How can micropayments work?

One argument against micropayments is that the decision to spend or not to spend a penny still requires a certain minimal amount of time and mental anxiety, and users will never take to a micropayments system because they don't want to have to make hundreds of such decisions.

I find this argument somewhat compelling, but I wonder if we could use micropayments between non-consumers as follows. Say that I'm an aggregator of content. I charge my users a fixed subscription rate of $60/year, which gives them unlimited access to the content. Then I turn around and redistribute a portion of that revenue to the people who provide the content, on a micropayments basis, i.e., they get a share of a fixed pot of money based on the number of people who click on their content.

The consumers of content, and also the aggregator middleman, are freed from mental anxiety because their total payment to the content providers collectively is fixed at a predetermined amount. Any mental anxiety is transferred to the content providers, who when producing their content not only don't know how many people will click on it, but also don't know how much they will be paid per click, since a click on one piece of content is devalued by clicks on other pieces of content.

Psychologically, people are probably more willing to tolerate uncertainty in profits than in costs. If Aggregator paid us microroyalties for writing posts, but the royalties fluctuated unpredictably from month to month, this would probably seem more acceptable than a bill for reading posts which fluctuated unpredictably on the credit card statement.

Also, in some sense, it doesn't matter when uncertainties are compounded. If I have no idea how many people will click on my content, I have a large error bar on my expected payment for the content anyway. If the value of a click is also unknown, my error bar is even larger, but so what? Conversely, if I have an expectation about my microroyalties based on microroyalties I've received in the past, it doesn't matter that that income was the product of two variables.

And to the extent that one post has a single producer but many consumers, it's less bad for the producer to have to agonize over whether to write it for a dollar, than to have all the consumers agonize over whether to purchase it for a penny.

Micropayments in the strictest sense may not be necessary for this scheme, since the aggregator might not make any payment until a content provider earns, say, $10. But a $10 payment is still low by the standards of the traditional media/content industry: a millipayment, if you will. I can't write a $10 mini-article for the newspaper, because it wouldn't be worth the editor's time to pick and choose which mini-submissions were worth the ink. But if the ink is virtual and the editor's job is replaced by an automated recommendation process...

What's really the point of these micropayments? When you pay someone to do something that he was already doing at some level for free—producing content, or playing baseball—you incentivize him in two ways.

First, you induce him to produce content or play baseball only in your forum and not in another. Presumably he will cease performing in public for free, and make your forum proportionately more valuable than public space.

Second, you induce him to polish his art more hours per day, more days per year, with more determination and so forth, so that he creates a better and more valuable product than he did before.

While both effects are important, in the current context—micropayments—I'm more interested in the first one, which I think will be much more significant at that level.

In other words, if Aggregator paid Charles some small amount for his posts, perhaps he would put a little more effort into them, but the effect would likely be marginal. After all, more or less by definition, some little peanuts micropayments aren't going to have a big impact on Charles's wallet, or by extension his habits. If we start talking about sums of money large enough for Charles to write second drafts, worry about meeting deadlines, etc., then we can change the subject of the thread to "royalties" and leave off the "micro-" part.

But it's more plausible that even a relatively peanuts micropayment would induce Charles to place his casual content exclusively at Aggregator, and not at some other site which didn't offer equal compensation. After all, it doesn't take effort to not make your output freely available. Any payment at all is free money, as it were, for Charles.