Google has gotten a bad rap from newspapers for profiting from aggregation while publications teeter on the brink of bankruptcy. But if media companies are going to start charging for content, Google would like to get in on the action.
This week the company announced plans to develop a micropayment system to help newspapers monetize. Google submitted the plan as a response to a request for paid-content proposals by Newspaper Association of America.
And while Google has some experience monetizing viewership online, newspapers aren't going to jump at the chance to put Google in charge of their online revenue stream. Not to mention the problems that are likely to arise from Google's revenue sharing proposal.
For starters, Google is not particularly adept in this area. The micropayment system will be an extension of Google's online payment product that competes with PayPal. And as CNET reports, Google Checkout has had usability issues for most of the summer.
If they can work out their bugs and media companies are interested, Google has outlined a “vision of a premium content ecosystem” that includes subscriptions across multiple news sites, syndication on third-party sites, accessibility to search and different payment options, including a micropayment option for individual articles.
"The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time. Google will mitigate the risk of non-payment by assigning credit limits based on past purchasing behavior and having credit card instruments on file for those with higher credit limits and using our proprietary risk engines to track abuse or fraud. Merchant integration will be extremely simple."
Lots of media companies are contemplating micropayments right now, but unless a mass quantity of publications adopt a scalable strategy, it's going to be hard to market.
To that end, the Newspaper Association of America has received proposals from other tech giants like Microsoft and Yahoo. Also Journalism Online, Steven Brill and L. Gordon Crovitz' venture, has already entered the space and claims to have signed more than 500 newspapers for its services.
Google's approach makes a lot of sense, but the search company does not see this as a permanent salve for the struggling media business. They admit: “We do not believe it will be the norm for accessing content.” Instead, they think that media companies will have more success with straight up subscription services that are already being implemented.
Meanwhile, if newspapers choose to use Google for micropayment, the company would implement a similar revenue sharing agreement to the one implemented by Apple in the iTunes store. Content creators would receive 70% of the profits, while Google would keep 30%.
Even if Google's option turns out to be the most viable micropayment provider, that will be a hard sell to newspaper owners who already feel like aggregators get the lion's share of advertising profits online while they do all the hard work of producing content.
Just this spring, a Wall Street Journal editor called the search giant a parasite for its monetization methods. Newspapers are dying to start bringing in revenue from access fees for their content online. But after years of acusing Google of stealing their revenue online, they aren't likely to jump at the chance to let Google stick its hands into their pockets again. Even if its through an agreement that gives them most of the revenue.