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October 28, 2010

Google’s $5m charitable donation to the newspaper industry will surely not include Murdoch

Google is to give $5 million dollars to organisations trying to find innovative ways to continue the practice of journalism, while estimates of traffic to News International sites’ front pages has declined by 43% and the number viewing stories by 88%.

Google, having strained relations with many US newspaper publishers, has donated $US5 million to encourage innovation in digital journalism. Today Nielsen estimated the number of UK web users going beyond News International’s front pages to their paywall in order to access subscription content is around 362,000 362,000 monthly users. They also estimates that before the paywall went up, content from Murdoch’s papers averaged 3.1 million unique monthly visitors. It is now only 1.78 million with just over 20% going on to access subscription content.

TechCrunch published today that Google executives have felt so bad about the newspaper industry’s malaise and blaming itself for all that’s gone wrong, it intends to give away $5 million dollars. But on the proviso that only those finding “innovative ways to continue the practice of journalism” will receive the funds.

Google will be giving away $2 million to the John S. and James L. Knight Foundation, with $1 million going to the Knight News Challenge and $1 million going towards continuation of US Journalism grant making. The remaining $3 million will be spent internationally.

I can’t really see that Mr Murdoch will be one of the many beneficiaries and he has in the past accused them of “stealing” his content and having announced: “The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid content, it will be the content creators — the people in this hall — who will pay the ultimate price and the content kleptomaniacs who triumph.” Google, content kleptomaniacs?

It is worth quoting Google in full on Techcrunch’s donations story: “Journalism is fundamental to a functioning democracy. So as media organisations globally continue to broaden their presence online, we’re eager to play our part on the technology side — experimenting with new ways of presenting news online; providing tools like Google Maps and YouTube Direct to make websites more engaging for readers; and investing heavily in our digital platforms to enable publishers to generate more revenue.” Not to mention the $5 million dollar tax write-off.

And while in this guilty frame of mind, Google has plans to release a micro-payment system later this year that links to paid newspaper content directly from search results called Newspass, in another attempt to save the newspaper industry. Newspass will provide news organisations with micro-payments for direct links to their properties from Google News.

Basically the system works by Google News providing both paid and unpaid results. If a user chooses to click on the paid results, they will be charged a fee via Google Checkout; if they don’t want to use Google checkout they won’t be able to read the content.

In a report by CNN, Italian newspaper La Repubblica is reporting that Google is already piloting the service with publishers in Italy and has been contacting Italian newspapers. Henrique de Castro, a Google vice president, said in a translated statement, “Google wants to be partners, not competitors, with the newspaper industry.”

Google will launch “an integrated payment system” allowing users to buy news content with just “one click” and Newspass would allow publishers to use a single infrastructure for web, mobile and tablet computers to monetise their content. Consumers will have a single log-in across a multitude of news sites that would be flexible enough to accommodate various kinds of payments, including long-term subscriptions and one-time micropayments.

Murdoch’s paywall initiatives seems to have had a predictable result: that of falling subscribers. The BBC argues that the number of people buying online subscriptions at The Times is very low, meaning much of the audience behind the paywall, that 362,000 of which Nielsen says it is confident, are either print subscribers or people who have free access, and “if only a fraction of people are paying online, that suggests that the 362,000 could be off and that the real number is far lower.”

Murdoch’s paywall idea for news sites has been highly controversial and there has always been justified scepticism about its ability to work: only a handful of specialist financial publications around the world have got it more or less right, but for mainstream, general news, paywalls have not been a success.

In the early 2000s many online publishers tried to put their content behind a paywall, but were forced to retreat in the face of what became known as the “web 2.0” era, which saw a tidal wave of user-generated content and blogging.

Now, driven by a slowdown in advertising, a financial crisis and an inability to make real money out of online advertising, the paywall debate has resurfaced with vigour, with much of the noise coming from Rupert Murdoch. The Times controversially implemented its paywall earlier this year and ever since the reports talk of plummeting readership figures.

Google’s initiative does not follow the Murdoch’s approach, which involves individual publications creating their own bespoke paywall and payment system. This, it is argued, contributed to the failure of multiple paywalls because it constitute a barrier to entry for users.

The Times’ solo paywall attempt was just repeating the mistakes of the past, it seems. Google’s Newspass is a no-brainer: it proposes a one-stop solution and, as a neutral service, offers the best chance of a paywall system working as it is one of the few internet players able to implement such a broad-ranging initiative.

Google argues that it drives traffic to newspaper websites and newspapers can easily prevent the web search engine from accessing their content if they choose to do so. This unprecedented charitable donation will not be going anywhere near News Corp’s bank account though.

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