From "Subscription Hell" to Precision Pricing: A History of the Evolution of Online Pricing Models

When machines become the main users, why are we still paying for human habits? From subscription models to x402 payment standards, explore how web pricing has evolved from satisfying human habits to accommodating the bursty demands of machine-to-machine transactions. This article is from AididiaoJP, an article by Sumanth Neppalli and Nishil Jain, and is compiled, compiled and contributed by ForesightNews. (Synopsis: Netflix joins forces with Epic to enter the “video game subscription system”: the mobile phone is in hand, threatening Microsoft, Nintendo, Sony console three giants? (Background supplement: Short seller Michael Burry “opened a paid group selling class” after being crushed by AI: annual fee of 379 mg, 60,000 people have subscribed) There are two very different schools of thought in the crypto space. One view is that everything is a market, and pricing things gives us clarity. Another view is that crypto is a better fintech infrastructure. For, as with all markets, there is no single truth. We're just combing through all possible patterns. In today's session, Sumanth dissects how a new payment standard is evolving on the web. In short, it raises the question: What would happen if you could pay for each article? To find out, let's go back to the early 1990s and see what happened when AOL tried to price network access by the minute. We explored Microsoft's path to pricing its SaaS subscriptions. Along the way, we explain what x402 is, who the key players are, and what it means for platforms like Substack. The web's business model is disconnected from the way we use it. In 2009, the average American visited more than a hundred websites per month. Today, the average user opens fewer than thirty applications a month, but spends much more time in them. It was about half an hour a day then, and now it's close to five hours. The winners, Amazon, Spotify, Netflix, Google, and Meta, became aggregators, bringing together consumer needs and turning roaming behavior into habits. They price these habits on a subscription basis. This works because human attention follows patterns. We watch Netflix most nights; We order weekly from Amazon; The Prime bundle includes shipping, returns, and streaming for $139 per year. Subscriptions eliminate a lot of ongoing pain. Amazon now pushes ads to subscribers to boost profit margins, forcing users to either watch ads or pay more. When aggregators can't justify a subscription, they revert to an advertising model, like Google, which monetizes attention rather than intent. Look at what's in advertising right now: Bots and automation now account for nearly half of web traffic. This is largely driven by the rapid adoption of artificial intelligence and large language models, which makes the creation of robots more accessible and scalable. API requests account for 60% of the dynamic HTTP traffic handled by Cloudflare. In other words, machine-to-machine communication already accounts for the majority of traffic. We designed today's pricing model for purely human networks, but traffic is now machine-to-machine and bursty. Spotify on the way to work, Slack at work, Netflix in the evening. Advertising assumes eyeballs, someone is scrolling, clicking, thinking. But the machine has neither habits nor eyeballs. They have triggers and tasks. Content pricing is a function not only of market constraints, but also of the underlying distribution infrastructure. Music has existed for decades in album form because physical media need to be bundled. It costs almost the same to burn one song or twelve songs on the same CD. Retailers need high profit margins, and shelf space is limited. In 2003, when the distribution medium shifted to the web, iTunes changed the unit of account to songs. Buy any song from iTunes on your computer for $0.99 per song and sync it with your iPod. Splitting bundling increased discovery, but it also eroded revenue. Most fans buy hits instead of those ten filler tracks, squeezing the per capita income of many artists. Then when the iPhone came out, the infrastructure changed again. Cheap cloud storage, 4G, and a global CDN make access to any song instant and smooth. The phone is always online and has access to an unlimited number of songs in an instant. Streaming rebundles everything at the access layer: $9.99 per month to listen to all recorded music. Music subscriptions now account for more than 85% of music revenue. Thales was unhappy about this: she was forced back to Spotify. Enterprise software follows the same logic. Because the product is digital, the supplier can charge for the exact resources used. B2B SaaS providers offer predictable access to services on a monthly or annual basis, typically “per seat” charge, and offer tiers with limited functionality, such as $50/user/month plus $0.001 per API call. Subscriptions cover predictable human usage, while metering handles burst usage of machines. When AWS Lambda runs your function, you pay exactly for what you consume. B2B transactions often involve bulk orders or high-value purchases, resulting in larger deal sizes and significant recurring revenue from a smaller, more focused customer base. Last year, B2B SaaS revenue reached $500 billion, twenty times that of the music streaming industry. If most consumption is machine-driven and bursty now, why are we still pricing like we did in 2013? Because we designed today's infrastructure for humans to make occasional choices. Subscriptions became the default choice because a month's worth of decisions was better than a thousand micropayments. It wasn't cryptocurrencies that created the underlying infrastructure that can now support micropayments. There's an element to that as well, but the web itself has become such a massive behemoth that it needs new ways to price usage. Why micropayments failed The dream of paying by cents for content is as old as the web itself. Digital equipment companies' Millicent protocol promised less than a cent in deals in the 1990s. Chaum's DigiCash has conducted a banking pilot, and Rivest's PayWord has solved the cryptography problem. Every few years someone rediscovers this elegant idea: what if you could pay $0.002 per article and $0.01 per song, exactly what they cost? The American Online learned this in 1995 at a rather costly price. Source – The Case Against Micropayments They charge for dial-up Internet access by the hour. For most users, this is objectively cheaper than a fixed-rate subscription. However, customers hate it because it comes with a mental burden. Every minute online feels like a meter running, with every click carrying a tiny cost. One can't help but write down every small cost as a “loss”, even if the amount is small. Each click becomes a micro decision: Is this link worth $0.03? When America Online switched to unlimited plans in 1996, usage tripled overnight. People pay more to think less. "For you…