[Spambayes] Two Stage Plan

[Gary Robinson]

OK, but MOST of those expenses go away in the
MS-monopoly-it-goes-along-with-your-software-rental fees, as far as I can
tell, right?

1. Account setup has already happened.

2. There is very little storage per $.01 transaction of an already
registered user. It coule probably be done in, oh, 20 bytes, including
timestamp. yes there is some overhead to carry out the updates, but as an
experienced database guy, I don't think it's going to be too significant for
this application.

3. Your correct about the latency being relaxed for emails. i don't think it
will add significantly to the cost to get an acceptible latency

4. Billing costs. The only billing cost is in loading the account, say, once
per year, and it would probably be part of an overall software subscription
bill that MS would be sending out anyway, if MS is the vendor.  It would be
negligible comparitively. remember that $1 would actually pay for MANY
transactions because the $.01 is being shifted between user accounts all the
time and is reused by the recipient.

5. Authentication. Again only done in the loading of the account, and
depending on whether it's part of a larger software rental package, may be
being done anyway.6

6. Retrieval costs -- outside audits. I think this probably goes away too
for the reasons above but you'd have to spell it out more for me to be sure.

7. Security, etc. Already covered in the MS case for their subscribers.


For a non-MS company to do it, NOT as part of an overall software rental
plan, the expense will be more. But I don't see that it's going to be
remotely $.05 per email, because there is only one "hard" transaction (where
money is actually moved by credit card) per year usually, to fill the
accounts so that they can shift $.01 back and forth by means of very simple
"soft" database transactions (again I'm quite experienced in database stuff,
not only from designing large systems for the phone company, but because of
personally designing and running an online service where people paid by the
minute).

--Gary


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Gary Robinson
CEO
Transpose, LLC
grobinson@transpose.com
207-942-3463
http://www.transpose.com
http://radio.weblogs.com/0101454


> From: "T. Alexander Popiel" <popiel@wolfskeep.com>
> Date: Wed, 18 Dec 2002 13:39:15 -0800
> To: Gary Robinson <grobinson@transpose.com>
> Cc: SpamBayes <spambayes@python.org>, popiel@wolfskeep.com
> Subject: Re: [Spambayes] Two Stage Plan
> 
> In message:  <BA264018.1AEB7%grobinson@transpose.com>
>            Gary Robinson <grobinson@transpose.com> writes:
>>> I'm currently working for a company in the transaction tracking and
>>> aggregation business.  Transactions under about 5 cents still are a
>>> net loss to the vendor, even with significant volumes.  The service
>>> cost is high enough to keep the company afloat (that is, significant).
>> 
>> Ah good. Now we can talk about something interesting.
>> 
>> What is the basis of the 5 cents? Where does it go?
> 
> Alas, I'm not one of the financial guys here, so I can't say with
> any authority, but here's my best understanding:
> 
> 1. There's account setup costs.  These are variable, but typically
>  fairly hefty for the vendors.  I would be unsurprised if there's
>  a fair amount of milking going on here, but there is a minimum
>  level.
> 
> 2. There's data storage costs.  These tend to vary wildly based on
>  who you ask.  I know that the big raid arrays are expensive,
>  though, particularly when you get to dual or triple failure
>  tolerance.
> 
> 3. There's connectivity costs.  These are not particularly high
>  bandwidth, but latency needs to be low and the reliability
>  needs to be extreme.  Anything more than 3 second turnaround
>  is unacceptable, and downtime _really_ hurts.  (The latency
>  requirement might be relaxed if the only product is email...
>  but for stuff like ringtones, customers get annoyed easily.)
> 
> 4. There's billing costs.  Actually doing collections of the
>  money is one of the largest expenses... even if it's just to
>  a credit card.  Somewhere down the line (for typical consumers,
>  at least), a physical mail is getting sent, a check is getting
>  handled and processed... and this cost gets reflected up the
>  line.  While processing fees are generally expressed as a
>  base + percentage of the sum, if you do too many small
>  transactions, then the credit card companies will start
>  increasing the base (so cross-cancellation doesn't help much).
> 
> 5. There's authentication costs.  Fraud is a noticable problem.
>  Note that authentication is not necessarily per-transaction,
>  but it is required on a statistically sufficient basis.
> 
> 6. There's retrieval costs.  Outside audits in particular are
>  expensive.
> 
> 7. There's security and destruction costs.  The data has to be
>  safe from prying eyes, and it must go away after certain
>  lengths of time.  When it goes away, you must be sure it
>  goes away... privacy liabiliy sucks.
> 
> Unfortunately, I don't have the information to actually put
> values to any of these pieces.  I've probably left out a few
> pieces, too.  Only the ambient office knowledge that "<5 cents
> isn't worth it".  We really encourage transactions between $.75
> and $3.00.  Above $3.00, we start imposing additional
> authentication measures.
> 
> - Alex
>