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Two weeks after its launch, a Web site created by BitPass Inc., a Palo Alto, Calif.-based micropayments startup, has attracted nearly 100 bands and other musicians selling single songs and tracks at prices ranging from a quarter to $1.50. Designed for so-called independent musicians seeking an outlet for their music other than established recording studios, BitPass's mperia.com has also served as a demonstration site for the company's transaction technology, which allows consumers to buy small bits of content such as single photos, articles, or songs, for prices that often fall under $1. BitPass, which owns the site, hosts musicians' content, handles all downloads, and processes payments. In return, it takes a 30% cut of each transaction, double its normal transaction fee on payments under $5. “If the artist charges $1 for a track, he'll get 70 cents, and that's as much as some artists will get from a major (recording) label for an album,” says Matthew C. Graves, chief operating officer for the 15-month-old BitPass. Graves estimates musicans typically earn from 60 cents to $1.20 per album, depending on costs, sales, and other terms. BitPass, which emerged from its beta-testing phase with a commercial micropayments product last December, is competing in a red-hot market for online music that has attracted major players such as Wal-Mart Stores Inc. and PayPal, which late last year slashed its transaction fee by two-thirds on the typical 99-cent song download (Digital Transactions News, Dec. 8, 2003). The company called its site Mperia as a play on mp3.com, a discontinued music-download site, and on the acronym for the Recording Industry Association of America (RIAA). BitPass has not promoted the site beyond word-of-mouth, but plans to begin consumer promotion when it has doubled its roster of sellers. That may not take long. The company thought it would take a month to get to 100 sellers, and it reached that milestone in half the time. BitPass thinks it has struck a nerve with independent musicians. “It's about more than micropayments,” says Graves. “What we heard from musicians was, 'help me build my community, help me promote myself.'” Consumers use BitPass by funding a BitPass “card” through a credit card or PayPal account, then spend down the account at amounts as small as 10 cents or so by clicking on BitPass icons displayed by participating online merchants. The typical prepayment is $75. BitPass stands in as the merchant and pays all merchant discount fees, charging merchants 15% of transaction amounts for tickets under $5 and 5% plus 50 cents for amounts over $5. BitPass serves close to 1,000 merchant sites currently, a fourfold increase since December. The company will not reveal transaction volumes.
