Is Pay-Per-View Next for the Search Heavyweights?

 

Google is reportedly coming out with an online payment system. CEO Eric Schmidt acknowledges some kind of electronic payment system is in the works but told the Associated Press: “We do not intend to offer a person-to-person, stored-value payments system.

“The payment services we are working on are a natural evolution of Google’s existing online products and advertising programs which today connect millions of consumers and advertisers,” Schmidt continued.

These rumors apparently surfaced when one or more retailers ignored Google’s standard nondisclosure agreement and leaked the project’s existence.

Analysts and the press are having a field day discussing how Google is taking on eBay PayPal and where Froogle may fit into the mix as a major e-commerce or shopping search engine. The pundits are missing the true potential power of a wallet and payment system owned by a major search engine. The killer application is pay-per-view content.

Good content is increasingly hard to find, even in Google search results. Searchers want high-quality content, and some will pay for it. I’m not just talking about the lofty $5 a stock analyst report or medical document might fetch, but also the $.08 searchers would pay for access to their favorite song lyrics or $.01 to read today’s Al Franken or Rush Limbaugh blog post.

Increasing broadband deployment and a huge explosion in digital music also means a wallet owned and operated by the content gateways is a really good idea. Paying for music, video, and other content from a stored value payment system that processes low-value payments without huge transaction costs will happen. It’s no longer a question of if, but when and by whom.

Yahoo is also considering premium content’s value. It’s introduced a beta program, Yahoo Search Subscriptions. Yahoo’s system allows users to search content that exists behind publishers payment firewalls, but the beta lacks the usability factor an integrated payment system could deliver: one-click payment at the time of the click on the listing (or after seeing an abstract).

Google already has some killer advantages in deploying a payment system for content or e-commerce, in particular the large number of self-updating Google Toolbars installed out there. By adding a payment icon or option to the toolbar, Google can be on millions of desktops in short order, ready to facilitate payments for content that may not be available anywhere else. Even if content were purchasable on multiple platforms (including MNS Passport), the quality of the SERP (define) and the engine’s ability to sift through premium content to deliver the most relevant will be a big differentiator.

Imagine a paid content overlay on Google AdWords, where listings are PPC (define) and auctioned. A content revenue share would be used to either offset ad costs or add a revenue stream to Google.

Simply put, Google is primed for a service like Google Wallet.

If Google Wallet takes off, 2006 may be the year micropayments finally take off, too, especially with broadband popularity.

Micropayments for pay-per-view content have been tried a few times over the last 10 years. They’re generally considered payments of less than $5, or any size that makes the economics of credit card approval cumbersome.

Microsoft could revive MSN Wallet and become a major contender as well. MSN Wallet may have been ahead of its time and could play in the same areas Google has clearly focused on.

Amazon.com Honor System and eBay PayPal are also potential players in this space. Amazon, with its A9 and Alexa assets, is clearly interested in search. Its payment system is already in place and facilitates remote payments. Mostly, though, the payment API (define) is used as a donation vehicle for sites and is completely voluntary. Sites with the Amazon Honor System code will identify visitors by name if they have an Amazon cookie. Of course, Amazon already sells digital content with downloadable e-books. Remote payment for content isn’t much of a stretch.

eBay could go the Amazon route and easily enable remote micropayments, thanks to 71 million accounts already deployed. A PayPal or eBay cookie could speed user recognition and improve the content purchase process.

Startups are still being funded to build standalone micropayment gateways, including BitPass, PaymentOne, and a growing list of companies. The search engines have huge advantages over these startups: eyeballs and the fact searchers are ready to determine how much they want the information they just searched for.

Search marketing will continue to evolve. Micropayments will be a part of it, sooner rather than later.

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