices like five cents or less to work. But this possibility seems less important than the model above, because it suffers from the traditional problems of micropayment -- the mental transaction cost of making the five-cent decisions (although robot negotiation, described below, might help), plus the huge problem of getting a critical mass of customers who have smart accounts, have money in them, and know where and how to use them. This writeup focuses on business models that do not have these problems.
Here are some other examples that show some of the range of possible uses for these smart accounts:
I believe these smart accounts could help artists make a living, and contribute to human betterment in other ways as well. Here is a form of money with endless automatic services that individuals and communities can shape as they choose.
Due to other commitments I am developing this system not as a business, but as a public conversation. Anyone is free to use these ideas non-exclusively as they wish, commercially or otherwise. I am looking for people to work with in creating a wider discussion on how to improve the design, and where to take the project from here.
If you find something on this site that appears erroneous or unable to work as described, please let me know at the email address below. I'm also looking for recommendations for a good online discussion system -- one that requires no special software and no learning curve for the end user.
The following earlier descriptions of the smart-account design have many details that were left out of this one. The information in these links needs to be reorganized, with consistent terminology throughout. But meanwhile those who want the information can find it here.
Note: Earlier articles (before October 2005) use the phrase 'smart code' where this one uses 'smart account'. Both refer to the same thing. Access to the account is by a code, which is also the name of the account; this code is kept secret for accounts that can spend money, but can be published for accounts that offer services and receive money but do not spend it. The usual system of user names and passwords would not be convenient for accounts that can reproduce without limit.
Today micropayment is looking up again, mostly to pay for various items through one's phone bill -- overcoming the critical-mass problem since so many customers already have each company's telephone. Our smart accounts can also pay by telephone -- with the advantage of not having to go through the phone company for non-telephone items such as event tickets, except for making the call itself.
Here are some micropayment links that came to our attention:
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John S. James, jjames at MicropaymentSmartCodes dot com
This work is licensed under a Creative Commons License.