It’s Google Friend Connect vs. Facebook Connect

Just hours after Yahoo announced a planned implementation of Facebook Connect on its network of sites, Google announced that you can now use your Twitter credentials to register on Google Friend Connect sites. Friend Connect and Facebook Connect are both a means to quickly register for a site or service that requires a login, and it’s likely no coincidence they announced competing deals on the same day. This could end up being a hard fought battle, because there’s one major reason one-stop online identity is becoming important as we enter 2010, and that reason is paywalls.

2010: Year of the Micropayment

2009 may have been the height of Google’s power as the champion of the open and free Web, but the mantra “information wants to be free” may start to change in 2010 to “information wants a small fee.” The signs are everywhere. Forget Rupert Murdoch’s ludicrous comments about pulling News Corp’s news sites from Google’s Index. What’s more likely, and what the News Corp Chairman has stated on several occasions, is that all of his company’s news sites–including The New York Post, The Wall Street Journal and The Times in London–will erect paywalls by next summer.

Murdoch isn’t the only one either. The New York Times Company CEO Janet Robinson has said there is a “high probability” the Times will put up a paywall again. Magazine publishers like Conde Nast and Time Inc. are also busy creating online formats for touchscreen devices that will entice people to pay for digital versions of their magazines. There are even rumors that Hulu may be considering some kind of pay service. So in all likelihood, paywalls are coming back.

Nickel-and-Dimed to Death

But this idea of having you pay for every single site and service they use online has been tried before. During the Web’s early days in the 1990s, numerous sites wanted you to sign up for an account with a unique login and password. Many of these sites were also asking you to pay small amounts for access to their content — typically anywhere from $2 to $10 a month. But all those little payments could add up if you bought too many of them, and very few were offering one-time payment schemes. It was such a pain to have to constantly remember logins and fork over your credit card information all the time, so most people didn’t. Over time paywalls fell, the Web became more open and business models started crumbling. But things may change with resurrected paywall schemes, and that’s where these unified logins like Facebook Connect and Google Friend Connect could come in handy.

Your Digital Wallet is Already Here

Paying with Facebook is already underway according to several reports. In May, TechCrunch’s MG Siegler came across an option to pay with his Facebook account on a Facebook application from GroupCard. Then in June, Inside Facebook reported that Facebook had lured a Google Checkout executive to help Facebook develop the social network’s growing payment platform.

Google Friend Connect and Facebook Connect could easily be linked to Google Checkout and Facebook’s payment platform making it easier to pay for things online. If paywalls, micropayments, and subscriptions are coming back to the Web in force, then a digital wallet that you can take with you to any site and pay for items using one-click access will be a critical component for success. These identities would become even more useful if they could be used across most online retailers as well.

That’s why a war over how you choose your online identity could become increasingly important moving into next year. Google and Facebook aren’t alone; other major contenders looking to be your wallet include PayPal and Amazon. None of these services are universal methods of payment yet (although PayPal is probably the closest), which means the market is wide open for some of these companies to dominate the digital wallet. So the question is: who will you trust with your money?

Connect with Ian on Twitter (@ianpaul).