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October 12, 2009

Can the Google Micropayments System Save Online News?

For over ten years now, when publishers first started to put their content online for free, there has been an almost continuous and fractious chorus of discontent about “giving news away for free”. Now, just as online advertising revenues have overtaken television in the UK, it seems as if this thorny issue has come to a head, with attacks on the BBC, bankruptcies, and talk of The Times of London being put behind a paywall next month, etc. But will charging for content actually work?

Many options for providing online news are being discussed at the moment, the most prominent of which is for Google to build a micropayments system for access. Taken from Google Checkout, this system would finally allow newspapers and magazines to charge for content.

At the heart of the problem are persistent threats to the newspaper industry’s bottom line. The quarterly revenue data for US dailies, published by the Newspaper Association of America, shows a year-on-year drop of some thirty percent in print revenue and almost sixteen percent online.

To address the issue, Google’s micropayments system, although still in its planning stages, aims to launch next year. According to, it will be “fast-tracked to deliver reportedly ‘extremely simple’ merchant integration and a solution to the major problem of transaction costs that currently inhibits micropayment plans from being implemented widely on the web.

This may prove to be a partial answer to the industry’s diminishing revenues. But just by putting content behind a paywall cannot justify James Murdoch’s recent attack on the free content provided by the BBC at the British taxpayers’ expense, as the industry reels from the loss of ad revenue. People just won’t pay.

The problem of charging for access is that although the Google rescue plan seems to have merit, most people are highly reluctant to pay for online news. A recent UK/Harris Interactive poll shows how resistant we all are to paying for reading newspapers online: results of the poll show that while a miserable 5 percent of people would be prepared to pay to read newspapers online, forty-eight percent responded that they would only pay if it was coupled with a discounted subscription to the print edition, and The Guardian has offered a novel alternative to this: that print and online news should work in tandem.

It has long been argued that people are tactile and that newspapers themselves would never be compromised. That makes sense, as it is unthinkable that people read entire newspapers online; it is far too dense to read on a screen, although with the introduction of e-readers, such as the Kindle, this is changing.

As a whiff of what is to come, The Spectator recently launched a subscription-based iPhone application, run by EE. This company has also launched iPhone apps for other major titles to alleviate the pressure in the newspaper/magazine industry. But, when the BBC tried out the app they considered it a “complete dud” as it was “pitifully slow”. The reporter tried it out and had to download the page he was reading every time he switched to another app and back. “Worse,” he said, “it’s just a facsimile of the paper version, and there’s no easy way to search it or to jump to a particular article.

Much has been reported of late on the survival of newspapers, with several major publishers having already filed for bankruptcy, such as the LA Times. Almost all of the publications involved have blamed online. This, no doubt, prompted James Murdoch to weigh in so heavily, with his acerbic attack on the BBC, wrapping up his address with, “the only reliable, durable, and perpetual guarantor of independence is profit.

However, the ongoing rant of the publishers is unhelpful, as subscriptions are still a barrier that most people are not willing to breach unless, as sees it, “a true micropayment system would operate invisibly and simply accumulate charges on the user’s monthly bill without an explicit confirmation for every click. That’s exactly how electricity bills and long-distance telephone bills work…it would be as simple as a click of a button, and tracking and billing would happen in the background.

Maybe, but one of the major hurdles yet to be overcome is cultural. Newspapers have not adapted adequately to online news provision, sticking firmly to replicating their print editions. As Peter Horrocks, Director of BBC World Service, has already argued, mass broadcasting doesn’t really work. makes the same point: “We are seeing more fragmentation and specialisation.” This concurs with Mr Horrocks’ findings that “newspapers need to figure out what they do well and report on that.” And publishers need to focus far more on presenting their information in multiple formats rather than rely exclusively on their newspapers/websites and
start building online communities.

It would certainly make a lot of sense if the print media started to branch out into other directions so as to work out new, potentially successful business models that revolve around social networking. And perhaps while they’re at it, one of most obvious requirements in this new paradigm would be to value the public far more than they do through greater interaction.

It seems as if there are many more questions than answers at the moment. The Spectator seems to have made a mess of its subscription launch and News International’s knee-jerk plans to lock out some Sunday Times content behind a paywall is likely to falter also.

It will be interesting to see how plausible it is to charge for news, as Murdoch Jnr. may yet rue the day he treats readers of online news as mere freeloaders. It is certainly interesting times ahead for online news provision and its social media fallout.

John Sylvester is the media director of V9 Design & Build and an expert in search engine optimization and web marketing strategies.