Electronic Commerce Payment Systems

Pay-Per-View Pages Freemiums in Social Gaming World

Prepared by: Djafar VASIPOV Uurcan YELIRMAK

Electronic Commerce Payment Systems

Credit Card Stored Value Online Credit Card Use PayPal Digital Cash Online Stored Value Accounts

Credit Card
Represents an account that extends credit to consumers, permitting consumers to purchase items while deferring payment, and allows consumers to make payments to multiple vendors at one time Credit card associations Nonprofit associations (Visa, MasterCard) set standards for issuing banks Issuing banks Issue cards and process transactions Processing centers (clearinghouses) Handle verification of accounts and balances

Stored Value Accounts

Accounts created by depositing funds into an account and from which funds are paid out or withdrawn as needed Examples: Debit cards, gift certificates, prepaid cards, smart cards Debit cards: Immediately debit a checking or other demand-deposit account Online Peer-to-peer payment systems such as PayPal

Online Credit Card Use

Processed in much the same way that in-store purchases are Major difference is that online merchants do not see or take impression of card, and no signature is available (Cardholder Not Present transactions) Participants include consumer, merchant, clearinghouse, merchant bank (acquiring bank) and consumers card issuing bank

Online Credit Card Use

Problems with Online CC Use

Security Neither merchant nor consumer are authenticated. Merchant gets consumers credit card number for possible later misuse. Cost for merchants, around 3.5% of purchase price plus transaction fee of 20-30 cents per transaction Social equity many people do not have access to credit

Other Online Payment Systems

Digital Cash
One of the first forms of alternative payment systems Not really cash rather, form of value storage and value exchange that have limited convertibility into other forms of value, and require intermediaries to convert. Many of early examples have disappeared; concepts survive as part of P2P payment systems.

PayPal
One of e-commerces major success stories:
Went public in 2002; acquired by eBay October 2002 for $1.5 billion

A peer-to-peer payment system using email. Fills a niche that credit card companies avoided individuals and small merchants Piggybacks on existing credit card and checking payment systems Weakness: suffers from relatively high levels of fraud PayPal has more than 35 million account members and is available to users in 38 countries around the world

Online Stored Value Accounts

Debit cards online Permit consumers to make instant, online payments to merchants and other individuals based on value stored in an online account Rely on value stored in a consumers bank, checking or credit card account

Pay Per View Pages

The big web sites such as Yahoo!, MSNBC, etc. are able to charge on a pay-per-view basis becuase they have the traffic to provide value to that model. It works in the same way a billboard on the side of the road or even a tv/radio commercial works in that they can say "We have 1mm users see this page every day, so this ad space is worth $X amount".

Pay Per View Pages

The difference is that, these sites can "prove" how many times an ad is served up through exact tracking down to the user where the traditional media have to base their numbers off of a user group rating While an average site can provide this same exact user information, the traffic may not be heavy enough to warrant an advertiser to pay for your ad space. If they do, they won't pay as much because they are not getting as many views as the big sites do.

Pay Per View Pages

Bottom line is the more traffic you have and the more targeted the audience the more you can charge for your ad space.

Pay Per View vs. Pay per Click

The primary difference between Pay-per-Click and Pay-per-View is whether you or the advertising provider decides where your ads are placed. In the Pay-per-Click model, the search engines decide. They place your ads on search result pages and, optionally, on other pages throughout the web. When they bring you a customer, you are billed. The search engines have a financial incentive to place your ads only where they are most likely to be clicked on.

Pay Per View vs. Pay per Click

If a Pay-per-Click ad were to cost $1 per click, the same Pay-per-View ad might costs $0.05 to $0.10 per view. The difference is that you decide where the ad is placed and pay whenever the ad is seen, rather than when it is clicked. For example, this newsletter is being read by businesspeople in the renewable energy industry. When an ad like this appears here...

Pay Per View vs. Pay per Click

... then there is no doubt that it is reaching its intended audience. It doesn't matter whether the ad is clicked on or not because it is valuable simply because it is seen. Pay-per-View advertising appears on websites and in newsletters. Like Pay-per-Click advertising, Payper-View ads generate click-through' statistics that show what percentage of people who saw the ad and clicked on it. When considering Pay-per-View advertising, there are some important considerations:

Advertising Provider:
The company providing the advertising needs to be relevant, trusted, and have the technology to accurately track the views. In order to be effective, your ad needs to be seen by the right people. You need to be confident that the advertising provider has detailed demographics on its readers. With Pay-per-Click this doesn't matter, but with Pay-per-View it is critical.

Product Category:
Some products may be unique or highly innovative and lend themselves to Pay-per-View over Pay-per-Click. For example, SunMateSolarPanels.com has a unique product for residential solar thermal air. Pay-per-Click would be useless here because no one searches for "SunMate." Pay-per-View ads on a site like RenewableEnergyAccess.com, on the other hand, would give them the opportunity to introduce the new concept to solar dealers and installers.

Ad Content:
The wording of the ad needs to be different for Payper-Click and Pay-per-View. A Pay-per-Click ad is specific and entreats the reader to click, but only if they are interested. A Pay-per-Click ad claiming "Free Solar Panels" but only offering them with the purchase of a $10K system will spend a fortune on clicks from everyone who wants something for free. The same ad as Pay-per-View would be far more effective on a solar-oriented site where most people who see the ad are interested in buying a system anyway.

Tracking:
There are two ways to track the effectiveness of ads; clickthrough statistics and simply asking people where they heard about you. Neither method is highly accurate and depends on the product, industry, and offer. Some advertising campaigns require thousands of sales to be successful, others require only one. Typically, an excellent clickthrough response for a targeted Pay-per-View website ad is about 5 clicks per thousand views (0.5%). Newsletter Pay-per-View ads can average 3 clicks per thousand.

So,
Pay-per-View advertising can be an ideal way to promote your product or service to a welldefined target audience. It is critical, though, that you deal only with well-known, reputable providers and that you design the advertising campaign and the ad itself with Pay-per-View in mind.

Pay-per-View pages:The Next itunes

Problem; A reader is travelling to Rome,Italy,on his or her next vacation and only wants a couple of chapters from holiday travel guide to taly not the whole guide.Selling pages,chapters or any other sections of a book or journal onlne for under$5 is another story.The barrier is not technical,it is financial.Fee is big problem. Solution;The purchase of single items are aggregated until the total purchase amount makes it cost-effective to submit the payment to the credit or debit card issuer.

Freemiums in Social Gaming World

Problem;the major difference between social games and video games is that the former are free.If players dont have to pay,where does the return on investment for companies like EA? Solution;
Advertising Freemium

In a freemium game its not a rational decision to pay; its an emotional one.
The emotions that freemium preys upon tend toward the primal: theyll make you wait (or let you buy faster progress), and theyll make you want revenge (which you just need to gear up a bit more to achieve). Theyll make you want to top the leaderboards, make you jealous of what other players have that you do not (rather like in real life!), or offer you an even more heightened sense of accomplishment if youd just kindly drop a few cents here and there. Or theyll try and offer you more and better thrills. And its worth noting that these methods arent just limited to social and mobile games

Q1.What is freemium ?
The word freemium is made up from the words free and premium. It describes a business model where you give a core product away for free and sell premiumproducts; like the way Skype gives away free computer calls and sells voicemail, calls to landlines and other products.

Examples
The internet phone service Skype is a prime example of the Freemium business model. The program that enables you to call between computers is offered free. If you want to call from a computer to a landline or have a voicemail associated with your Skype account you have to pay. The free program has hundreds of millions of users and only 10% of these free users are paying customers.

This succinctly illustrates how Freemium has become a very popular business model in the software and internet services industry. Similar successful models are also emerging in the publishing, consulting and music industry.

Q.2
An assessment of social networks' potential hinges on three metrics: subscriber growth, time spent on the network, and CPMs. advertising rates, measured on a CPM (cost per thousand impressions) basis , are likely to remain low compared to other forms of online advertising as well as traditional media.

Q.3 Zong System vs Spare change system

Spare Change Spare Change is a payment application currently on social networks Facebook, MySpace, and Bebo that lets users make purchases from social network applications and games and then make payment via PayPal. Users can open a Spare Change account and fund it with a credit card, PayPal, bank account, or mobile phone. According to the Web site, consumers can use Spare Change balances to purchase hundreds of applications easilyan "iTunes-style business model for social networks. Zong Zong is a payment provider that allows consumers to purchase virtual currency, gifts, and other applications on social networks via the mobile phone in lieu of traditional payment methods. Zong uses the mobile carriers with whom it partners to bill customers for their transactions. Once the consumer has paid his or her mobile phone bill, Zong in turn pays the merchant. The distinguishing feature for Zongs business model for micropayments is its nine-year relationship with mobile carriers globally. However, at this time Zong is currently available for digital goods and services only.