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Feb. 16, 2011, 11:15 a.m.

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?

POSTED     Feb. 16, 2011, 11:15 a.m.
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