Google is developing a paid online content model involving both subscriptions and micropayments that it is has proposed to the Newspaper Association of America, Nieman Lab reported. Google submitted an eight-page document to the NAA in response to the association's request for content charging solutions (available here).
Google already has an e-commerce platform called Google Checkout and the new system would be an extension of this.
The company outlines its thoughts on paid online content as follows:
Google believes that an open web benefits all users and publishers. However, "open" need not mean free. We believe that content on the Internet can thrive supported by multiple business models -- including content available only via subscription. While we believe that advertising will likely remain the main source of revenue for most news content, a paid model can serve as an important source of additional revenue. In addition, a successful paid content model can enhance advertising opportunities, rather than replace them.
The document outlines Google's assumption that one of the main challenges of paid online content is to "create a simple payment model that is painless for users." It claims that it could use its expertise in e-commerce and consumer products to "help create a successful e-commerce platform for publishers." And it stresses that, given its position in Internet users' lives, it can help publishers to enable users to find the paid content via search.
Key features in Google's vision of a "premium content ecosystem" include:
- • 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
Using the "fast, secure" Google Checkout, consumers can store their payment information in their Google Account and use this to buy products, both digital and physical. Fraud losses are low, the document says, and tens of millions of users and several hundred thousand merchants are already registered.
Subscriptions and micropayment options
Checkout can already offer subscription payments, and the document promises that the currently "fairly rudimentary" process could be improved to be "more relevant for news and media companies." Micropayments are "in the early planning stages" but "will be a payment vehicle available to both Google and non-Google properties within the next year." The document stresses that merchant integration will be "extremely simple."
"Google believes that there is real power and benefit to publishers in providing these sorts of broad, multi-publication access passes."
The Google document expresses a preference for subscriptions over micropayments, and the company seems particularly keen on bundled packages of content: "Google believes that there is real power and benefit to publishers in providing these sorts of broad, multi-publication access passes." It notes that for such packages, publishers "will receive a revenue disbursement that is proportional to the usage of their content in the package." It is not clear whether this would be allocated per article clicked upon or depending on time spent on each site, however, and this has the potential to be an area of contention amongst publishers involved. Such packages do offer definitive benefits to the consumer, however, allowing users to move freely between publications, as they do now.
With regards to micropayments, the document states that "we do not believe it will be the norm for accessing content." However, it suggests that they could be useful for readers who want to buy single articles that are not included in their subscription, the price of which would be added to their monthly bill. It also proposes a pre-paid service.
Continuing to promote advertising is an integral part of Google's proposal and the document states that "we believe the increased advertising opportunities will likely exceed total revenue from subscriptions." The platform would allow ads to be sold in three different ways: "directly by publishers, sold as part of the Google Content Network, or sold via multiple ad networks through our ad exchange." Advertising could be targeted, based on voluntary data from individual registration information.
The document notes the ways that Google's search engine currently makes paid content discoverable: allowing either a preview to appear in search results if the searcher is not a subscriber, or by allowing one article free via search (the tactic the Wall Street Journal currently takes). "Search engines should know what content a user has access to," the document states, and "assuming the user has access rights, the full content should be available and exposed within 1 click from the search results page." The content to which a user does not have access would be displayed with a price.
The document suggests that Google News could also license and host further content from interested publishers, as it already does for various news agencies without a destination website. It also proposes helping distribute content more widely via repackaging and syndication.
How does Google compare to the competition?
Paid online content in the near future is increasingly seeming an inevitability. In July, the NAA distributed a "request for information" to a range of companies asking for details of their paid online content solutions. As well as Google, ten others responded: CircLabs, Journalism Online, IBM, Mather Economics, Microsoft, MyWire, NewsNav, Oracle, ViewPass and YouData. The NAA has published and summarised all their proposals for the industry's perusal.
Google's proposal is particularly interesting because the company's unquestionable dominance of the search market and its existing relationship with many web-users through services such as Gmail gives it a significant advantage. Plus, it already has a news search engine, Google News. It is definitely well-placed to implement such a system.
One drawback for Google would be the fact that many publishers, due to copyright conflict particularly over Google News, see the company as an enemy rather than an ally. The document suggests that the cut taken by Google from content sales would be comparable to Apple's split on iTunes and the AppStore, which Nieman Lab points out is about 30%. Would publishers be happy to share their revenue with Google in this way?
The most similar and serious competitor to Google's proposition would seem to be Journalism Online, the venture led by Steve Brill and Gordon Crovitz. The start-up already has a detailed business plan in place, including projected revenue increase, and last month announced that over 500 publishers had signed on. So although it does not have the web presence in place that Google has, it has made considerable progress in terms of publisher awareness of its product, and intends to launch imminently. It is also promising to give member publishers feedback about how users are purchasing and reading news, in order to improve their offerings over time. Lastly, it has the advantage of not already having enemies within the industry, and the fact that its founders are from publishing backgrounds. Journalism Online's commission would be 20% of subscription revenues, according to the document it presented to the NAA.
So which proposal will emerge as a winner amongst publishers? Or will they decide to go forward with paid content alone and save on broker fees? There are definitely advantages to working through a third party: ease being prominent amongst these, for both the publisher and the user. But maybe a conglomerate as big as News Corp might have the capability to develop its own efficient system and could persuade others to follow suit.