10 Reasons Why Google’s Newspass Might Fail
The other day, we covered how Google is testing a new paywall system for newspaper called Newspass. But given where the newspaper industry is headed, there’s a very a plausible chance that Google is coming too late to the party.
Essentially, newspapers have struggled with their online revenues because they’ve been unable to successfully implement either a paid subscription or micropayment model on a widespread level. Google is hoping to change that with Newspass, a new a paywall system that offers users one-click access to multiple sites/networks through a single Google Account (like Google Check Out). Essentially, Google seems to be testing whether paid subscriptions and micropayments become more viable revenue models if users can manage their purchases through a single, third-party account.
As good as an idea that Newspass looks like on paper, however, the product faces quote a few challenges.
1. Google’s Non-Search Track Record
Google’s track record beyond search-related products is less than stellar. Essentially, the list of Google’s failures is long and growing, with Google Wave added to it less than a week ago. So if Google hopes to keep Newspass off of this list, it will need to ensure that a strong marketing strategy is in place.
2. Marketing Challenges
Now, Google has had some success beyond search, and Google Checkout is one example that’s particularly relevant to Newspass. But just like Google Checkout has to target both merchants and consumers, Newspass must also engage the market on two fronts simultaneously: publishers and readers.
As it stands, Newspass intends to solve a problem for publishers by catering to readers. That means that the Newspass team must successfully deploy two separate marketing strategies simultaneously. Granted, this isn’t impossible, but it does double the workload for Google.
3. Growing Digital Revenues
Newspass is set to bolster digital revenues, but many newspapers are already experiencing digital revenues growth on their own. As The Wall Street Journal reports:
Several newspaper publishers have reported solid growth in digital advertising revenue for the second quarter in recent days, helping offset continuing declines in print advertising. The New York Times, for instance, reported 21% growth in digital-ad revenue against a 6% drop in print advertising, keeping total advertising “roughly flat” with the year-earlier quarter. Digital now accounts for 26% of its total ad revenue, up from 22%.
4. Newspapers are Losing Less and Less
Even though print ad revenue has continued to fall, print might be pulling out of the nosedive. As we reported last month:
Editor & Publisher reported that even though newspaper print and online revenue dropped 9.7 percent year-over-year in Q1 2010, it was the mildest drop in three years. “The 9.7% drop compares with a 28.3% year-over-year decline in the last quarter of 2009, and a 29% drop in Q3 2009.â€
Part of the cause behind these changes in newspaper ad revenues, no doubt, is that there’s just less competition. Essentially, enough of the smaller guys have gone out of business, that the largest ones (such as the NYT) have been able to capture more of the market more easily than before. But this also means that newspapers are under considerably less pressure to adopt entirely new processes — such as integrating an entirely new paid content system such as Newspass.
5. Increasing Production, Lowering Costs
Newspapers are also finding cheaper, more efficient ways of sourcing their content. For instance, the San Francisco Chronicle, the Houston Chronicle, and USA Today have started using a content farms to source content for some of their sections. This is allowing them to broaden their coverage of topics without having to invest in additional editorial infrastructure.
6. News Sources of Revenue
Many major newspapers companies are developing completely new sources of revenue by either partnering with or outright acquiring online marketing agencies. Specifically, Hearst, Gannett Newspapers, and the McClatchy company have all started offering online marketing services to advertisers in the various local markets they serve.
7. New Distribution Channels
Mobile apps are offering newspapers an entirely new distribution channel for their content, and the opportunity to bolster ad sales through mobile content is clear and present. The Globe and Mail, for instance, is already serving gets 7.5 million page views / month through its iPhone app alone, and advertising is embedded throughout each of these pages.
8. Subscription Revenue is Obsolete
Subscription fees are a revenue model designed to cover the costs of distributing content on a physical piece of paper that had to be delivered to readers’ doorstep. Online content isn’t plagued by such overhead, which is probably why online readers have been reluctant to pay for content.
With newspapers adapting to the new content marketing by adopting new advertising, production, and distribution models, they might be reluctant to try and impose such outdated costs on their readers. After all, the first newspapers to do so can risk losing their readers to any competition that holds out. After all, you can’t teach a new user and old (obsolete) trick.
9. Users Habits
There’s also considerable reason to doubt that, at this point, users will be willing to start paying for content. Essentially, users have been consuming free content for quite some time. They’ve also seen paid content models fail time and time again. So it might be impossible for newspapers and/or Google to convince users to start paying for content now.
10. Bad Blood
The relationship between newspapers and Google is a strained one at best. Essentially, many newspapers feel defrauded because they’ve received no compensation for their content appearing in Google News, but Google has made revenue off of the Adwords ads that appears alongside that Google News content. So it might be unrealistic for Google to now expect newspapers to trust them with revenue and sales data.
Early in the Game
For all the challenge’s facing Newspass, it’s still very early in the game. After all, the service is still only being tested, and only in Italy. It could very well turn out that Google doesn’t take Newspass beyond Italian borders.
Similarly, it’s just as likely that Newspass will pique the interest of many newspapers. While some newspapers cut Google out altogether, others have invested considerably in SEO.
The world of news publishing is going through so many changes, that it’s hard to tell where things will end up exactly. So like all things related to newspaper publishing, we’ll just have to wait and see what happens with Newspass.
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