Amazon's 'Honor System' to Handle Micropayments for Other Sites

Baldwin Louie — Tue, 06 Feb 2001 17:00:00 -0500

Melding the fundraising techniques of National Public Radio (dossier) with its one-click shopping software, Amazon.com (AMZN) unveiled a program Tuesday that allows its 30 million Web surfers to donate money to their favorite content sites.

With the "Amazon Honor System," customers perusing participating sites such as Modern Humorist, can click on an image that whisks them to Amazon's site and asks for at least a $1 contribution. Once given, Amazon charges the reader's credit card - already on file - and passes the gift along to the site, taking a 15 percent cut along the way.

It's the latest twist on micropayments - the pay-per-view model that flourished briefly in the mid-'90s before sites bet their futures on free content, banner ads and limitless venture capital. The form has recently made a comeback with companies such as Qpass - whose software is used by the New York Times and the Wall Street Journal, among others - but no one has the customer base and brand name of Amazon.

"The broad way to look at this is that this is the beginning of the Federal Reserve Board of the Web," says usability expert Jakob Nielsen, who is accepting payments at his site Useit.com. "New companies will be the banking system in the future and Amazon is making a bid for it now."

Amazon, of course, begs off from any comparisons to the banking system or a master plan regarding online transactions. "We see this as helping customers make small payments to the Web sites they love," says Alan Kaplan, Amazon's VP of payment services. "One of the reasons we launched this site was that we were in a good position to do it - we've got 30 million customers who are comfortable making a payment through us. We have a payment system that's already paid out money to other folks. And we've already signed up 600,000 people who work with us without any human intervention."

But Amazon has quite a way to go before it signs up any noteworthy content sites. The list Amazon included on the Honor System homepage is a mish-mash of marginal sites such as Satire Wire, the Museum of Bad Art, Guitar.net and BedandBreakfast.com. A few familiar names pop up - Modern Humorist, The Internet Movie Database (which is owned by Amazon) and AdCritic.com.

And in some cases, the partners are participating even as they slight the service. "My analysis is that this is only the first attempt," Nielsen says. "This is really kludgy and not an optimal way to do this. It's a way to get their feet wet in a pilot program." ("I appreciate Jakob's candor," Kaplan replies.)

At Modern Humorist, co-Presidents Michael Colton and John Aboud are asking readers to send money to buy a gift for Amazon CEO Jeff Bezos - a Weber Black Genesis Silver A Gas Grill, selling for $349.99 on Amazon. They're sure that once they buy him the grill, he'll invite them over for a barbecue. "We figured $350 owed to our company wasn't much," says Colton. "But to Jeff Bezos, if that was in the form of a Weber grill, that's huge."

As of Tuesday, the site had raised enough cash to buy Bezos a lesser gift, the Short Circuit Special Edition DVD ($21.49 on Amazon). They're not counting on the Honor System for hard cash anytime soon.

"If we started to get $10,000 from it, we might evaluate differently," Colton says.

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Amazon's 'Honor System' to Handle Micropayments for Other Sites