Consumer demand for download songs is explosive. And that demand would really skyrocket if those selling the songs could price them at what the market is actually willing to pay. But current prices are artificially inflated because no low-cost system now exists that will allow a merchant to accept payments profitably in the range of 20¢ to $2.00.
Because they had the advantage of an infrastructure that took over 20 years to develop and build, the credit card networks instantly became the early de facto standard for the majority of transactions on the Internet. For most medium to large businesses handling transactions from $5.00 up, credit card merchant fees are a tolerable cost and reasonably secure way of doing business.
eBay became a major aggregation point for small to medium size merchants to sell directly to consumers and its success and scale developed other new sub-opportunities. PayPal created a new business model that literally piggybacked on the credit card network infrastructure and began by providing this mediation service to the small merchant on eBay. Delivering credit card processing services to those small merchants who either didn't want -- or couldn't qualify for -- standard merchant accounts allowed PayPal to become a $1 billion business in less than 5 years by providing efficient – and still tolerable -- fees for processing transactions from $2.00 up.
Early download music sites like Napster and Kazaa became the aggregation points (and proving grounds) for the pent-up demand for convenient download music. While the music industry focused on the threat of illegally free music, the most important point was generally overlooked: the Internet presented people with a way to obtain more selective content from the overwhelming volume of information that was suddenly available. People could now select single items from magazines and newspapers, photo collections and art collections, rather than having to purchase more than they wanted. But the music industry was initially unrelenting in their efforts to continue forcing customers to buy music only in pre-packaged formats. Apple's iTunes, BuyMusic.com and the New Napster are among the new legal music aggregation sites finally selling low-cost songs on an individual basis. However, the minimum standard merchant processing fees (approximately 27¢+) and PayPal fees (approximately 20¢+) now represent the largest single barrier to the creation of a successful pricing model for the average online music buyer. ACME is preparing the launch of a complete solution that will enable music merchants -- and other microcontent providers -- to accept payments from 20¢ to $2.00 for dramatically reduced fees ranging from 5¢ - 15¢.
Over the past 6 years, ACME's founders have researched and developed technologies to enable secure, online transactions using debit cards as well as credit cards, with complete assurance of their authenticity using smartcard technology. Today, this combination of technologies presents significant new opportunities for leadership in secure online transactions and brings lower-cost payments to the Internet.
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