Google Pay Wall?

When I was a kid, my brother and I used to play a game.  It was sort of, “If I ruled the world…”, followed by toys we would possess, movies we would be allowed to see and usually homework abolishment.  That kind of fun speculation for me has changed to, “If I were Google…”.  My latest “If I were Google” fantasy has to do with the plight of newspapers.  Check out this recent article by Nat Ives in AdAge about newspapers escalating debate about pay walls.

If I were Google… I would erect the pay wall and take a commanding place as a content provider.  If Apple can do it with a device or two (iPod, iPhone + iTunes) – think of what Google could do with all of those visitors.  The Apple model seems to be “pay for convenience”.  I would bet that there is not a piece of content in the iTunes store that I could not find for free if I were willing to be a bit adventuresome, take some risk and violate copyright laws.  Yet, iTunes is a HUGE part of the music industry and a growing part of TV and Movies.  And, in my opinion, just wait until the tablet comes out and it will become a powerhouse for book distribution as well.

So how much bigger is Google than the newspapers?  Let’s start with just comparing the GIANT of the class the NY Times to Google News Search.  According to Comscore, NYT has been running about 10mm unique visitors every month until September, where we see a huge spike up to about 15mm unique visitors.  That’s almost as big as Google News Search which runs at 16+mm unique visitors month after month.  Comscore also says that roughly 8.8mm visits to the NYT site start at search (mostly Google), with such insightful search terms as New York Times, NY Times, NYTimes, Serena Williams, NYT, The New York Times, NYTimes.com, Editorials, Maureen Dowd, and Taylor Swift.  Personally, I love the juxtaposition of Maureen Dowd and Taylor Swift.  But all of these comparisons are around the edges.  Most of those searches did not get initiated from the 16+mm UV to Google News Search, they came from the 157mm unique visitors using Google Universal Search.  To put that number into perspective the entire Newspaper segment in Comscore is credited with only 86mm unique visitors in September!  Google isn’t just a media company, it is access to all media.

If I were Google I would have all the traffic I could possibly need.  I also would have all the cash I could possibly need.  For the expense estimates, I guess that the NY Times is still a good reference point.  From the latest NYT 10K, the total Wages and Benefits expense for the NY Times in 2008 was $622mm; Silicon Alley Insider pegs the newsroom cost at $200mm per year – and the BIG number essentially the cash that Google generates every 2 weeks in profit – the estimated annual newsroom only cost would be about 6 days of Google profit (according to the Google 10k).  So, investment $$$’s would not be the problem.

Would it be hard for Google to be profitable on this venture?  Fist, let’s use the $200mm newsroom expense number as it seems reasonable.  Let’s also assume that Google’s share of the Newspaper audience is similar to its share of the entire internet audience (roughly 78%) – that would give Google about 67mm people using their universal search interested in news.  Getting EVERYONE to do ANYTHING is impossible, but at $0.25 per month in revenue per visitor you are at break even.  Work the math from there.  Is it reasonable to expect $0.50 per month from ½ of those visitors?  Is it reasonable to expect $1.00 per month from ¼, or roughly $1.10 per month from every current visitor to NY Times.com.  Seems VERY plausible.

Why would this be so potent?  Because of the iTunes model.  If they could make the service simple, convenient and a natural part of Universal Search – they could eventually charge to distribute other publishers’ content.  Here is one simplistic way to do it:

  • Risk 12 days of profit to prove out the concept for 24 months.
  • Acquire the equivalent of the NY Times newsroom.  Or better yet, risk 2 whole weeks and give the newsroom a 16% raise to make the move.
  • Put up an access wall immediately, but give out free credits.  If you have a Google user name and password – the credits would just appear.  Don’t have one; sign up now.  Give out enough credit for everyone to have access to all of the paid content for the 2 year span.
  • Include the summary in universal search; only mark it as a paid link.  If you follow that link, Google will ding your credit balance.
  • Google can generate additional revenue from its own AdSense like surrounding of the content with paid links.  (one blogger claims Google gets about $0.09 in search revenue per page view.  If they have similar page view results to the NY Times, that would be about $12mm per month in search revenue alone, leaving only $5mm required for break-even from the pay wall.
  • If they can be as successful as iTunes in making the service simple and convenient, they could also sell other publishers’ content.  Having their own, best in the world journalism would be the leverage required to bring other news publishers under the tent.  In fact, it would be an interesting negotiation when Google’s creditable threat is its ability to hire any talent at a premium and put that journalist behind the pay wall.

Would this be a consistent move for Google and abide by  “You can make money without doing evil”?

If you believe that the press is the Fourth Estate and it is necessary in order to hold a mirror up to government, clergy and society then by creating a sustainable, profitable model by which journalists can do their work, a Google newsroom would be “doing good”.

The punch-line may be “Its Good to be Google”.  Or it may be, when considering the competitors to newspapers, you really should not count Google out.  They are like the worlds biggest newsstand already.  Media players are smartly fighting for shelf space to display their headlines.

Oh yeah, I forgot to mention – this will probably never happen because Eric Schmidt thinks that paywalls are stupid.

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