Media: All about ... Google's plans for online news

Plans could open the door to online micropayments, Alasdair Reid writes.

"Google saves the newspaper industry." It would make a great headline for a story, say, about Google trying to come up with a "micropayment" system that allows newspapers to charge online readers on a pay-per-view basis. And, indeed, variants of the headline appeared online last week.

But there was always something missing. The exclamation mark. That said, it's hard to conceive of the exclamation mark that would do justice to this. It would need to be as tall as a tree.

Which is perhaps why British newspaper publishers didn't even flirt with the headline. In fact, none of them really did much with the story. Not in their (searchable, via Google News) online versions anyway. Which is really rather funny when you think about it.

When, in 100 or 50 or (who knows?) ten years' time, someone comes to write the definitive history of newspaper publishing, it may prove rather difficult for them to explain the ease with which Google managed to elbow its way to the table and eat the newspaper industry's lunch. Not to mention its dinner and the greater part of its elevenses.

So this latest chapter could prove equally perplexing. The prospect of a corporation with 2008 revenues of $21.7 billion offering to save a sector it has helped bring to its knees is not without a charming, fairytale dimension.

Last week, Google submitted a document to the Newspaper Association of America in which it proposed a system, based on its existing Google Checkout commerce platform, that would allow all e-commerce operators - not least publishers - to extract "viable payments ranging from a penny to several dollars" from customers. It could be in place by 2010.

Google's move is hardly a surprise. In an address to the NAA conference in San Diego in April, Google's chief executive, Eric Schmidt, said he envisaged a future in which online newspapers would exploit three revenue streams - advertising, subscriptions and micropayments.

Characteristically, though, he maintained that advertising would always account for the biggest slice of the pie.

1. The newspaper industry on both sides of the Atlantic was emboldened to address its collective online cash haemorrhage problem back in May, when the News Corporation boss, Rupert Murdoch, told analysts that he expected to begin charging for news content "within 12 months". Speculation initially focused on subscription models - and attention was also given to the emergence of a new generation of handheld mobile reading devices such as Amazon's Kindle. Kindle 2 now offers monthly subscriptions for a whole range of newspapers and magazines. The Financial Times is priced at $9.99, for instance.

2. Many publishers are nervous about digital subscriptions, arguing that a generation that has grown up expecting a free ride will baulk at such a crude, upfront payment demand. But they concede that the free generation may be more open to the pay-as-you-go concept, especially if the cost per page is suitably tiny. Some analysts believe that entry-level pricing may have to be as low as one thousandth of a penny per page. The beauty of micropayment systems, however, is that (theoretically) they can aggregate these tiny payments into lump sums to be debited from users' accounts each month.

3. Google is not the only show in town. IBM, Microsoft and Oracle have also submitted micropayment system proposals to the NAA. In the UK, the Technology Strategy Board (a government quango sponsored by the Department for Business, Innovation and Skills) has announced that it intends to develop proposals for a micropayment platform. It is soliciting the participation of internet service providers and media owners - from the world of television as well as publishing - and hopes to conduct a public trial sometime in mid-2010.

4. Unfortunately for the newspaper industry (and many other industries come to that), there have been many failed attempts to launch micropayment systems in the past decade or so. The most famous e-commerce payment brand is arguably PayPal - but it has focused on its role as an intermediary for online shoppers making significant single ticket purchases. Less-than-successful micropayment brands include Flooz, Beenz, CyberCash, Bitpass, Peppercoin and DigiCash.

WHAT IT MEANS FOR...

PUBLISHERS

- It's almost impossible to envisage any form of consensus emerging in the UK market. Some publishers continue to insist that micropayment systems will never work; and even if they do work, these same publishers would rather eat their own sick than submit themselves all over again to humiliation at the hands of Google. The reality is that this may prove to be a humiliation deferred.

ADVERTISERS

- Advertisers love newspapers - both on- and offline - and would dearly love the industry to develop a sustainable business model.

- Ten years ago, digital gurus everywhere were confidently predicting that the "old economy" retail giants (and, by implication, the old economy consumer goods manufacturers) would be swept away. They weren't, clearly (largely because they declined to disown their customers), and there's a lesson to be learned somewhere in there.- This makes it even more difficult to swallow when newspaper executives tell advertisers that the travails of the newspaper industry are somehow their fault - the notion being that they're being stingy with their online adspend.

- Nevertheless, advertisers would be as pleased as anyone if newspaper publishers decided, like other sectors of the old economy a decade ago, that they really can aspire to "own" their customers (customers as in readers), even in a digital world.

GOOGLE

- A large part of the traffic on which Google relies is derived from people seeking news. Google managers appear to understand the implications of this. Newspaper publishers do not.

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