THE FUTURE OF MONEY Bernard A. Lietaer - library.uniteddiversity ...

$29.95 CD ROM version of the game has to pay for the retailers' and
distributors' shares; for the production, packaging and shipping
costs; for sales commissions and unpaid accounts. After all this, the
income to Virtual Vegas is $4.50, out of which Herschman pays for
his own staff and the infrastructure to manage distribution
middlemen and production steps. In contrast, each $2.95 copy of the
game paid for with CyberCoin and delivered over the Net costs him
only 26 cents, yielding a $2.69 profit. At the Web price, many more
copies will be sold. Herschman summarises: 'The profit margin on
the Web is huge. We make it once and... we could sell that from here
to eternity.
Nor is this the end of the cost compression game: Digital
Equipment Corporation is launching its Millicent payment product to
compete with CyberCoin, promising to reduce the costs of a Web
transaction still Further from 26 cents to the order of 0.1 cent (yes, one
tenth of a cent!). Other companies such as Citibank, Verifone, and
Microsoft are all known to be developing similar products, ensuring
that these costs will remain really low.
New products?
Even so, it would be a mistake to look at the cyber economy as an
unusually cost-effective new wholesale marketing outlet, or as a very
special and fast growing export 'country' for existing products. It also
promises to make possible totally different products. For instance, the
new micro-payment technologies already offered by CyberCash
make it economically interesting to 'unpack' products that we have
always purchased as a unit. One could charge a very small fee for
providing exactly what the consumer specifies. Instead of buying a
whole cookery book, a magazine, a CD or even a newspaper, for a
few cents, you could order only the sections, articles or songs that
you really want.