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February 16 2011

16:15

Take that, Cupertino! Google undercuts Apple’s subscription plan with a cheaper one of its own

Back in 2009, we broke word that Google was working on an e-payment solution for publishers that would be based on its Google Checkout platform. Google’s proposal (pdf) to the Newspaper Association of America said that the company’s “vision of a premium content ecosystem includes”:

• Single sign-on capability for users to access content and manage subscriptions

• Ability for publishers to combine subscriptions from different titles together for one price

• Ability for publishers to create multiple payment options and easily include/exclude content behind a paywall

• Multiple tiers of access to search including 1) snippets only with “subscription” label, 2) access to preview pages and 3) “first click free” access

• Advertising systems that offer highly relevant ads for users, such as interest-based advertising

Google’s got plenty of targeted advertising options (#5), and First Click Free is old hat by now (#4). But Google took a big step toward fulfilling the rest of that vision (#1, #2, and #3) today with the announcement of Google One Pass, “a payment system that enables publishers to charge consumers for articles and other content.” And coming on the heels of Apple’s less-than-publisher-friendly subscription announcement yesterday, Google’s alternative may seem like a breath of fresh air.

First, Google is selling flexibility. No requirement to offer the same deal through a Google One Pass payment system as through other means — which means bundling with print subscriptions is a whole lot simpler than with Apple. Print customers can enter a coupon code to get free access to a website. Want to try a metered model, or experiment with putting more, less, or different content behind a paywall? No problem. It’s device-agnostic — so if you want to sell an all-access, all-platform subscription, no problem there either. (It’s also a micropayment platform, for the few still living who believe in per-article micropayments as a viable model.)

Second, as Lee Shirani writes in the announcing blog post: “With Google One Pass, publishers can maintain direct relationships with their customers and give readers access to digital content across websites and mobile apps.” That sentence isn’t detailed any further in the initial announcement or docs online, but it sure sounds like a nice way of saying, “We’ll let you keep all the customer data Apple isn’t letting you have.”

And, most key of all, Google isn’t demanding the 30 percent cut Apple does. The announcement doesn’t share cost details, but the FT is reporting Google will take 10 percent of any subscription revenue. So selling a $15/month subscription via Apple would net $10.50 versus $13.50 via Google.

The announcement’s a lot to digest, but three quick thoughts:

— With the timing, it’s easy to see One Pass primarily as a competitor to Apple’s subscription plans. But note that the focus is primarily on web access, not app access. (Note that the word “Android” — Google’s mobile platform — is mentioned nowhere.) While mobile apps get a shoutout in the announcement, Google notes that it’ll work only “in instances where the mobile OS terms permit transactions to take place outside of the app market,” which likely means it’ll only work in Android apps, which are still a secondary priority for most news orgs, for better or worse, and where getting users to pay anything for apps has been a challenge. At least for the moment, One Pass is more of a direct competitor to Journalism Online’s Press+ than it is to Apple. It’s an infrastructure play.

— Frankly, I’m a little surprised Google’s even taking 10 percent. The transaction costs themselves shouldn’t be any higher than what Google Checkout regularly charges, which is 2.9 percent plus 30 cents a transaction (plus volume discounts). Sure, building and maintaining the record-keeping system for subscribers and the tools for distinguishing free/paid content will cost something. But Google’s consistent model has been to undercut paid competitors by making good free offerings, and I’d have thought just keeping the Checkout fees would have been the play, to soak up as much of the market as possible.

— What Apple is selling publishers is not just an easy payment system — they’re selling the 160 million user accounts with active credit cards attached. That’s about 70 million more than PayPal. How many of you have a credit card on file with Google Checkout, which has struggled to gain relevance and market share?

November 05 2009

00:27

Google CEO Eric Schmidt envisions the news consumer of the future

For all the bluster about Google as an enemy of the news industry, you might be surprised to learn that Eric Schmidt, the company’s CEO, is kind of a triumphalist for mainstream media, big newspapers, and print.

He took questions from reporters this afternoon at Google’s offices in Cambridge, and I asked him, among other things, why Google News had recently begun attaching a “(blog)” label to some news sources — a move I criticized last month. Schmidt ended up bringing up bloggers’ moms:

Me: A very small question. Google News very recently added a label for blogs, to differentiate from non-blogs. It seemed weird in 2009 to make that distinction. I wondered, did you have any input on that or —?

Eric Schmidt: I was not directly involved in that. There seems to be a difference between blogs and traditional news. It’s sometimes hard to distinguish because many people in the traditional news are also bloggers.

Me: Or they use a blog platform.

Schmidt: Or they use a blog platform. So we’re trying to find that line. And it’s hard to articulate what that difference is.

Me: How would describe that line if it’s not based on the tech behind the publishing platform?

Schmidt: No, it’s not the technology. My guess is — again, I’m speculating, which is always a mistake — it has a lot to do with the infrastructure around the writer. So a blog that’s associated with a major, legitimate organization — of which, I think, the majority, if not everyone, in the room is associated with — would be, I think, treated differently than an individual blogger who’s using his or her right of free expression to say whatever he thinks. So the presence of an editor, as an example. You know, an editor that’s not your mom.

That is, for what it’s worth, not the distinction Google News is making: The “(blog)” label is supposed to be attached to any news published with blogging software. At the time, I thought Google might be throwing a bone to newspaper companies that don’t like being lumped with amateur news sources. And while I’m sure the new label was not important enough to reach Schmidt’s desk, his framing of that distinction — “the infrastructure around the writer” — is an interesting one.

I also asked Schmidt about the concept of a “hyperpersonalized news stream,” coined by Google VP Marissa Mayer to describe a customized flow of information from a broad range of news sources. Does Google have aspirations to build on that concept?

Schmidt: We have about ten news stream ideas, of which hyperpersonalization is one. And, again, I’d rather not talk about specific products or even prioritize them, but I would make the following observation: In five or ten years, what will the primary news reader look like?

Well, that person will be probably on a tablet or a mobile phone, probably the majority of the reading will presumably be online not offline, just because of the scale of it. It’ll be highly personalized, right? So you’ll know who the person is. There’ll be a lot of integration of media — so video, voice, what have you. It’ll be advertising-supported and subscription-supported, so you’ll probably have a mixture. Think of the Kindle as an example. The Kindle is a proto of what this thing could look like. People will carry these things around.

So if you start thinking about that, it becomes pretty obvious what the products need to be: more personalized, much deeper, capable of deeper navigation into a subject. Also, show me the differential. Since you know what you told me yesterday, just tell me what changed today. Don’t repeat everything.

As some news organizations begin charging for digital content, I wondered, how is Google positioned to aid or take advantage of those moves? I mentioned the company’s proposal to power micropayments for news sites with Google Checkout.

Schmidt: The first question: What percentage of news organizations will charge for content? And it’s entirely their decision. If they do so, then we want to make sure that we have products that they can use to help them charge. Right? Because we’re in the infrastructure business. We respond. But, to me, that’s a relatively straightforward infrastructure decision. Could we get them to use Google Checkout, other payment systems, and so forth? But I think it’s early to talk about that.

We also, for newspapers that are trying to solve the revenue gap problem, we’re working hard on stronger advertising products for newspapers. And we’ll see how well they do, but it remains an unsolved problem. That’s probably all I — everything else is tied up in discussions with specific —

David Beard, editor of Boston.com, asked about a remark Schmidt made last month regarding Google’s “moral responsibility” to aid the news industry. Schmidt’s reply:

Schmidt: We have a responsibility. We have not yet figured out how to exercise that responsibility…We’re looking for new ideas. It’s a hard problem because, as everybody knows, printed circulation has declined, and the online use of newspapers has exploded positively. So you’ve got a bridge problem between one and the other, and we want to help. We really do.

A few other tidbits outside our purview:

— Schmidt said invite-only Google Wave is “getting ready for a much broader distribution…very soon,” which he clarified to mean within weeks.

— Surveying the laptops of reporters in the room, he said, “We’ve got a couple Macs — always my favorite.”

— And asked about something Microsoft CEO Steve Ballmer said, Schmidt replied, “I’ve learned not to respond to quotes by Steve Ballmer.”

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