Jonathon Rentzsch talks a bit about credit cards and the iTunes Music Store and breaks out a very likely scenario about how Apple can manage to charge $.99 to a credit card successfully. The key to this is understanding that there are two phases to a credit card transaction: authorization and capture. Basically, they're banking on you to buy more than one song.
Bill Bumgarner lays out a case that Apple may have partnered up with the credit card companies to try out a micropayment system that is different than the traditional model of credit card transactions. He also makes a point that is valid from both the payment side as well as the music business side:
"The launch of the Apple Music Store has the unique characteristics of making a really huge amount of media noise while being accessible only to a niche market [Macintosh owners with a US billing address]. At least initially. This provides an excellent opportunity for the companies involved to gauge the public's reaction without actually having to commit to a stupendously large potential market."
Me. I think that both Bill and Jonathon may be right. I just watched a few of my purchases from yesterday come in batched together on an invoice. And, the credit card companies would be foolish not to explore the micro/minipayment space with Apple on this one. It's a controlled enough market to be manageable, yet a big enough one to be meaningful.
Like I said, there's more to this endeavour than just selling songs at 99 cents a pop. [James Duncan Davidson]
This seems like an easy gamble for Apple. Don't bill until you hit a reasonable threshold. Most people can't stop at just one or two songs... just ask my bro :-)
