micropayment

Google’s Amazing “Surveywall”

 

How Google could reshape online market research and also reinvent micro-payments. 

Eighteen months ago — under non disclosure — Google showed publishers a new transaction system for inexpensive products such as newspaper articles. It worked like this: to gain access to a web site, the user is asked to participate to a short consumer research session. A single question, a set of images leading to a quick choice. Here are examples Google recently made public when launching its Google Consumer Surveys:

Fast, simple and efficient. As long as the question is concise and sharp, it can be anything: pure market research for a packaging or product feature, surveying a specific behavior,  evaluating a service, intention, expectation, you name it.

This caused me to wonder how such a research system could impact digital publishing and how it could benefit web sites.

We’ll start with the big winner: Google, obviously. The giant wins on every side. First, Google’s size and capillarity puts it in a unique position to probe millions of people in a short period of time. Indeed, the more marketeers rely on its system, the more Google gains in reliability, accuracy, granularity (i.e. ability to probe a segment of blue collar-pet owners in Michigan or urbanite coffee-drinkers in London).The bigger it gets, the better it performs. In the process, Google disrupts the market research sector with its customary deflationary hammer. By playing on volumes, automation (no more phone banks), algorithms (as opposed to panels), the search engine is able to drastically cut prices. By 90% compared to  traditional surveys, says Google. Expect $150 for 1500 responses drawn from the general US internet population. Targeting a specific group can cost five times as much.

Second upside for Google: it gets a bird’s eye on all possible subjects of consumer researches. Aggregated, anonymized, recompiled, sliced in every possible way, these multiple datasets further deepen Google’s knowledge of consumers — which is nice for a company that sells advertising. By the way, Google gets paid for research it then aggregates into its own data vault. Each answer collected contributes a smallish amount of revenue; it will be a long while, if ever, before such activity shows in Google’s quarterly results — but the value is not there, it resides in the data the company gets to accumulate.

The marketeers’ food chain should be happy. With the notable exception of those who make a living selling surveys, every company, business unit or department in charge of a product line or a set of services will be able to throw a poll quickly, efficiently and cheaply. Of course, legacy pollsters will argue Google Consumer Surveys are crude, inaccurate. They will be right. For now. Over time the system will refine itself, and Google will have put  a big lock on another market.

What’s in Google’s Consumer Surveys for publishers whose sites will host a surveywall? In theory, the mechanism finally solves the old quest for tiny, friction-free transactions: replace the paid-for zone with a survey-zone through which access is granted after answering a quick question. Needless to say, it can’t be recommended for all sites. We can’t reasonably expect a general news site, not to mention a business news one, to adopt such a scheme. It would immediately irritate the users and somehow taint the content.

But a young audience should be more inclined to accept such a surveywall. Younger surfers will always resist any form of payment for digital information, regardless of quality, usefulness, relevance. Free is the norm. Or its illusion. Young people have already demonstrated their willingness to give up their privacy in exchange for free services such as Facebook — they have yet to realize they paid the hard price, but that’s another subject.
On the contrary, a surveywall would be at least more straightforward, more honest: users gives a split second of their time by clicking on an image or checking a box to access the service (whether it is an article, a video or a specific zone.) The system could even be experienced as fun as long as the question is cleverly put.
Economically, having one survey popping up from time to time — for instance when the user reconnects to a site — makes sense. Viewed from a spreadsheet (I ran simulations with specific sites and varying parameters), it could yield more money than the cheap ads currently in use. This, of course, assumes broad deployment by Google with thousands of market research sessions running at the same time.

A question crosses my mind : how come Facebook didn’t invented the surveywall?

–frederic.filloux@mondaynote.com

 

 

How to make readers pay for news

An idea is gaining momentum: online readers must open their wallet. In recent weeks, several suggestions for moving from wish to implementation have popped up. The latest one comes from Google. The company proposes to give a boost to its not-so-successful Checkout service by harnessing it to online newspapers interests. Quite a change here. Only a few months ago, Google’s haughty advice to the newspaper industry was : You’re on your own guys ; Darwin is in charge here ; adapt or face extinction. Last November in Paris, I personally witnessed Googlers’ poor performance in front of media barons — an embarrassing mixture of unpreparedness and arrogance. Some of us felt really sorry the search giant screwed up so badly.

Google was slow, but it finally got it. It understood that its position — “Thank us to the billion clicks a month we send to your sites, we bring value to your businesses, the rest is your problem” — was no longer defendable. Google can no longer ignore the dramatic deterioration of the news media sector. 
Here are key figures for the US market:
- The best recent period was 2005 ; that year, US newspapers reported a total advertising revenue of $49.4bn. 96% from print (35% from classifieds) and 4% from online. Since then, between 2005 and 2008, things changed dramatically :
Total ad revenue :…….. -23.4%
Print:………………………..-26,7% (and a drop in classifieds of -42.4%)
Online:……………………..+53,4%
It looks like this :

Now, to get a more precise and recent representation, let’s compare the last available quarter (Q2 2009), with the recession’s impact, to Q2 2005. Here is the evolution over four years :
Total ad revenue:……………-44%
Print:…………………………….-47% (classifieds dropping by : -64%)
Online:………………………….+30%

An important precision for the online ad revenue: it peaked in Q4 2007; since then it has dropped by 23% in Q2 2009. More

The Facebook Micropayment System

This week’s question: Will Facebook launch a so-called “PayPal killer”, a micropayment system for members to pay for goods real or virtual? To me, this is a Flat Earth debate, meaning there is no debate, Facebook is ideally placed to become a powerful payment system player.

First, a bit of history: the Minitel. Once upon a time, a rather statist country, France, decided to equip telephone subscribers with a home information terminal. Merchants of various persuasions were invited to connect their servers to Transpac, the backbone network. Sellers could tout physical, groceries, or logical, entertainment, information, goods and services. For the logical kind, the phone company graciously did the billing and the collecting for the merchant, taking a courtesy 25% fee for its pains. The buyer saw a new section at the end of the phone bill, everything automagically deducted from the subscriber’s bank account — after a legally mandated 10-day bill presentation delay.
Effective and efficient.
This reduced the overall cost of doing business for all, sellers, buyers, the phone company, that’s the efficiency part. And effectiveness manifested itself in a huge spurt in new enterprises. So much so the network, Transpac, initially underwent several major outages because buyers and sellers had much more fun than expected. For several years the French phone company would rather forget, it became the largest pornographer in the Western world.
I won’t dwell into the phone company’s initial resistance to the Yankee invention, the Internet, but all is well now: French netizens now enjoy very good broadband services, and the Minitel is largely forgotten.

But the micropayment lessons shouldn’t be discarded. And, in a way, they aren’t: Look at Amazon. More

Paid news on Mobile. Why it could fly.

This week, I downloaded the iPhone application of the British newspaper the Independent. It’s a new breed of app, taking advantage of the new features embedded in the third iteration of the iPhone OS. For a daily newsmedia, Push Notification is the most interesting new feature, combined, in this case, with an offline reader. On the iPhone’s main screen, a red badge tells you the number of stories updated and unread since the last time you used the app (see below).

Home page of The Independent iPhone App

Then, inside the app,12 categories work the same way. On a wifi network, in the background, it takes a minute or so (three four times longer on a 3G network) to download a batch of 150 stories updated every day.  Then, the articles can then be read, quickly or leisurely, regardless of your connection. Pretty cool.

There are many reasons to be confident in the development of news on smartphones. Especially with the Apple innovation engine showing the potential to create a brand new sector — as it did in the music business with iTunes. As we speak, 43% of mobile internet traffic is generated by the iPhone device. Competitors have seen the threat and opportunity. RIM’s Blackberry wishes to enter the mobile app market — with an eye on the lucrative specialized news segment — and we can count on the combined impact of Google’s Android (their smartphone OS) and Chrome OS (their netbook platform) due next year. And Microsoft won’t stand still either. (Yes, they were early with Windows Mobile and let their lead evaporate, but they’re taking the situation seriously, they know what’s at stake if they don’t “make it” in the smartphone market.) And Nokia, the cell phone king, hard-pressed to stay ahead in the new smartphone world, but, just like Microsoft, rich, awake and determined. More