Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Guest Post: Here's Why Google's Paywall Will Work (And The Times' Will Fail)

Posted by Guest Writer - July 28, 2010

By Matthew Buckland - memeburn.com

Google has been quietly testing a new paywall system for publishers it is calling "Newspass". According to Italian newspaper [1] La Repubblica, Google has been piloting the service with publishers in Italy.

The search giant will apparently launch "an integrated payment system" allowing users to buy news content with just "one click". Newspass would allow publishers to use a single infrastructure for Web, mobile and tablet computers to monetise their content.

Importantly, La Repubblica reports that 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. It would be a one-click payment for access, not too dissimilar from Google Checkout [2].

Paywalling systems on news sites have been controversial for a better part of a decade. There is justified scepticism about whether they work or not. A handful of publications around the world, largely in the specialist finance field, have got it more-or-less right, but for the most part, paywalls have not been a success.

Google's new effort is an acute case of Déjà vu. In the early 2000s many online publishers tried to paywall their content, but were forced to retreat in the face of what became known as the "web 2.0″ era. This saw a tidal wave of user generated content and blogging content hit the net, a source of traffic for publishers. Google News [4], an aggregator [5] of the formal online publishing sector and a big source of referral traffic, launched in 2001. Quite simply, publishers did not want to miss out on all the eyeballs that were being sent their way by putting paywalls in place.

Now, driven by a slowdown in advertising, a financial crisis and an inability to make significant revenue out of online advertising, the paywall debate has resurfaced with vigour -- with much of the noise coming from the Rupert Murdoch camp.

What's different about Newspass

Google's new initiative is however significantly different from the failed paywall attempts at the start of the decade. Its paywall initiative does not follow a silo approach which involves each individual online publication creating their own bespoke paywall and payment system. This, it could be argued, contributed to the failure of many paywall systems in the past because it was a barrier to entry, causing complication and admin for users who just wanted to get their story.

Google's initiative involves a comprehensive solution across multiple sites -- and a simpler, streamlined combined value proposition than many individual website paywalls. This is also a better fit with web content consumption behaviour patterns, because readers consume content across a broad range of sites. They don't like to be siloed to just a few publications -- that's the print world. A Newspass that grants access to multiple sites may just represent fair value for a user.

Take the analogy of satellite TV. You pay once and you get a bouquet of hundreds of channels. The transaction is simple and easy. You know you're getting good value for money too because there is an economy-of-scale effect at work. Now imagine another scenario: What if you have to pay individually for each TV channel and go through the effort, time and extra cost to do so. It's a no brainer really.

Whether Newspass will work really depends on the publishing sector and whether they embrace the initiative. If they take a combined decision under the auspices of global publishing bodies like the World Association of Newspapers [6] or IFRA to support the move, which then leads to rapid adoption, then it may work.

But if viewed with suspicion because it involves a third-party like Google or because publishers are keen to implement their own systems on an individual basis -- then, once again, paywall attempts will fail.

A colleague of mine once described Google as the "crack cocaine" of the online publishing industry. Many traditional online publications have a love-hate relationship with the search engine. On the one hand Google sends a rush of traffic, but on the other aggregates content that it does not pay for. Then there is the sticky issue of advertising. Google has the better model -- and one that disintermediates publishers from their advertisers. Quite simply, the online publishing industry has no idea what to do about it.

I'm a paywall skeptic, but I feel the pain of online publishers who want to generate more revenue to ultimately increase quality and value for their readers.

This, a third party, neutral service, offers the best chance of a paywall system working. Google is probably the only internet player able to implement such a broad-ranging initiative. Of course the news industry could come up with their own paywall system, but would the industry ever be able to come together to agree? A paywall system needs a dispassionate third party like Google.

Should there be a strong take up of Newspass in formal online publishing sector, you may eventually see publications clamour to be part of it -- because it may even become an indication of quality for the user. Then as more publications join, so the free options narrow for the user. Consequently users will find that there may be simply no choice but to buy a Google Newspass.

There is no shortage of content and distraction on the web. What's often harder to find is quality content. If Google's paywall initiative contributes to increasing quality, then it's good for the industry.

But whether Newspass will work or not is, well, entirely up to the publishing industry.

Article printed from memeburn: http://memeburn.com


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