Google’s New Micropayment System

An interesting development has come from a line of communication between the newspaper industry and the mighty Google. As we know, the traditional newspaper business model has been in sharp decline and the industry has been frantically looking for alternative means of collecting revenue within the digital age. Some newspapers have tried their own micro-payment systems, where they have implemented a fee-based platform for individual items of information, individual stories, access to news feeds or to a collection of individual media formats. Generally speaking, they have not been very successful. Processing fees have been a major stumbling block, including credit card fees, chargeback implications and so on.

Historically, Google has been viewed as one of the enemies of the newspaper industry, as it has been charged with the “crime” of presenting voluminous amounts of information, revenue-free. It is interesting to see that Google has engaged in this line of communication with the newspaper business and will be even more interesting to see whether anything fundamental emerges at the other end.

Google’s Checkout system has been in a state of constant development for the last few years. There is no secret that the goal is to equal and surpass PayPal, although they have a long way to go. The micro-payment system they are discussing would be effectively an extension of the Checkout platform. It could theoretically be possible to buy access to information pieces through payments ranging from “a penny to several dollars,” according to Google. It seems that Google will take responsibility for abuse and fraud, by assigning credit limits based on past purchasing behavior and by using their “proprietary risk engines.”

Google does point to existing and successful micropayment setups, such as featured within the popular iTunes app store, where you can download a 99 cent app for your smart phone, for example. Those promoters take a 30% cut of the associated revenue.

Doomsday proponents suggest that something bigger is at work here and that we could see a move towards a broader goal of taking micropayments for access to a wide variety of news-related content. Google however says that they “do not believe it will be the norm for accessing content.”

Expect the new micro-payment platform to be available within the next year, according to Google, which further outlines its “vision of a premium content ecosystem” by stressing that an open web does not necessarily have to mean free. Google recognizes the right of publishers to charge fees for access to their content and it seems that they now want to work to provide a usable micro-payment system for the future.

Do you think this has broader implications?

Matthew Toren