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Google moves toward micropayments for newspapers

Is it an olive branch for the beleaguered (and Google-bashing) publishing industry, a move to encroach upon Facebook's turf in the micropayment wars, or a bit of both?

Caroline McCarthy Former Staff writer, CNET News
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos.
Caroline McCarthy
3 min read

With micropayments and transaction platforms a buzzworthy sector of the Web right now, it's no surprise that Google would want to get in on the game.

But Mountain View's pitch is a little bit different: the payment platform it plans to build, according to Harvard's Nieman Journalism Lab, is geared toward newspapers that want to charge for digital content.

Google's plans are detailed in a document the company sent to the Newspaper Association for America. The document, a response to a query from the association, also requested more information pertaining to paid-content models.

"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," explained the document (PDF) posted Wednesday by Nieman Lab. "The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time. Google will 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 our proprietary risk engines to track abuse or fraud. Merchant integration will be extremely simple."

This is interesting, as Nieman Lab points out, because Google's plan aggregates payments into a bundle for processing, something that could potentially quell publisher concerns about transaction fees. The plan is very preliminary, obviously.

"The Newspaper Association of America asked Google to submit some ideas for how its members could use technology to generate more revenue from their digital content, and we shared some of those ideas in this proposal," according to a statement Wednesday from Google's PR department to Nieman Lab. "It's consistent with Google's effort to help publishers reach bigger audiences, better engage their readers and make more money."

Google's Checkout product, the online transaction service that would likely be the base for a micropayment system, has been around for a few years now. But it hasn't made a huge dent in far bigger competitor PayPal, and it's also been experiencing some big problems, as my colleague Tom Krazit reported Thursday.

It ought to be pointed out, of course, that Google has been the target of harsh criticism from the newspaper industry (as well as other sectors of the publishing business) for profiting from third-party content. Wall Street Journal editor Robert Thomson went so far as to call online news aggregators (not mentioning Google by name) "parasites or tech tapeworms."

Meanwhile, the payment platform that's been getting the most scrutiny and interest in the tech press these days has been, of course, Facebook's "credits" system. But while Facebook's pitch thus far has been toward nonprofits looking for small donations and game developers selling virtual goods, it's still impossible to discount the fact that Google's micropayments move could be aimed at staking a claim in the same territory.

Note: This post was expanded at 7:09 a.m. PDT. And on Friday morning, the Associated Press reported that Google was one of several tech companies, including IBM, Microsoft, and Oracle--that responded to the Newspaper Association of America request, though the AP story offered no details on those other companies' responses.