The newspaper industry is all abuzz about Google’s submission of a micropayment proposal to the Newspaper Association of America (NAA, see latest ad at right). Nieman Journalism Lab first reported Google’s involvement and has been birddogging it the last couple of days. Google basically proposed to make its Google Checkout service available to publishers who want to charge for content. You can read the eight-page Google proposal here. Nieman’s Zachary Seward followed up to try to get Google to elaborate, but was simply told that “we don’t have any specific new services to announce but we’re always looking for ways to make payments online more efficient and user-friendly.”
In fact, the document is pretty standard boilerplate material about Google Checkout, but with one interesting twist. It notes that “micropayments will be a payment vehicle available to both Google and non-Google properties within the next year. The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time.” This approach would enable subscribers to set up accounts spanning multiple media properties and would aggregate their charges into a single bill. So, for example, a reader could subscribe to The New York Times, The Economist and Advertising Age and automatically receive access to pay-walled material from those publications without having to jump through registration and sign-on hoops.
Visitors who were not subscribers to those services could choose to pay by the drink for content. The whole process of enabling access and billing a few pennies for it would be handled by Google’s back-end servers. There are even options to enable free-trial access with a paid conversion option. All charges would be aggregated into a single bill. Google also proposes ideas to index content and display search results differently depending on a subscriber’s status. In other words, a subscriber to the Washington Post would see different search results than a non-subscriber and would also be able to click through to a full article without registering.
Journalism Online’s Grand Assumptions
Google is only one of several vendors that submitted bids to the NAA. Journalism Online, the much talked-about Steven Brill venture that has reportedly signed up 500 newspapers as clients for its micropayment service, also submitted a proposal that details its commission structure for the first time. Seward analyzes it here and the entire submission is here. Journalism Online basically proposes to take a 20% commission on subscriber revenues.
Maybe we’re missing something, but the Journalism Online math looks pretty twisted to us. Its proposal includes the business model for a mythical one-million-print-circulation newspaper (now that is a myth) with 800,000 home delivery subscribers and 20 million unique online visitors. Annual print circulation revenue is estimated at $600 million a year, which translates into $750 per subscriber. Our own local paper charges about $400. The model also estimates that the website will have 2.2 million subscribers in year two, which means that 11% of the unique website visitors are paying something for content. Again, this sounds optimistic. Renewal rates are given an equally buoyant estimate of 90%.
The NAA has said it won’t pick any winners but rather is performing a service for its members by inviting submissions. Members are free to do business with anyone they want. Keep an eye on Nieman for continuing coverage of this latest development in the evolution of pay walls.
This entry was posted on Friday, September 11th, 2009 at 7:48 am and is filed under Advertising, BusinessModel, NewMedia, Revenue20, Solutions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.