So if I want to buy an mp3 from an artist, and the artist charges me 0.99$ for it, paypal will take ~0.40$ of it. Paypal becomes the artist's 60-40% partner. So this option is clearly not viable. If you go through bitcoin, the artist can keep like 98-95% of the money.
I'm confused. I thought you previously argued for small blocks and not worrying about scaling so much? Isn't it kind of clear that at 3-ish tx per second, Bitcoin won't be used for small payments like this as the fees will have to grow rather a lot higher than they are now?
Currently the (subsidized) cost per tx is about 7 USD. It's pretty clear miners are being paid too much at the moment, their income will have to come down in the future for Bitcoin to be viable. So if you assume the cost comes down from 10% of value stored annually to 2% or so, the cost per tx is still 1.4 USD, and that's extrapolating from the current situation where there's not that much competition for blockspace. Now, you can still cram some more tx into 1 MB blocks than we currently have, but then again that should also create competition for tx inclusion, so more tx currently is more likely to raise fees than lower them.
If tx per second doesn't rise and you can still send 1 USD cheaper than PayPal in a few years time, that means hardly anyone actually uses Bitcoin.