Content Billers Need to Cooperate, Not Compete

The role of standards and protocols is one of the characteristic differences between the North American and European markets — and a major reason why European publishers now lead in solving the problem of how to charge for online content.

North Americans characteristically use protocols and standards as competitive weapons. When a North American invents a good new standard, he keeps it proprietary, and his company tries to bash the competition with it. Some examples: control program for microprocessors (CP/M) versus DOS; Macintosh OS versus Windows; CDMA versus TDMA cellular systems; DVD versus Divx; and AOL Instant Messenger versus MSN Messenger versus Yahoo Messenger.

This characteristic is why PCs are from Mars and Macintoshes from Venus and why American mobile phone companies are saddled with incompatible networks. The characteristic dates back at least a century to the battle between Edison’s direct current (DC) and Westinghouse’s alternating current (AC) electrical power networks. The post-war American occupation even passed this characteristic on to the Japanese: VHS versus Betamax.

By contrast, Europeans characteristically use protocols and standards as, well, protocols and standards — ways of ensuring a level playing field and driving the whole industry forward. Rather than wielding standards and protocols as competitive weapons, they adopt one and compete within it, distinguishing themselves by service and price.

When Europeans invent a good new protocol, they characteristically make it open and nonproprietary. Linux, GSM, and the World Wide Web itself are recent examples. They know companies can more easily interoperate (even compete) through nonproprietary protocols and standards, which makes those protocols and standards even more utilitarian and practical.

Many of my American compatriots think the idea of everyone using a common technological standard is somewhat unentrepreneurial and un-American, but Europeans realize the quicker everyone begins using common standards and protocols, the better it is for businesses and consumers.

This holds true when you look at protocols and standards designed to allow payment for online content. Earlier this month, I wrote about a variety of European content micropayment systems that use cellular phone billing, most using the GSM-based, open standard SMS protocol. During 2002, European online publishers also began developing micropayment systems that aren’t based upon cellular telephony billing.

Verband Deutscher Zeitschriftenverleger (VDZ), the Association of German Magazine Publishers, is developing a microtransaction system that aggregates each user’s online content micropurchases into one monthly charge. The charge then appears on the user’s telephone bill, prepaid phone card, ISP bill, bank checking account, or credit or debit cards — whatever the buyer prefers. This is a Web-based system and doesn’t require publishers to operate server-side billing software.

Among VDZ’s partners here are Deutsche Telekom’s T-Pay system, AOL Germany, FIRSTGATE, paysafecard‘s prepaid Web shopping card, and the major credit card consortia and banks.

Meanwhile, nearly 50 of Denmark’s media companies and Internet portals have signed an agreement with Accenture (the former Andersen Consulting) to develop a micropayment system. Online content purchases will be billed through Norway’s Netaxept microtransaction system. TV2 Interactive of Denmark called the arrangement unique because so many Danish media firms have never before banded together to use a common system.

Some 20 Norwegian online publishers and broadcasters are jointly testing a similar system that will work through the Norse company E-Solutions.

All of these German, Danish, and Norwegian publishers and broadcasters compete against one another in their respective national markets. But they’ve all realized that using a common micropayment system is in their best interests.

Rather than each picking a micropayment vendor, they’ve joined to pick a common solution. They know consumers are more likely to sign up for and use one common solution for paying for online content. A variety of competing solutions only confuses consumers.

The phenomenal success of the World Wide Web has been based upon its open and nonproprietary protocols. The future’s successful online content billing solution likewise must have an open and interoperable nature.

As 2002 ends, the challenge for publishers in each language, indeed for all publishers worldwide, is to cooperate — rather than compete — in developing such systems.

Happy New Year!

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