Google Offering Micropayments To Newspapers

According to Harvard’s Nieman Journalism Lab, Google recently responded to an RFP/RFI from the Newspaper Assn of America that sought “to gather information about the products and services available from qualified providers with expertise in helping local online publishers additionally monetize digital content, either through transactions (pay for content) and/or through collection of user data for enhanced advertising targeting or other ‘access to content programs.”

In Google’s pdf response the company describes its perceptions of the requirements of a “successful e-commerce platform for publishers”:

  • Single sign-on capability for users to access content and manage subscriptions
  • Ability for publishers to combine subscriptions from different titles together for one price
  • Ability for publishers to create multiple payment options and easily include/exclude content behind a paywall
  • Multiple tiers of access to search including 1) snippets only with “subscription” label, 2) access to preview pages and 3) “first click free” access
  • Advertising systems that offer highly relevant ads for users, such as interest-based advertising

The proposed Google system (partially built, partly in development) would use Google Checkout and mimic iTunes with a revenue split to publishers and Google:

Current models on revenue sharing for the selling of content typically involve a percentage of each sale to Google in order to cover maintenance, bandwidth, processing charges, and profit margin. The Android Marketplace is the most prominent example of this model. The revenue split is comparable to Apple’s models on iTunes and AppStore and consonant with experiments being currently conducted on YouTube.

Google correctly asserts, however, that micropayments are not likely to be widely popular:

While providing an option for micropayments will be important, we do not believe it will be the norm for accessing content

A broader subscription model is more viable, but even so charging for content that consumers have come to expect for free will still be challenging and there will be enormous resistance in the near term.

It’s pretty clear that Google well understands online consumer behavior and psychology. The Google payments platform would compete with several other initiatives in the market, including Steven Brill’s Journalism Online.

Here’s a dilemma: if everyone uses a single platform there are some potential anti-trust issues (which are potentially avoided if pricing is decentralized). In the absence of consolidation around one or just a couple of payment platforms this approach potentially fails because of complexity and friction.

What do you think of all this? Next year we’re going to see lots of pay walls go up around newspaper content.


5 Responses to “Google Offering Micropayments To Newspapers”

  1. WikiCity Says:

    I think this is fascinating, yet sad. I cannot blame newspapers, but for their sake, I hope they do NOT introduce pay walls.

    Internet junkies like me seem to be quick to criticize newspapers, but timid when it comes to realistic solutions. We’ve heard “kill the print”, but let’s explore that for a second…

    In reality, most newspapers’ online editions don’t even come close to paying the bills! If they simply “kill the print”, then many advertisers would leave due to reduced circulation.

    Why is this a big deal? Well, with less revenue, content & coverage would need to be drastically scaled back – creatining gaping holes. This would result in an inferior product, and your local newpaper that you already think sucks would suck even more.

    So, to all the critics out there (yes, I’m one of them), what should newspapers do?

  2. Greg Sterling Says:

    Yes, it’s a very challenging situation. They must generate more revenue from digital but there’s no clear way to do that. Pay walls may dramatically limit ad revenue but ad revenue isn’t paying for most sites. Mobile offers an opportunity to get people to pay to some degree, but that’s also not certain.

  3. WikiCity Says:

    In my opinion, newspapers need more video. One potential solution is to consolidate the local paper w/ the local television station (assuming the community has both), however there are still some antiquated FCC rules (dating back to the time when most newspapers were monopolies) that prevent the cross-ownership of broadcast stations & daily newspapers. This must change, otherwise (as the link suggests), these rules could potentially outlive the newspaper.

  4. Terry Howard Says:

    It seems from the way these newspaper sites set up their pages and place ads that their real problem may be in that they are not putting effort into analyzing performances of various placements and other factors or in enlisting the services of seasoned veterans who have. Testing and revising where they place their ads and in what context could make all the difference, plenty of people are doing it right, why not ask them how?

  5. Print Advertising Says:

    I think that publications also need to explore different print advertising models, including performance-based options for some advertisers.

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