Micropayments: Could Google Make It Happen?

Sep 15th
posted in

Remember how the news media wanted Google to come riding to the rescue and save them, and their failing business model?

Well, Google might have found a way.

This should be of huge interest to anyone who produces content on the web.

IF

...it comes off.

Micropayments

Google is planning to roll out a system of micropayments within the next year. Micropayments, as the name implies, are small payments - a cent or even a fraction of a cent - and the idea is that micropayments can be used to pay for accessing web content.

Google sent a paid content proposal to the Newspaper Association of America outlining their ideas. Micropayments will be an extension of Google Checkout, Google's PayPal competitor.

While currently in the early planning stages, micropayments will be a payment vehicle available to both Google and non-Google properties within the next year,” Google wrote. “The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time.”

Micropayments are not a new idea, of course. People have been suggesting micropayments will be the next big thing for quite a while now. Jakob Neilsen got it rather wrong in 1998:

I predict that most sites that are not financed through traditional product sales will move to micropayments in less than two years. Users should be willing to pay, say, one cent per Web page in return for getting quality content and an optimal user experience with less intrusive ads. Once users pay for the pages, then they get to be the site's customers, and the site will design to satisfy the users' needs and not the advertisers' needs."

Will Google be the first company to make micropayments work? It remains to be seen, but if they do, this will be the biggest game-changer on the web since PPC.

The Decline Of News

The news industry have been howling as their outdated business model falls apart. Their days of running regional oligopolies are fast coming to end, eroded by the ubiquitous web and the low cost of online publishing. The media is fueled by advertising, and as their readership fragments, the value to advertisers drops.

But what happens if 100% of a newspapers revenue came directly their readership? Micropayments may make this possible.

The big question is: who would pay for the garbage the media serves up? Why should we pay for regurgitated press releases and stories about celebrities shopping expeditions?

Micropayments could help increase the quality of news. Paid news outlets, like STRATFOR charge $349 for annual membership. How can they do this? By providing a level of analysis and research you don't get from mainstream media. Clearly some people are prepared to pay for news that isn't driven by advertisers and the lowest common denominator.

However, the subscription price is still a barrier for most. But what if micropayments, by introducing economies of scale, made it possible to get quality news, analysis and content for a few cents a week? What happens when the price is so low you barely even notice you are paying it?

The scale of the web, plus the tiny charging increments, could be a game changer. And not just for news. This opportunity applies to anyone in the web content business.

How Would This Work?

Nielsen may have got the timing wrong, but he had some good ideas about how a micro-payment system should work:

A true micropayment system would operate invisibly and simply accumulate charges on the user's monthly bill without an explicit confirmation for every click. That's exactly how electricity bills and long-distance telephone bills work. True, people wouldn't make many long-distance calls if they first had to discuss the fee with an operator (though we certainly made calls back when we had to talk to a long-distance operator and acknowledge charges for each call). In any case, telephone companies now simply add up the calls and put them all on a single bill. Intellectually, you know that it costs money to use the phone and turn on a light, but if you want to talk to somebody, you pick up the phone. And if the room is too dark, you switch on the light. You don't go out to the meter every few minutes to check on your electricity bill.

A micro-payment system should be quite different from existing payment systems. You won't be asked to fill out your details each time. Rather, it would be as simple as a click of a button, and tracking and billing would happen in the background.

Google Extends Their Reach

With Adsense, Google cleverly figured out a way to click the ticket on content it didn't own or produce.

The problem with Adsense is that it works best when placed on content heavily geared towards commerce. Micropayments opens up a business model for other types of content, content that is not easily aligned with a commercial imperative.

Imagine the potential for high quality, non-commercial content. Imagine the potential for channels like YouTube. On demand television and movies for a few cents. With micropayments, the volume of content Google could click the ticket on gets much, much bigger.

But the big question remains....

Will users pay the price?

What do you think?

Poscript by Aaron: Clay Shirky published an article in 2003 about fame vs fortune & micropayments. And, while I have generally been skeptical about micropayments, we recently had an interesting thread about this topic in the forums that changed my perspectives of the topic.

Published: September 15, 2009

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Comments

September 15, 2009 - 4:23am

Most intriguing is how Google will push out content to Google searchers, biased towards Google "partners". Surf with a Google account to see paid content (charged thru your Google account). What will the public see?

Search "restaurants" in Google maps/local, and see all restaurants? Or only those with reviews? Or only those with reviews that are in a Google-preferred microformat?

Paid content brings in the concept of equal access, which involves civil rights (in the US). That's a slope Google has avoided with its claims of algorithmic determination of search results.

We live in interesting times.

September 15, 2009 - 4:43am

There will always be more than enough sites that have the information for free. Such 'micropayment-free' sites will thrive. Google wanted to kill competition by giving everything for free and now they want to revert it??

TOO LATE :-).

If tomorrow Google starts charging for viewing detailed maps, I'll be going to Bing, Yahoo, Mapquest, WhateverFreeSite to do my searches. And I'll take 10 people with me within a few days. Same applies to other things that used to be free and suddenly are not.

Besides, I'm not going to keep any credit cards saved with Google or its partners.

September 15, 2009 - 4:41am

OK lets imagine scenario... google wants to charge us for surfing web... premium content... exclusive... so me with non-exclusive content but free am attracting more visitors and driving sales via affiliates or what ever and generate income... premium publishers may hate me... google then can't make 'search' because it had to disclose what is free and what is paid... like now organic and organic in organic in future...

That would compromise their search are basis of their business model. If they could somehow have monopoly on search and nobody would be able to do it they could theoretically, do what ever they want... but they are also on the market and micropayment system is hitting very basis of their business model.

Let's say I am AOL and I decide to charge you some pennies for all my content... users will bounce from "Premium Content Sugn-up Form" like 99.9% nobody would do such a suicide...

Google with bunch of multi-billion businesses decides to charge own video, maps, and their partners content... and finally what some percent will bounce from "Premium Content Sugn-up Form" but you would still have Craig who do not pay a shit... Yahoo and Bing as an alternative premium content provider and huge space for hunt that would open market for new startups, ideas, projects...

Web is divergent thing it develops own way... who would ever believe that somebody or anything could not depend on organic traffic and grow to #3 website on the planet? Zucberg has found his own way without SEO and organic traffic... also google almost never shows Facebook 'fun pages' groups or anything like that even if some of them are very good facebook is blacklisted... but they so not pay a shit...

Web evolves and micropayments would only harm google... too many guys want to jump on that place but people at the web is like fluid you can't sit on them... they simply flow... just flow... and do not allow more pressure than gravity hold them

September 15, 2009 - 5:25am

Google could add a micropay option at the bottom of the search results as another revenue stream. I suspect that is where they would add it because they would much rather have a paid ad click for 25 cents than a chance at earning a minority share of a potential $1 conversion.

September 15, 2009 - 6:12am

They could also add toggle (show/hide) elements on search results, like:

Website title
.. description text snippet...
[click to expand the page]

That way most users would stay on google.com :) That is their long-term goal, I'm afraid...

September 15, 2009 - 2:34pm

Sure, we've all become accustomed to getting info of all types for free. But have you noticed the sharp decline in reporting quality and analysis that are the hidden price we're paying as income evaporates for news organizations? To the extent people see this and appreciate higher quality offerings, micropayments can work, and make news organizations viable again.

September 15, 2009 - 8:12pm

Totally agree about the watering down. Sorta a chicken vs egg scenario though...media keeps responding to lower revenues with lower quality products. I have to imagine that the companies that manage to break this trend will likely do so outside of the Google ecosystem.

September 15, 2009 - 5:23pm

* What do the other search engines do? If Google is charging and others are not, what happens?

* What about people who include references to this paid content in their web writing?

* What about people who link to this content from their website? If people started linking or stopped linking more/less to paid content wouldn't it mess up the whole link popularity algorithm?

* Doesn't this make Google the ultimate publisher? If they are "publishing" the news and then charging for the news in their SERP, who really owns the content? Doesn't this just make the newspapers content divisions of Google?

September 15, 2009 - 8:11pm

Google won't charge for everything...they will suggest publishers try charging for content THROUGH A GOOGLE CONTROLLED CHANNEL which can be monitored and exploited by Google for the benefit of Google. ;)

There is a fair use clause for quoting content. Although if TOS say that no quoting is allowed there might be some issues with it.

People will link less frequently at the paid versions and more frequently at the rehashed free blog versions.

Google gains the benefit of being a publisher with little to no expense to them. For legal reasons they would never want to wear the publisher label on their sleeves though!

September 16, 2009 - 3:11am

... because 80% of them are MFAs. Those who feature paid content risk no link-love from webmasters ;).

September 16, 2009 - 4:38pm

Is there too much noise in the media? Yes, but that's why I've got my RSS reader tuned just how I want it. It's really not hard to skip over a story if I don't see any value in the headline. It's only slightly more difficult to delete a subscription if a news source has served me "one too many" bad articles.

The exception here for me is industry news as opposed to general news. When it's related to my career, I need to know that I'm getting cutting-edge and COMPLETE information. I'm willing to pay for that information because it's an investment, but I don't see it happening at the Google level. In that case, Google would just be a middle man adding little value and diluting the money my publisher would get, thereby diluting my content. I would subscribe straight to the source(s).

September 17, 2009 - 3:39pm

Do Google charge for these micropayments ?

September 17, 2009 - 4:50pm

It's not out yet, but when they do launch it you can expect they will do something similar to how they launched Google Checkout.

Step 1: Make it essentially free to buy marketshare, become the marketplace, and kill the business model for competing start ups.

Step 2: 12 to 24 months later start charging a fair to normal market rate for the service.

September 21, 2009 - 5:12pm

So, here's how it works:

Your ISP/cable company, teleco - whatever, adds another nominal fee to your already confusing and bloated cable/phone bill.

This 'content' fee, is charged to every account holder, individual or otherwise. The gubment pools these funds and then distributes them based on engagement and referral traffic.

Furthermore, a small percentage of every participating site's ad revenue would feed into this collective pool.

Content providers (websites) are rewarded for uniques, content producers (writers, bloggers, vloggers, etc.) are rewarded as rights holders for impressions. And even the end user, is rewarded for their promotion of engaging content.

think of it like a multi-faceted pyramid scheme with micropayments at every level of engagement.

The price to access content on the web is neglibible(but not free). And the revenue is distributed to those individuals, websites, marketers who are able to capture the most attention from this content.

Google becomes the auditor - and finally agrees to police copyright infringement by creating a content submission process which makes it very difficult for image, video or copyright theft. Or better yet, allows the rampant syndication of content and simply assigns the micropayments to the proper rights holder. - a 'borrowed' gallery of megan fox images may generate a few pennies for the webmaster who 'borrowed' them - but the registered source of the images will always receive the larger piece of the pie for that engagement.

What details did I leave out...

September 22, 2009 - 1:52pm

I am hoping such a micropayment system never takes hold (at least not to that level) ... if it did that would create so much hype/spam/junk AND many content producers would not be able to make a livable wage without creating hype/spam/junk.

October 5, 2009 - 4:40pm

Google is dominant only because it's serving searchers better than alternatives. If it messes with injecting "premium content" crap in search results, my prediction is they will loose its bread & butter in no time. Google isn't the only search game there is, it's only the best for now. If it starts poluting search results voluntarily like that, it will no longer be the best.

October 5, 2009 - 8:39pm

Google has already started injecting promotion of Google maps and Youtube and Google product search and Google News and Google Checkout and has yet to lose marketshare from such efforts.

October 7, 2009 - 6:42am

this a good new for me

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