Electronic tip jar

Tim Harford looks at Radiohead’s well publicised new direction in selling music — optional payments — and likens it to an electronic tip jar. That leads him to conclude that this isn’t a sustainable business model.

I have wondered whether a small change in the rules might make it more sustainable. When you are at restaurants (especially if you pay by credit card), there is room left for a tip. On a credit card, you have to actively not pay a tip by writing in the payment amount again and crossing out the tip. I think that it is this that makes tipping in restaurants sustainable. Take it away but, say, letting people deposit a tip later on or mail it in and we would find that tipping would quickly disappear.

Radiohead effectively opted for the latter policy on their site. In order to tip, you had to fill in credit card or other payment details. That was costly compared to just downloading the album for free. But what if they required people to put in payment details even if they chose to leave a tip of $0. My guess is that they would earn lots more as it then becomes trivial for people to tip a dollar or two.

4 thoughts on “Electronic tip jar”

  1. Nah, people would get pissed off at having to provide their details for no reason. I’m not even sure it’d be legal to collect in these circumstances. And people might just put in a fake number anyway.

    Perhaps they could demand a nominal minimum, e.g. a dollar, assuming that covered credit card transfer costs?

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  2. Yeah, once I’ve got my credit card out, $10 is really easy to tip compared to $0.

    What works really well on me are those “donate via Paypal” buttons on websites. I click it, and I go to a pre-filled donation form. My web browser logs me into Paypal, and all that’s left is to hit “1” “0” and it’s done.

    Make it easy and the tips will flow.

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  3. hi do all tip jars have to go through paypal as i have heard some horror storys to say the least and it has stopped me tipping people a few times that i would of loved to have tipped .

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