Why are microtransactions important or necessary?

Question

I read about IOTA Data Marketplace and discussed it with my friend. One question stood out from our discussion that neither of us couldn't find an answer to. Is there (or will there be) an actual need to pay for data in real-time?

For example, why would something need to pay for weather data every time it requests it? Why not just pay an annual or monthly bill?

Answer 1

Paying an annual or monthly bill requires a centralized accrual system, which often accrues billing fees. This is one potential example.

Accruals and billing are made for humans to manage finances in a timely way as we have certain limitations. In a machine to machine economy, the need for accrual and billing isn't necessary if debits and credits can be calculated and processed in real time, which allows us to avoid the middle step of accruals and therefore, save time, energy, and fees.

Answer 2

Paying an annual or monthly bill is only possible when:

• seller and buyer trust each other with the high annual amounts (buyer pays in advance but doesn't get data or seller sends data in advance but doesn't get money)
• buyer never or rarely ever changes the data provider
• buyer doesn't need data just once

since:

• the buyer doesn't want to trust anyone with the high annual amounts. He would rather just pay small amounts whenever he really needs the data in case he gets overcharged, so he doesn't lose much.
• the buyer wants to get data from the cheapest, most accurate, etc. data provider possible. If another provider has a better data deal, he could switch. Immediately!
• Some of the buyers devices only need a small amount of data once or twice (e.g. testing, etc.). These shouldn't have to subscribe to any services

microtransactions are necessary.

Answer 3

The IOTA Data market place is currently just a demo. That said you are actually paying for a subscription to a data stream, not just per request. By paying you get the "frequency" or secret key for that data stream. Payment for data streams is an option but not required; It's a good way to monetize data without having to deal with payment fees. If you want to offer it for just a day, month or year is up to the supplier of the data I suppose.

Answer 4

Another important point which isn't covered in the others answers: You don't have to pay directly a high amount or later a high amount. As a company it gives you the freedom and ability to work with your money in realtime. You don't need complex models for how you should work with your money. How and when you pay who, how liquid you need to be. There are many humans which are just doing this stuff. They find the best way and time to pay whatever the company need. And also the other side: When to get the money from partner-companies. etc. etc.