tipjoy is pretty cool

One can make a compelling argument that much of the growth in blogging and experimental web ideas is tied to Google's Adsense and related products. By setting efficiently creating a 4-way transaction between the site creator, site visitor, advertiser, and Google, Adsense created a microtransaction system that worked. I know, you're now thinking "Microtransactions? I thought that was when I would pay the site creator 1/10 of a cent for their content. This is advertising!" It doesn't look like a microtransaction system.

But it is. And unlike the various attempts to create microtransactions in the past, it worked. See, the problem with microtransactions was that even when the amount of money being paid was trivial, the number of steps required to make a micropayment still killed the procehttp://www.blogger.com/img/gl.link.gifss. I would happily pay a few pennies to xkcd, but am I willing to do the work to keep my account full, click "I Approve" every time, etc. There were a lot of attempts but nobody seemed to overcome the user experience challenges. Adsense succeeded by piggybacking on something people wanted -- better targeted ads -- and making the payment transparent -- Google splits the payment from the advertiser with the site creator.

The results make everyone happy. Visitors only click on things they want, site creators get subsidized, advertisers reach high quality prospects, and Google makes a zillion dollars. Only downer is that some people don't like ads and want something different. In the real world, this is the National Public Radio model. Online, we're back to microtransactions and one new company -- out of Y Combinator -- is Tipjoy.

Here's a Tipjoy button:



If you click it, it will ask for your email address to leave a tip. No checkout, no big approval process. Eventually, if you go to the Tipjoy site you will be able to create an account and fund your tips via Paypal. Sort of like Digg, but with the added filter of "is noting this site worth 10 cents?" If it takes off at all, it should generate some excellent search and ranking data.

The Tipjoy folks are even doing one other clever thing. To avoid being a money transfer service -- which no small startup wants to be -- your tips can either go to charity or into an Amazon gift card.