TipJoy goes under? Do Social Micro Payments Work?

What do you think? We all know micro payments work in theory. (See Obama Fundraising Data) But that is thousands of people giving $5, $10 or even $20 dollars. What about micro donation fundraising technology? Does it work?

Have you heard of twollars? Twollars at its core is a currency of appreciation. Think of it as a new way to thank people on Twitter. The idea emerged when we noticed the incredible amount of social energy on Twitter; people helping one another, sharing links and content, giving advice and tips etc.

However, there was no way to capture and store all this positive energy. We realized that if we could give this energy a symbolic form, a currency (Twollar), we could harness it, make it flow and be passed on to others. This symbolic currency or Twollar could then be exchanged for ‘real’ money.

Reminds me of TipJoy? Well guess what TipJoy just went out of business. Check out this note from their site:

When we evaluate why there’s been so much hype about payments on Twitter, and yet so little traction for us (and even far less for our competitors) it is clear to us that the reason is that a 3rd party payment service doesn’t add enough value. We strongly believe that social payments will work on a social network, provided that they’re done within the platform and not as a 3rd party. “Simple, social payments” is *the* philosophy needed to do digital payments right, but once a service groks that, they need only to implement it on their own. We’ve been the thought leaders in this space, we see the hype and excitement, and yet we know very intimately the difficulties in gaining actual traction. The only way to get around this is for the platforms themselves to control payments – then all people wanting to operate on that platform would have to play along. We believe that a payments system directly and officially integrated into social networks such as Twitter and Facebook will be a huge success.

So what do you think? What works and what doesn’t in this area? I know at the American Cancer Society we are not using either of these. Your thoughts?