Till few months back, it looked as though news paper and journal industry would die due to the growing shift of readership from print to online. Though news paper industry quickly embraced click and portal model, it looked like going the carriage industry way due to lack of monetization solutions. However, survival instincts are deeply ingrained.
In February, Newsday announced it will soon start charging for access to its online content. The Wall Street Journal followed suit in May. And in August, The Boston Globe announced its intentions to charge readers for online content, while its parent, The New York Times Co., (NYSE:NYT) is exploring a possible — but not certain — sale of the newspaper. Meanwhile in June, the Newspaper Association of America (NAA) engaged around 11 companies including Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT) and IBM (NYSE:IBM) to develop innovative monetizing solutions for online content.
In response to NAA's request, Google announced yesterday that it is developing a micropayment scheme to allow users to buy digital content through its Checkout online payment system. NAA is reported to have received proposals from Microsoft, IBM, Oracle (NASDAQ:ORCL), and other companies as well. It is but natural that the solutions proposed by these companies would be different from each other in significant ways - furthering their own long term business interests.
Google's solution could be more acceptable to NAA as some of its members blame Google or the Internet for their declining fortunes. In May, Google's VP of search products and user experience, Marissa Mayer, made it clear that Google supports publishers through online traffic referral and advertising revenue. But she made no mention of her company's interest in providing a micropayment infrastructure to assist publishers seeking to charge for content. Rather she suggested that the future of news publishing might look more like Wikipedia or Knol entries, which grow longer and gain search relevance over time, rather than articles posted afresh every day.
Google intends to make its micropayments vehicle available to both Google and non-Google properties by 2010. The problem of small change payment is supposedly overcome by aggregating purchases across merchants and over time. Google hopes to mitigate the risk of non-payment by assigning credit limits based on past purchasing behavior and having credit card instruments on file for those with higher credit limits and using its proprietary risk engines to track abuse or fraud. Moreover, Google hopes to make merchant integration extremely simple. It is too early to say if Google's micropayment solution can save the newspaper industry but it is definitely helpful for other online content providers.
