Wednesday, January 28, 2004

Catch 22 in payments via new media?

Yesterday, the Dutch Ministry of Economic Affairs held a brief conference to outline the results of an investigation in payment methods for new media. The research suggests that there is sufficient demand for new payment methods, but that this demand is not properly met by sufficiently cheap or standardized payment products. The policy conclusion is that, due to the lack of payment mechanisms, information services are not being as widely distributed as possible. The thinking is that in fact a real Catch 22 situation exists and the Ministry will now take action to solve this by quickly establishing which regulatory or standardization hurdles could be eliminated.

Interesting enough Fons Westerloo of RTL Nederland illustrated this policy conclusion by demonstrating that the Idols website allows for 5 different payment methods. His most fundamental complaint with respect to premium-SMS was that too much money was going to mobile operators. So he called upon the Dutch banks to come with a better (cheaper) product. As he did before when he called upon all smaller players in the market to develop a new product for him (which they did: thus turning up on his website).

So what I can see is a perfectly functioning market with lots of payment mechanisms and commercial and technical means to ensure payment of content via new media. And I see large players such as Endemol, RTL and SBS6 pushing the market to come with cheaper solutions to be able to choose the best or cheapest one. So, although I see irregularities in the market (the position of DNB with respect pre-paid funds of mobile operators) I don't see a lack of payment instruments hampering commerce via new media.