On Billing, and Google, and Disintermediation

Recently talk resurfaced about Google’s plans to launch a one-click payment solution for traditional media. According to La Repubblica, the solution will be called “Newspass” and would be available for Web, mobile and tablet platforms.

Over the past few years there have been almost as many vendors announce a new offering that will be the savior of traditional media as there have been people claiming that traditional media is flat lining and nothing can be done for the patient. Personally I still read broadsheets and subscribe to magazines, I can’t see this changing and the fact that I have a tablet, a laptop and a large format mobile device in my arsenal of gadgets doesn’t make a difference to that fact. Paper is tactile, call me old fashioned but the tactility works for me.

I realize however that there is a significant industry in providing the toolkit that allows traditional media to move to a new model, and one of the most important problems that media companies need to solve is that of billing and subscriptions. I’ve written in the past about this (and helped to write a whitepaper supported by many industry players about the topic) and though it timely to seek the feedback of many of the subscription and billing vendors about this reported move.

I first spoke to Scott Waldrun from Monexa, he was quick to point out the benefits in terms of validation that the Google move (if real) would bring. As he said “right now subscription billing is a very small market [but] the whole space is heating up right now outside of the current SaaS/Cloud billing battleground. It’s good for all of us”. He rationalized the move as follows:

1. Apple has shown people will pay through iTunes/appstore to get content to their devices. This appears to be the real strategy for paid online content as opposed to online paywalls at the NewYorkTimes.com.
2. Google needs their own micropayments solution for the android platform.
3. All the payment gateways (cybersource for example) are looking at strategies for getting into the space. They used to be directly connected to the storefronts for online purchases. Now they are being distanced from the buying decision by “billing” solutions that broker the transaction.
4. Visa just bought Cybersource for exactly this reason.

Tien Tzuo, Founder and CEO of Zuora is never one to mince words. He’s been the number one evangelist for the “new subscription economy” but he was pretty dismissive of Google’s ability to execute in this space becuase of content creator concerns. As he said:

“if I’m a newspaper, why do I want the bill to come from Google? It’s further disintermediation from me and my customer and if there should be a disintermediator between me and the writer, shouldn’t that be someone that can provide an editorial voice that I trust?

He was also dubious about Google’s ability to add value to a payment service, asking what value a Google checkout would provide here versus, say, paypal? He quite rightly points out that it’s not like Google checkout has been a runaway success with hundreds of millions of people demanding to use their google checkout to pay for stuff

Lastly I spoke to Sanjay Sarathy from Vindicia, another of the fledgling SaaS subscription and billing vendors. Sarathy had multiple perspectives on this:

• First, if I were Google, I wouldn’t tie this to Checkout since that limits the acquisition opportunities for the publishing companies.  A lot of consumers aren’t going to open a separate Checkout account just to pay for their media content.

• While they talk specifically about micropayments in the article, any solution would be able to support multiple business models – subscription with a la carte options, pure microtransactions, virtual currency support to use across different newspapers within the same media conglomerate, etc.  Based on our own experience with media companies, there is a lot of experimentation going on with business models and forcing people into just one business model option won’t be attractive or viable.

• You’ve heard this sentiment from me many times, but the big issue for media companies is not just erecting the paywall, but also understanding why people would pay for the service given how broadly disseminated basic news/content is.  The question is whether Google can help them understand how to make the paywall relevant for consumers.

Three fascinating perspectives from some industry insiders. Three insider who, it has to be admitted, gain from a further validation of the subscription model, but lose from Google becoming the dominant player in the market. What will happen? Keen to hear your thoughts on what Newspass could mean for the world.