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How could artists, fundraisers, and other merchants begin using smart codes? The most obvious scenario -- people buy codes and use them to pay for goods or services -- is probably not how it will start. Below are some business models that seem more likely. Keep in mind:
1. Bulk Downloads and Free Paid Access
A key use of smart codes will be selling songs, articles, photos, or other art or information that can be downloaded -- allowing artists to support their work, perhaps by selling unfinished sketches or drafts created and edited with a personal computer, charging a price too low to be worth the hassle and expense of paying by credit card. But we think that most download fees will not be paid by the end user, but by fans who buy downloads in bulk and give free paid access to friends and associates. Then most end users will download the art for free, while the artist still gets paid.
The way this would work is that anyone could go to a Web site provided by the smart-code server, and enter a public code that identifies a particular sales offer -- such as one song or a collection of songs by an artist or group. (The public code could be part of the URL, so the offer could be reached by clicking the link.) The control center for that public code will provide a shopping basket if needed, show prices for different quantities of downloads purchased through a new code, and provide payment options, including smart code, various credit cards, or other payment systems.
A customer who wanted to share a song with others might buy 20 downloads, and send the resulting link out to perhaps a hundred people by email. The first 20 to click on the link would receive the song free. After that, those who clicked would get a price list and Web form to buy one or more downloads. Buying bulk downloads would immediately re-charge the link for anyone who had ever received it (unless the customer asked for a new code for the bulk purchase, to send it to their associates only).
If some of the links are unused after an expiration period (for example, 30 days), the remaining value could automatically revert to the buyer, if he or she paid by smart code (which could routinely accept the refund).
2. Digital Customized Art
Artists could use smart codes to create computerized works that could be customized by the owner and only the owner (the person with the code).
For example, the owner could use the secret ownership code to change the photographs in a digital painting to photographs of the owner's family -- or replace a text that appears in the picture with another text. Or in a musical composition, certain rhythmic or other qualities could be replaced by qualities abstracted from music selected by the owner. Of course these changes could be made only as provided by the artist.
Multimedia environments -- customizable with the owner's own image files, and/or music files, and/or text files, or with different optional file sets provided by the artist -- might be the most impressive use of this medium.
This customization means that an exact digital copy of such a work will no longer be considered a new original -- as it cannot be further customized, even with the code. Instead the code itself will be the original (plus the programming of the work on the server, but that will not need to be carefully guarded as it will be useless without the code).
The artist might even do a numbered edition of such a customized work -- say numbers 1 through 50, with 50 different codes -- to increase income while reducing the cost of owning an original.
The artist, an owner, or indeed anyone else could easily display one customization of the work through the Web, by using a public code created by an owner (and revokeable by that owner as well). The programming would live on a distant server; the artist and each owner could keep a copy if they wished. The code itself would be sold as the original. And of course a new owner could replace that code with a new one the previous owner does not have.
1. Encouraging Small Contributions
Smart codes would let many donors give small amounts such as $1, $2, or $5, especially when they wanted thank an organization for particular work it had done. These small acknowledgements would give organizations another source of feedback on how they are doing -- and give independent activists a motive to encourage such donations when the organization did something they liked, again increasing the total money raised.
Readers could click a "Donate" link, on the Web or in email, and be taken to a unique Web site for that particular button (the control center of a public code used only for that button). Here they could see text, picture, or sound messages, as well as credit-card and other payment options. Donors could pay, say, $3 by credit card -- or they might choose to charge, say, $15, and get a smart code for the remaining $12, which they can use for later donations to the same organization or others. A smart code is easier to enter than credit-card information -- and a browser might allow it to be entered automatically. Fundraisers or merchants will never keep smart codes after charging them; the code will be entered again to make another payment.
2. Contributions as Collectables and Investments
Smart codes could acknowledge contributions to historically important causes -- and be archived forever by specialized organizations designed to survive the death of the organization that issued the code (and designed to survive most disasters as well, short of an asteroid collision that ends human life). Historic donations could be collected and traded, potentially developing much greater value than the amount contributed -- thereby creating a totally new motivation to donate, and helping organizations raise funds today.
The donation code would have to be kept secret, but its owner could generate one or more public codes that tell the story of the organization, and the times and the role of that particular donation. The organization itself could enter text, photos, music etc. into one public code that could not be changed by the owner or later owners (or perhaps could only be changed for a period of say 30 days, so it would still reflect the time in history that the donation was made). The donor's secret code's control center could document exactly when the text or other media in any public code had been entered or changed -- and could even save deleted versions, if the owner requested that option. Like any smart code, the donation code could generate any number of public codes, each of which could tell different views or stories of members of the organization, witnesses, or different owners through history.
1. Smart Codes As Digital Tickets to a Theater or Event
One smart code could admit any number of people to a theater or other event. Groups using the same code could arrive either together or separately.
Therefore somebody who had a smart code of enough value to pay for the tickets needed could phone the server used by the theater (or reach it online), and use their smart code to purchase an admission code for their party. The smart code for admission to a particular event could be short; 6 digits allows 1,000 tickets to be issued, with the chance of a guess hitting any of them being less than 1,000 to one. So the admission code could easily be created and shared by mobile phone, even by people already on their way to the event.
Incidentally, the only equipment the theater needs to admit people this way is an ordinary touchtone speakerphone. While tickets are being accepted the phone is left connected to the server. When the party (or part of it) arrives, one of the members enters the code and the number of people then arriving, and the speakerphone tells the party and the theater staff that admission for so many people has been approved. Staff lets them in and gives each of them a torn ticket or other receipt. After they have passed the gate, the staff enters a confirmation code; without that the customer's code will not be charged. So if any glitch or issue occurs, no charges go through until the people have gone in.
And if the box office sells out of paper tickets (after having given a block of tickets to the smart-code server, which then bypasses the box office entirely), it can call a special number at the server, enter a code, take back some or all of the smart codes that have not yet been sold, and sell that many more paper tickets. Or it could do the transfer the other way, if the digital tickets sold out first. Eventually smart codes will be integrated with the paper-ticket systems -- but this does not need to happen right away.
2. Smart Codes to Encourage Savings and Investment
Economists agree that the U.S. saves far too little. In addition to everything else, smart codes could be used to encourage children or adults to save or invest.
Why have $20 or $500 just sitting in a smart code, when simply clicking a box in its control center could instantly have that money participate in, say, a Vanguard index fund, or other investment option offered by the code server? The code would still work the same as before; the only difference would be that the value it contained would rise or fall with the market.
As we noted elsewhere on this site, with smart codes the expected cost per financial transaction should be less than a tenth of a cent regardless of amount, especially when only one code server is involved. Therefore, the code server could aggregate the investments from its various codes at little cost, and every week or so buy or sell some shares in each of the investments it offers, so that its holdings match the total in all the smart codes it provides. The values of the codes would be computed to the day.
The total investment amount in smart micropayment codes may never be important in the big picture. But the educational value of making saving or investment so easy could be important.
This site (www.MicropaymentSmartCodes.com) shows examples of the enormous range of uses for smart codes -- computerized payment codes each with access to its own Web control center, through which it can set options, and can reproduce new smart codes through any number of generations.
I found the smart-code idea by accident, while looking for better ways to sell access to a newsletter online. I want it to be generally available, not tied up in litigation over patent rights, and therefore am publishing the idea online as it develops. I am not planning to go into business offering smart codes, due to other commitments -- but instead will start a public discussion and make these ideas freely available for use.
I have worked in software development (see About the Author), but not in micropayment or any financial field. So if you see any problem with this idea, or know of similar work, let me know.
John S. James, Philadelphia 2004-11-29
jjamesXXX@MicropaymentSmartCodes.com [see note below]
People: remove the XXX from the email address. (Spam robots: leave it in.)
Or leave message at 215-978-7480.
This work is licensed under a Creative Commons License.