Bits: Visa Advances Toward a Digital Wallet

 VisaVisa hopes its technology will lead to mobile device apps that create digital wallets.

Visa is taking another big step in its continuing efforts to create a universal digital wallet.

On Wednesday, the company announced plans to introduce a one-click payment system that will allow Visa customers to sign up for a set of credentials that will allow them to pay for items online with a single click.

Jim McCarthy, the head of global products at Visa, said that the company was trying to simplify the process of buying items online or on a mobile site, which can be cumbersome for people who have to re-enter their card numbers and personal information each time they want to make a purchase online.

“E-commerce is our fastest growing channel,” said Mr. McCarthy. “We know we can do a lot to improve the experience in the e-commerce environment.”

People can buy things with one click at a particular site, say Amazon.com. But they can’t yet do it across the Web. Visa’s new feature reduces the multitude of ways a consumer might want to pay for an item — whether with a Visa check card, a PayPal account or some other means — into a single log-in and password. All of the information is stored in Visa’s secured servers so that users only have to sign in to pay for their purchase.

Mr. McCarthy said the service would be introduced to consumers in the United States and Canada by the year-end holiday shopping season.

Visa has also been testing a system that lets users pay for items with an application that uses “near-field communication” technology on a mobile device to process a payment. This one-click system will also be wrapped into that service when it is introduced more broadly, the company said. The company says that a customer’s entire financial history could be securely stored in one spot, along with frequent-flier accounts, medical benefits, even appliance warranty information from Best Buy, replacing the jumble of account information that most people have stored in different locations — on and offline.

The first users of the service will probably be online gamers. The service will be introduced in social and online games, allowing Visa customers to buy virtual goods. Eventually, Mr. McCarthy said, the company will introduce it “broadly to e-commerce merchants, mobile and social commerce developers who will allow consumers to check out of a site with a single click.” Visa even plans to make the underlying code, or A.P.I., available to third-party developers who want to install the features on their payment Web sites.

Visa executives said the plan was the result of two strategic acquisitions that the company made over the last several months — PlaySpan, a start-up that lets people pay for virtual goods in games, and CyberSource, an e-payments company. Representatives at Visa said it was working with several banking partners, but did not specify which ones.

Visa faces stiff competition as it ramps up its online and mobile offerings. American Express and other credit card issuers are fast at work developing and adopting their own solutions. Mobile carriers have also struggled to bring their own solutions to market, but it is not yet clear when or if, they will debut.

“We’re trying to get ahead of the curve here,” said Mr. McCarthy.

 

Google’s Digital Music Service Falls Short of Ambition

 

But the service that the company unveiled on Tuesday, called Music Beta by Google, fell short of those ambitions. There is no store, the streaming function comes with restrictions, and, like Amazon’s Cloud Drive service announced in March, using it requires a long upload process.

What came between Google and its ambitions was an obstacle familiar to many digital music start-ups: despite months of negotiations, the company could not obtain licenses from the major record companies.

In interviews, Google executives put the blame squarely on the labels. “Generally there were demands on the business side that we think were unreasonable and don’t enable us to have a sustainable, scalable music business,” said Zahavah Levine, director of content partnerships for Google’s Android unit and the lead negotiator with the labels.

Music Beta was introduced on Tuesday at Google I/O, a developers’ conference in San Francisco.

Neither Google nor the labels would specify which points they stumbled over. But their disagreement follows a long pattern of friction in which the labels demand high prices for licenses or withhold the licenses altogether. The stubbornness of the labels has earned them a particular caricature in Silicon Valley: the bridge troll, demanding payment for passage.

“They tend to not look at these things as opportunities, but as someone taking advantage of their business,” said Fred Goldring, a former top music lawyer who invests in media and technology companies. “Until they figure out how they’re going to deal new technology on their terms, they don’t make a move. And when they finally do, it’s usually too late.”

The labels believe they are protecting their content and maximizing income for themselves and their artists. But as technology companies and industry analysts see it, the labels’ conservatism in striking deals that involve their licenses hinders technological development and ultimately harms the marketplace by reducing consumer choice.

“The history of the digital music marketplace is littered with the ramifications of record label conservatism,” said Mark Mulligan, an analyst at Forrester Research.

Music Beta, which Google is offering by invitation only while in its trial state, will allow users to store 20,000 songs at no charge and stream them to Android phones, tablets and other devices. As with Amazon’s Cloud Drive, the company does not need special licenses as long as it stores each user’s files separately and then streams them back only to that user, intellectual property lawyers say.

But to sell music, or to operate a master jukebox of every available song and then matching users’ collections to it — widely viewed as the most efficient form of cloud music — Google would need licenses from the labels. Google’s plans were described by many record label executives who have been in discussions with them but spoke on condition of anonymity because their talks were private.

Google and Amazon have not been the only companies negotiating with the labels for cloud music services. Apple is preparing its own, and Spotify, a popular European subscription service, has been locked in talks for two years over American distribution rights. In most of these cases the disagreements are over lump upfront payments or concerns that a service that charges users too little could cannibalize other sales and devalue music overall, executives say.

Ted Cohen, a consultant and former major-label executive, said that when both sides of such negotiations have bad faith, customers suffer. “Neither side is playing fair with the other,” he said. “They go into the negotiations believing that the other side of dishonorable. It’s rare that both sides see that the common goal is to create a consumer experience that people value and are willing to pay for. Things don’t come to market because of this.”

But whether Google and Amazon have abandoned their bigger plans or were just scaling them back temporarily was unclear. In an interview, Ms. Levine denied that the abrupt introduction of Music Beta was a negotiating tactic. But music executives said that since Amazon introduced Cloud Drive — with almost no advance notice to the labels — it has been in discussions over licenses, and these executives, speaking anonymously, said they expected Google to eventually return to the negotiating table.

A more robust digital music service would attract more users to Google. But Mr. Goldring said that it was the labels that really needed to strike a deal.

“At the end of the day they’re clearly hurting themselves,” he said, “because they’re leaving money on the table.”

Claire Cain Miller contributed reporting.