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The Green Sheet Online Edition

September 28, 2009 • Issue 09:09:02

Will Google grab NAA micropayment business?

The Newspaper Association of America distributed a plea to select companies for new methods NAA members can use to monetize their online content. Google Inc. responded in July 2009 with an eight-page proposal. In an official statement, Google said its proposal submission was consistent with its "effort to help publishers reach bigger audiences, better engage their readers and make more money."

As people increasingly forgo their daily print papers in favor of Internet news sites, newspapers across the country are experiencing a decline in traditional subscriptions. Meanwhile, papers that have put some or all of their content online are reporting a surge in online readership. To remain viable, they must learn how to make their digital content generate revenue.

Google's solution

Google could combine two possible approaches. The first is ad placement. With Google's AdSense, relevant ads are fed to a site once the site's owner places an ad widget there. The site owner receives money when visitors click on the ad.

The second approach is micropayments, which can be facilitated through Google Checkout. Teaser content can be viewed in a Web site's public area, and readers wishing to read a full story can click on a link to pay a small amount (a micropayment) to view the complete story.

Consumers often use credit and debit cards to pay for traditional newspaper subscriptions - providing ISOs and merchant level salespeople (MLSs) with a revenue stream - but they generally use alternate payment forms for micropayments when such options are available, leaving ISOs and MLSs out of the loop.

Melody Wigdahl, Global Merchant Sales Director for UseMyBank Inc., said, "Overall, micropayments is sort of the Holy Grail in e-commerce. Everyone seems to be reaching for it, but no one has ever really been able to pull it off successfully on a wide scale."

In a recent press statement, Randy Bennett, NAA Senior Vice President of Business Development, said the NAA "regularly makes requests for information to various companies to make our member newspapers aware of new technologies, systems and resources available to them. We have received some intriguing responses, and individual newspapers will ultimately decide whether to pursue relationships with any of the companies that participated."

According to Jeff Sigmund, the media contact for the NAA, the responses were inadvertently made accessible on the public area of the association's Web site through a technical error.

Monopsony

In 2005, separate class action lawsuits were filed against Google by The Author's Guild and its member authors, and publisher The McGraw-Hill Companies Inc. In cooperation with several libraries, Google digitized the libraries' books to benefit researchers. It then made digital copies publicly available through its search engine.

Books outside the public domain are copyright protected and cannot be reproduced or distributed without permission of the copyright holders. A combined preliminary settlement was reached between Google and the plaintiffs in both cases in October 2008. A final court ruling is pending. And on Sept. 15, 2009, Precursor LLC released a white paper entitled Googleopoly IV - The Googleopsony Case: How Google extends its search monopoly to monopsony over digital information. A monopsony exists when there is a single buyer for a commodity or service.

Google's controversial approach to providing access to online content could cause newspapers to shy away from its proposal. But the newspapers may have other options. Chris Gaither, Senior Manager, Corporate Communications at Google, said he believes about 10 companies submitted proposals to the NAA.

For now, the newspaper's micropayment market appears to be wide open. "This is a niche that ISOs should be getting into, if possible, because it can be a huge market," Wigdahl said. "And if Google takes it over, ISOs could be on the outside looking in." The Green Sheet, Inc.

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