Gratias Steven!
And now a word from our MilliCent Sponsor: Russ Jones...
Russ was very quick and kind enough in answering. He sounds like one heck of a smart and sincere fellow. Which makes me wonder why he's still plugging MilliCent in light of everything Steven has just told us. (Thanks, Steven, for pointing out how people don't mind spending money that's given to them rather than the dough they have to work for themselves) Also, it's apparent that the responsibility for tailoring and working out the bugs of the MilliCent system is being allocated to the licensee of Compaq's (or was it something that came with Digital Equipment?) microcommerce software. Bummer. Compaq is, to put it tersely, getting rid of MilliCent.
Anyhow, here's what Russ has to say:
Marty,
You do have a lot of questions!
>What's the sense of MilliCent? Why dissociate small transactions from larger
>ones as a mediator of digital data? Couldn't Compaq be putting together a
>system that would meter and distribute for sale all digital content?
Compaq could, in fact anyone could. MilliCent does not interfere with other
Internet payment systems, and as you point out, could be very complimentary
to bigger ticket systems.
>When will MilliCent be ready for Market and who's the initial target?
MilliCent will be on the shelf as a turn-key commercial product sometime in
the second quarter of 1999.
>How does Compaq intend to market and make common the MilliCent system?
Compaq is taking the product to market "through a technology partner". This
means that Compaq will not directly offer it to the market, but instead
will license it to an established Compaq technology partner who will
control the day-to-day operation of the system, end-user licensing terms,
technology evolution and product support -- and, in return, will derive
most of the revenue.
>When will people at home be able to access MilliCent and what will it
>provide for content?
It is hard to predict the roll out, given that the overall roll out is
really going to be out of Compaq's hands. But I belief we will see it
usable in the marketplace within the next six months. We are starting a
production deployment in Japan in April, 1999.
>As a revenue generating machine, what revenue do you foresee MilliCent
>adding to COMPAQ's bottom line in the near future and down the pipe?
Compaq will license and distribute MilliCent from the technology partner
much like it distributes other software solutions from other companies. In
doing so, Compaq hopes to become to premier distributor of microcommerce
solutions based on MilliCent technology. But the revenue model to Compaq is
not transactions or software, it's systems and services.
>Who's currently signed up to provide content?
The list of the 45 vendors in the trial are on the website. However, we
have another 750+ content providers who are waiting for the system to go
into production. None of these people are really "signed up", as that
relationship is between them and their broker.
>Who are the "brokers" of the "e-cash?"
Just like the content vendors, we have several brokers waiting for the
system to go live. Two are banks and one is an ISP.
>Will MilliCent be used by distribution channels like Cable and Satellite
>Broadcast as they meld with the Net?
MilliCent is woven into the fabric of the Internet and is independent of
transport, much like this email message. However, there is a client and
server component. The wide availability of the client component will, in
the long run, determine the success of the system. Initially the client
component is implemented on Windows 95/98/NT. Over time, it will bundled
with PCs and at some point probably directly incorporated into browsers.
There are possibilities of a version for the Macintosh and a server
implementation as well.
>What examples have you of how people will use MilliCent from their homes,
>office, cars, boats, and, of course, the golf course?
All of the examples we saw in our public trial were people using MilliCent
from their PCs.
>Will MilliCent be compatible with Smart Cards?
Today MilliCent is not compatible with Smart Cards and Smart Cards are
marginally compatible among themselves. MilliCent can make use of Smart
Card technology, but that is further down the road.
>How will Millicent transactions be consolidated with all the transactions we
>might make otherwise and put in a ledger that can be viewed off-line?
MilliCent purchases can be consolidated in two ways. Buying tokens from a
broker is consolidated based on the payment method. If a consumer buys
tokens with a credit card, the purchase is consolidated onto their credit
card statement. If a consumer buys tokens from their ISP, the purchase is
consolidated into their monthly ISP statement.
Brokers are not involved in specific digital content purchases on the web.
Only consumers know exactly what they buy. This information is summarized
by their client-side software (ie. wallet).
They can examine it locally, export it to Excel for full-blown analysis, or
export it to Quicken for consolidation with other spending records.
>Will smart cards and smart metering microprocessors on PC's recognize
>MilliCent "coupons?"
MilliCent is compliant with the relevant protocol and software standards of
the World Wide Web, but is unrelated to other Internet payment schemes.
Microcommerce-specific standards are only now being explored in the
Internet community. In June 1998 the members of the World Wide Web
Consortium (W3C) voted to establish a subcommittee on microcommerce. This
subcommittee is working towards two different aspects of microcommerce
standardization: pricing markup and transaction interoperability. Compaq's
Mark Manasse, inventor of MilliCent, is the co-chair of this standards effort.
>Will MilliCent handle transactions larger than 5 dollars? If so, how much
>larger?
Yes, it can handle arbitrarily large transactions. However, it does not
provide the same sort umbrella consumer protection as credit cards, so we
try to position it as appropriate for transactions under the credit card
floor. So, consumers should feel free to use it for $10 and
$20 transactions, but at some point a credit card really is the better
alternative.
>How will individuals publish and encrypt digital content for sale anywhere
>on the Net using MilliCent?
There are two MilliCent alternatives for content providers; do it yourself
or hire a service to do it for you. This is analogous to run your own
website or use a hosting service. We also services that provide personal
homepages to also provide microcommerce-enable homepages.
>Do people have to purchase a license from Compaq to use MilliCent to publish
>their own digitally recorded literature, art, camera recorded files, movies,
>and music? Or, do they wait on their local ISP to purchase the rights to use
>MilliCent first and then pay their ISP a fee for setting up everything and
>providing them a server from which to distribute their content?
We anticipate that content providers would either use a freeware
implementation directly, buy a commercial product, or choose a
microcommerce hosting provider.
>What are people to do if they want to buy or sell software and digital
>content worth more than 5 bucks? Let's say they want to purchase the whole
>enchilada. After taking the product out for a free trial run or trying it
>out on a limited, or metered time trial bases, its total cost is $150 - what
>then?
MilliCent is not really right for $150 transactions. Consumers should use
credit cards for such transactions. However, we believe that many content
providers that today sell aggregated collections of digital goods for $$$
will be interested in selling and distributing content in individual pieces
at the appropriate prices (to them).
>How many pricing options does MilliCent provide? And, for how wide a range
>of transactions?
Pricing for content providers will ultimately be between brokers and
vendors to work out. There probably won't be any direct negotiations, as
the brokers will probably offer a number of different turn-key vendor
packages. For example,
Package 1: $500 setup fee, overnight settlement, 12% transaction fee
Package 2: $49 setup fee, monthly settlement, 10% transaction fee
Package 3: $5 setup fee, quarterly settlement, 8% transaction fee
The exact numbers will probably vary by broker, but the general idea is
that the vendors would get about 90% of the revenue. Competition between
brokers will keep setup fees and transaction fee reasonable. The
transaction fees will probably also slide up and down proportionally based
on the size of the transaction. For example, a 10% transaction fee might
only be on little transactions. Transactions over $5.00 might have a 7%
fee, over $10.00 maybe a 5% fee.
>If, in the near future, we can use smart cards without necessarily
>connecting to the internet and assuming all our other digital devices have
>smart chips that allow us to do the same for all transactions, very large
>and very small, why use a system as apparently limited as MilliCent?
Smart Cards, available in the "near future", are good things. I hope to
someday use a Smart Card myself. However, Smart Cards are real world things
that have real world constraints. A merchant transaction rate of one
transaction every 60 seconds is great a StarBucks, but doesn't cut it at a
website, where transaction rates typically run hundreds of transactions a
second. I do think Smart Cards will have a place on the Internet, but will
typically be associated with shopping cart style purchasing because of this
throughput problem.
I don't believe a single system can be built that handles both large and
small transactions and I think that's ok. When thinking about Internet
concepts, I often turn to the physical world we live in to look for
parallels and to spot trail markings. In our everyday life there is
obvious difference in selling styles and buying preferences. There are
complex business transactions and more simple consumer transactions. Even
when examining consumer transactions, there are a number of different types
of consumer transactions. Not just different payment instruments, but
different payment attributes that vary by the nature of the goods being
purchased and the value of the transaction.
For example, a consumer buying a $3.00 magazine from the corner store
probably uses cash and doesn't care about a receipt. A consumer buying a
$125.00 microwave oven from a department store might use a credit card,
demand a receipt, and verify the merchants return policy before leaving. A
consumer buying a $25,000 car is most likely using a cashiers check, and
signing documents acknowledging state-specific Lemon Laws and their right
to sue the dealer in court. A consumer buying a $200,000 home, wants their
lawyer present when the transaction executes. If buying a $2,000,000 home,
they want their lawyer present when negotiating the transaction! I believe
we will see the same types of differences in online transactions for the
same types of reasons.
>Somebody has to have a BETTER IDEA! Have you heard of any, lately?
I hear ideas, good and bad, every day. I bet you do too.
Hope this helps,
- Russ |
