Google Paid Content System Will Crush Publishers

Last Updated Jun 18, 2010 6:00 PM EDT

After weathering years of criticism from publishers, Google (GOOG) has begun experiments on a paid content system that may roll out by the end of the year. I'm sure many publishers are cheering aloud, at least in unguarded moments when no investors are nearby, but I think the entire experience will be a waste.

According to an original report in the Italian paper La Repubblica (via PaidContent), Google has developed a payment system called Newspass:

La Repubblica says that, with Newspass, people will be able to log-in to the sites of participating news publishers using a single login. Publishers will be able to designate what type of payment they want to accept, including subscriptions and micropayments. People who find content from participating publishers in Google search will see a paywall icon next to that content and be able to purchase access directly from there using Checkout.
Publishers have pinned their hopes on getting money from someone -- anyone -- to offset the loss of major print advertising dollars. Business heavyweights from the Associated Press to News Corp (NWS) CEO Rupert Murdoch have railed against the Evil Aggregators That Take Our Money. Behind the grousing lie three assumptions:
  1. Aggregators display too much of publishers' original material -- enough that readers aren't willing to visit the publishers' sites.
  2. Consumers are willing to pay additional money for that original material.
  3. When that's true, summaries like the ones on Google News will be enough to convince them to pay up.
These three assumptions are stuff, nonsense, and wishful thinking. Anyone who has gone onto Google News can see how little of a story appears -- a headline and opening line. That's nothing more than a what a newsstand reveals by displaying newspaper front pages and magazine covers.

A Pew study has shown how disinclined consumers are to pay for news -- as if low online subscription rates weren't evidence enough:

  • Over half (53 percent) of adult American get news online, but only 35 percent have a favorite site.
  • Of those that have a favorite site, only 65 percent check it daily.
  • Of that 65 percent, only a relatively small portion (19 percent, which is under a third) is willing to pay for news online.
Only 6.7 percent of adult Americans are willing to pay for online news, and that includes the ones who already pay.

The assumption about a request for payment being enough to get one is the howler. Ever look at Google's archives? You'll find one listing after another requestion a charge of anywhere up to $5. I'd be surprised if publications that charge make anything significant from it. Why would a quick description and a headline be enough to get most people to even consider paying? There is far too much information available on a news site like Google's. To command money, you must have two things: someone who badly needs an answer, and information unavailable elsewhere.

Most news organizations will find that their assumptions are erroneous, and any pay system will become a curiosity -- possibly generating some revenue, but mostly crushing the spirits of those who thought that they had the magic answer. What publishers need is something worth paying for. Unfortunately, even a pay system from Google won't help on that front.

Image: Flickr user Salim Virji, CC 2.0

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.