A huge thing to note, even with a large number of unprofitable cases, is not that the YC mantra is flawed, but more likely systems may not yet be in place to facilitate profitability. For example, if there were an awesome micropayment solution I'll bet a lot of currently unprofitable sites could find profitability.
Agreed - I think the minimum viable visa charge (due to high minimum fee) and the increased abandonment rate due to the hassle of using your CC is holding a lot of things back.
I think this is a very necessary startup, but one that's going to be very difficult to pull off well, and will require serious cash.
There are a lot of broken bodies on the micropayment road. Millicent & Peppercoin come to mind to start. Maybe the world has changed since then, but if you were doing a company on micropayments and came to me, I'd want a clear answer as to what you would do that everyone else did not.
You're ignoring the fact that 'want' is just one of many considerations people make when spending money. Things like 'need' and 'affordability' are going to factor in too. Want is probably just the strongest.
I probably should have given another example, as micropayments was just one. Another example would be having a self-serve ad space selling system where sites could negotiate directly with advertisers rather than rely on AdSense percentages.
