Money for nothing (and your clicks for free)

Saturday September 24, 2005
Divmod has an idea for an internal accounting system that I think is really exciting.

(That's right. I think our planned accounting system is cool. Perhaps I've had a bit too much kool-aid this year...)

For a while we wrestled with the idea of "Divmod Dollars" - how are we going to bill for our services out of a fixed pre-paid pool? Each individual "click" in the system should generally be free, charging you only internally,and only billing you if you overflow some large pre-paid limit. This seems to be the key to a successful micropayments system - paying for a reasonable amount of usage up-front so that each transaction doesn't have to worry you. Phone companies do this by charging for "minutes" (or, less popularly, for bits), ISPs for "bits", and airlines do it to a lesser extent by using their rewards program with "miles". For the wide variety of services we had planned there was no physically analagous unit of stuff.

So instead, we're going to charge in an internal unit, like a subway token. We call it the "divmid". The core part of the plan is that all services that you buy from Divmod will have to be purchased in divmids rather than in dollars. Convenient interfaces will be provided in various places to convert from sources of funds such as a credit card, PayPal, or e-gold.

As soon as we can get our accounting server up and running, we are going to start selling Divmids. Divmids will be available to our existing subscribers at a reduced rate, and to the general public at an initial cost of $0.60USD or so.

For now.

We've painfully discovered that e-mail is a bad first service to launch, especially on brand-new infrastructure. We've found, time and time again, that our platform needs tweaking, and while we haven't had problems losing users' data or having serious interruptions in service, the amount of care we have had to put towards the objective of stability and reliability has been prohibitive. For example, as a service like flickr improves, it "gets a massage" several times a month, and nobody minds because of their cute maintenance page. If those same users' email had disappeared (beta disclaimer or no), they probably wouldn't have been so charitable.

So instead, we are going to be publicly launching a set of simpler, more self-contained services, and gradually working up to our grand vision of an automated communications platform. Our first service should be available as soon as next week - I'll let Amir describe that one in a separate post.

As the value and diversity of services you can purchase with one divmid goes up, we will raise the price commensurately. In other words, our customers are effectively our venture capitalists. If you buy divmids, and the services become worth something, you can sell them. It's not a share in the company - and it is therefore not priced out of the reach of mere mortals - but it is something that ultimately represents our success. On the other hand, there is the risk that Divmids will suddenly become valueless, or decrease in value if we can't provide certain services any longer.

We do not plan on providing a way to directly convert Divmids back to dollars directly. Continuing with the subway token metaphor; when you buy a subway token and the transit authority raises its rates, you can't just take your tokens back and turn them into cash. Instead, we plan to set up an exchange where people can sell Divmids to each other rather than buying direct from us.