Comments

1
"credit card/paypal transactions puts a floor of around $0.5 under each sale"

Micro-transactions of any type won't really work until someone cracks this problem (i.e. lowers transaction costs down to $0.05 or so). Content creators/dealers want to sell lots of tiny bits, but can only profitably charge for them in amalgamated chunks, which tends to lead to the dreaded subscription model. Perhaps they should set up 'tabs' for consumers instead.
2
Did you read Charlie Stross' entire comment? He's not hopeful about the economics, and he explains that in the very next paragraph from the one you cut and pasted:

Asking $5.00 for a 12,000 word novelette with DRM on top is not going to boost sales relative to, say, $8 for a 120,000 word novel, also with DRM. So I expect sales to be no better than their current ebook sales, which is to say, dismal. Let’s be optimistic and say they can shift a thousand copies of each story — 1000 sales via Kindle is enough to put you in the monthly Top Ten Bestsellers on that platform. That’s revenue of $5000 for a story, of which somewhere in the range $1000-1500 goes to the author. More realistically they’re going to sell 100-250 copies, meaning the author might get $100-250, eventually, after a couple of royalty periods (6-12 months). Compared to the $600 they’d get from Asimov’s SF, for example — with their rights back after 12 months.

For a tenth of the words that go into a novel that would earn them $10,000.

Does Not Compute, does it?
3
Jesus Christ, 50¢ to process a damn card? That's awful. I'm totally in agreement with 1, here.
4
I wonder if this sort of thing, or Amazon, or Kindle, or whatever, would work better if it used an Xbox Live system. You buy points, which directly translate from a dollar standpoint. Amazon or whoever makes their profit on the points, and you buy based on that.

$20 = 2000 points.

1000 points buys you the new Dan Brown, or you can flip 100 points for a 40 page story. Amazon pays out to the author based on the point sales. Or is this dumb? I literally just thought of this. Amazon also benefits in that unspent points are monies loaned to them interest free, the same as Xbox Live points.
5
@2 Yes, I did read the whole thing.
His expected price points for short fiction are prohibitively high compared to full-length works. Those high price points are partially dictated by the transaction costs. I'm unlikely to pay even $1 for DRMed short fiction. Then again, I'd never pay $10 for a DRMed novel, so maybe I'm not the target audience.
6
Every dollar is a visa dollar, they'd be very very lucky to get that percentage. My opinion? Do it yourself, or maybe with a little help, and keep at least 50% of the e-book sales, if not all of them. One of the biggest reasons I stopped buying music CD's from labels bigger than a few dozen bands is I never felt like my money was going to the artist. I'd go to the shows because I know that's where they make their money. I don't buy books from Amazon because they take a 55% cut, even for independents, and still require you to move thousands of books to even get noticed. I understand why for the second part, but they're already taking quite a large cut for shipping and handling, if they keep down this path why not just pirate the book and if I like it donate directly to the artist like 20 bucks? I'm sure it's not a sustainable business model, but I can't think of any other moral way.

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