Mountain View, California — Search engine giant Google is planning to roll out a micro-payments platform to support the newspaper industry that would enable them to charge a nominal amount for to buy digital content through its Checkout online payment system, an idea that could help publishers struggling with the impact of the Internet, according to a report on Wednesday.
This onerous Google project was first revealed by the Nieman Journalism Lab, in a document that Google sent to the Newspaper Association of America (NAA) in response to a request for paid-content proposals that the association sent to several technology companies to formulate ways to help online publishers monetize digital content more effectively.
Harvard University’s Nieman published the Google proposal on its website, niemanlab.org, and described Google’s willingness as somewhat “surprising” given “the newspaper industry’s tenuous relationship with Google.”
The Google document, which was disclosed by the Nieman, suggests that the micro-payment system will be an extension of Google Checkout, a payment system that Google rolled out in 2006 and positioned as a competitor to eBay’s PayPal service, the leading system for online payments.
“While currently in the early planning stages, micro-payments will be a payment vehicle available to both Google and non-Google properties within the next year,” Google wrote. “The concept is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time.”
The micro-payment system could enable consumers to purchase a package subscription to an assortment of publications and then pay for other stories on an individual basis. But in a separate statement, Google said on Thursday it had no specific products to announce yet.
Google will lessen 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.
Google’s popular news aggregator website Google News has again and again drawn ire from some US newspaper publishers for linking to their articles without payment. The search giant has oftentimes dismissed the criticism and countered that it is providing newspapers a free service by driving traffic to their websites.
Ten other organizations reacted positively to the associations request, including Microsoft, I.B.M. and Oracle. But Google’s plans are particularly interesting because of the delicate relationship between the newspaper industry and the company.
Newspapers have been grappling with an industry-wide financial crisis that has devastated many dailies. With print advertising revenue and circulation is rapidly dropping, US newspaper publishers have been searching new ways to begin charging for content on the Internet and the NAA has been involved in the effort.
Randy Bennett, senior vice president of business development for the industry association, said the request for proposals was made following a meeting of its members in May. He said it is now up to individual newspapers to decide whether to pursue relationships with any of the companies that submitted proposals.
The Google document secured by Nieman said the payment platform under development by the Internet giant, an extension of Google Checkout, would be “available to both Google and non-Google properties within the next year.”
“Google believes that an open Web benefits all users and publishers,” the document said. “However, [open] need not mean free.
Google, which has long enjoyed on advertising for the overwhelming majority of its revenue, said that it believed that paid content could be a good complement to advertising.
“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 company wrote.
The Google proposal, if it is approved, could put the company in competition with Journalism Online, a venture backed by Steven Brill and L. Gordon Crovitz, which has recently said that it had tentatively signed more than 500 newspapers for its services. Those services include “hybrid models for paid content.” Journalism Online is one of the companies that presented a proposal to the association.
In a statement, Google said:
The Newspaper Association of America asked Google to submit some ideas for how its members could use technology to generate more revenue from their digital content, and we shared some of those ideas in this proposal. It is consistent with Google’s effort to help publishers reach bigger audiences, better engage their readers and make more money. We have always said that publishers have full control over their content. If they decide to charge for it, we will work with them to ensure that their content can be easily discovered if they want it to be. As for Checkout, we do not have any specific new services to announce but we are always looking for ways to make payments online more efficient and user-friendly.
Google has been experimenting with new ways to highlight news content and new ways to display it.
“Google has experience not only with our e-commerce products; we have successfully built consumer products used by millions around the world,” it said. “We can use this expertise to help create a successful e-commerce platform for publishers.”
Google also suggested it would share revenue with newspapers like Apple does with music companies on its online music store iTunes.