Google’s Micropayment System for Publishers Underscores the Harsh Economy

Google confirmed it is working on a micropayments system for the Newspaper Association of America, which asked Google to submit some ideas for how its members could use technology to generate more revenue from their digital content.

The micropayment system, which is still in the planning stages but could be available on Google and non-Google properties in 2010, would enable payments from pennies to several dollars by aggregating purchases across merchants. The micropayment system would be built on Google Checkout, the payment system Google rolled out three years ago.

The move, unearthed by Nieman Journalism Lab Sept. 9, is a surprise for two reasons. First, the company makes the bulk of its money from ads it places alongside content from 25,000 newspapers and other sources it indexes and serves online. Second, Google has a storied history of spats with newspaper publishers in the course of indexing their content on its massive search engine.

But perhaps this seemingly unholy union underscores a unity in the face of greater financial adversity. The newspaper industry has been struggling for years and faces challenges charging for its online content in a world where Google seeks to index its content for free.

Even Google is not immune. Google’s contextual links advertising model, which has propelled the bulk of Google’s $17 billion annual revenues, has shown signs of slowing in the last few quarters. A micropayments solution for newspapers, which post millions of pieces of content online daily and see it surfaced by Google, could provide a welcome new revenue stream for the search giant.

“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,” Google wrote in its proposal.

Google said in an e-mail to eWEEK the solution 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’ll work with them to ensure that their content can be easily discovered if they want it to be,” Google said.

The micropayment system could comprise:

• Single sign-on capability for users to access content and manage subscriptions.
• The ability for publishers to combine subscriptions from different titles together.
• The ability for publishers to create multiple payment options and include content behind a paywall.
• Multiple tiers of access to search, including snippets only with “subscription” label, preview pages and “first click free” access.
• A behavioral advertising system.

This isn’t the first time Google has breathed word of a micropayment system as alternative revenue source to pure advertising. Google CEO Eric Schmidt said on the company’s second quarter conference call that the company could create such a platform for programmers to charge for applications running on the company’s forthcoming Chrome Operating System.

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