Google vs Apple for Publisher Payment Solutions: Neither a Perfect Fit

The recent discussion in Media Beat around Google or Apple for publishers has been fascinating. On one hand I love to see the passion and loyalty people have for Apple or Google, but on the other hand there doesn’t really seem to be a debate as much as a religious shouting war. The way I look at it, the main question is one of making money. That’s the bottom line of this debate, not who is better, who will like it more, or even who provides a better experience.

When all is said and done, if the publisher makes money, they will use the payment or subscriptions system or systems that provide the most value. In this case the “value” term has two key components for the merchant:

1. Do readers get what they want at a price they want?
2. Do publishers get the exposure, revenue, and relationships that they want?

Do readers get what they want at a price they want?

You might wonder why I needed to add “at the price they want” to the question, but that’s a key component of the discussion. Before everyone gets hot and bothered over choosing a payment service, À la carte content, or subscriptions, let’s be sure that readers want to pay anything at any price.

Do I think the Wall Street Journal or Financial Times will sell? Yes, I do, so that specific content should be included in the debate. On the other hand, how many of you WANT to pay for pretty content that you can get free? What about magazines? How many of you WANT to pay for a digital edition of a magazine you receive in print form? How many of you WANT to buy magazines you don’t already receive in print form?

At the heart of this question is really one of economics around the discretionary spend of readers vs. their demand for content.

If readers are unwilling to spend more for these digital editions, then there is no point in debating what the publishers choose.  There could be other benefits from having the payment centric app, and if so, then the publishers would implement one or more systems where the return met or exceeded the effort and cost  of building, distributing, and maintaining the app.

On the other hand, if the cost justification is not there, the best route may easily be an HTML 5 based version of the publishers site or magazine. The lower cost of entry could allow for article, reporter, and advertising exposure that could provide revenue based on the quality of the content.

Do publishers get the exposure, revenue, and relationships that they want?

So assuming we’re past what the readers want, then publishers have their own needs. From personal experience at BitPass, where we met with and talked to many publishers about payments and subscriptions, the needs have roughly been in no specific order:

1. Billing relationship with reader
2. Recurring payments relationship
3. Customizable reporting
4. Ability to work with existing payment systems
5. Low transaction costs
6. Ability to use their merchant account for transactions
7. Ability to bundle print and online offers
8. Ability to support free or low-cost trials
9. Ability to upsell readers to other services or products in the same system
10. Ability to do pricing tests/spot promotions
11. Ability to drive more buying readers into the system
12. Minimal support costs
13. No new technical training or infrastructure changes
14. A partner they can trust

Assuming that publishers work with a profit motive, items 1, 5, 7, 8, 9 are immediately at risk if they choose the Apple system.  The Apple system also puts the desire for controlling their own fate into jeopardy, by removing 2, 4, 6, 10, and 11 from their control.

Choosing Google’s One Pass, on the other hand, will put items 4, 5, 6, 7, 9, 10, 13 at risk, but those may not matter unless item 14 is overcome. If publishers can get over their claims that Google is stealing content, then they can start to evaluate if the risk really impacts them. Choosing Google is also not a slam dunk.

As it turns out, the only system that does items 1-14 are the custom in-house systems that the publishers have already built, so we go back to the original question:

Do publishers get the exposure, revenue, and relationships that they want?

Since neither Apple nor Google make perfect bedfellows, item 11 is all that the publishers really get to test. Do they get more readers and make enough money to justify the costs?

If I were a publisher, I would try both, but I would not bet on either succeeding. Publishers used to tell me that a 10% percent transaction fee would adversely affect their margins, so I can imagine what a 30 percent hit would do. If either system drives traffic and sales lift of the digital product by 15 percent or 50 percent respectively (approximate increases), then the return or using those system is worth it. If not, it’s time to re-evaluate the offering and service providers.

About Duane Kuroda

Business ninja, deal hunter, Internet marketer, and technology fiddler obsessed about growing companies and launching products. Currently at Peerspin, Duane’s past lives include Vice President of Marketing roles at companies leading micropayments, Internet video, and online communities as well as research and consulting for mobile advertising. Duane has spoken at conferences including Digital Hollywood and Digital Video Expo on topics covering monetizing online content and online video, has appeared on TechNowTV and KNTV, and has been quoted in various magazines. Follow Duane on Twitter: @dkuroda.

Website: http://svexec.blogspot.com/