For about six months, I’ve pondered writing this post asking the dreaded Google question. Following yesterday’s announcement that the European Union has opened a Google antitrust investigation, I can wait no longer. My life, and perhaps yours, is enmeshed in Google products and services. If there is a devil, a Great Satan of modern technology companies, Google is it. I sold my soul to Google for free services, which are disrupting — some would say destroying — businesses that produce valuable content and other intellectual property. In the 1970s, Microsoft Chairman Bill Gates warned of the very problem Google is creating today: Making things that are inherently valuable nearly worthless.
The problem is simple: Google’s business model is fundamentally about free. Someone else pays to produce content or other valuable intellectual property, around which Google wraps search keywords, adverts and services. The information giant doesn’t produce content, but its entire business model is about cannibalizing others’ valuable intellectual property. Google’s search dominance — anywhere from 65 percent to 90 percent share, depending on the geography and analyst crunching the numbers — means that content creators must pay homage to free. The content’s base value to the producer is at least the cost of production, but content creators are compelled to give away their stuff for less and often for free. If not, the content becomes invisible to the Internet — or at least to the majority of people who use Google search and other services.
On my own blog, I write about broader topics than at Betanews. But sometimes there is overlap. In August 2009 I asked: “Can you Charge for News? Ask Google,” which I followed up a year ago this Friday at Betanews with “Can there be a free Web if no one makes money?” The August post looked at three organizations — Advertising Age, GigaOM and Wall Street Journal — using different paywall mechanisms. While the organizations all charge something, not one puts content behind a true paywall. To do so would prevent Google search bots from indexing the content. In April 2010 I posted to my blog: “The Price You Pay Google for Paywalls,” which explains what happens when a site fails to make offerings to the great Google god. The post profiled Reid Reviews, which is nearly invisible to Google search, because the content is behind a paywall.
What’s the saying? If a tree falls in the forest and no one hears, does it make a sound? Does Reid Reviews exist? You wouldn’t know from Google search, which indexes just two pages — home and index. That’s the dark secret behind true paywalls and why there is so much talk about them and so few content creators truly adopting them. I wrote in April:
If your business is content and selling online advertising around it, you must pay homage to the great Google algorithm. As was with previous age’s deities, the minions must make their sacrifices before the great Google god. To receive its blessings, they must do Google’s bidding — quite literally on keywords — and give away all their worldly possessions (e.g., content, for free). But can they give to Lord Google and keep something for themselves, too?…Yes and no. For the true worshippers, those willing to make their offerings to the Google god, the answer is yes…For others, paywalls will come at a price, in terms of traffic, pageviews and incoming links.
Heeding Bill Gates’ Warning
One year ago this month, I posted “Google’s ‘Open Definition’: Simply brilliant business, but is it evil?” The post contrasted Google and Microsoft worldviews. Microsoft produces valuable intellectual property for which it expects to be paid. Google profits from others’ intellectual property, while producing little valuable content of its own. Google uses “open” to describe its business model, but that’s a misnomer. I wrote in December 2009:
This so-called open approach fundamentally opposes longstanding principles of intellectual property ownership. Copyrights are a barrier to Google gaining information that it can monetize. Google takes what it gets for free — but which someone else may have paid to produce — gives it away for free but with eventual profit motive.
Google free isn’t some altruistic openness but a business model, which its search monopoly anchors. Microsoft cofounder Bill Gates laid out a different business, one where people get paid for production, in 1976 “An Open Letter to Software Hobbyists.” Gates wrote:
Most of you steal your software…One thing you do do is prevent good software from being written. Who can afford to do professional work for nothing? What hobbyist can put 3-man years into programming, finding all bugs, documenting his product and distribute for free?
Gates’ question “Who can afford to do professional work for nothing?” is strangely prescient of today’s expanding Google free — supported by advertising — business model. The question also defines one of the principles behind Microsoft’s worldview — that people (or the businesses they work for) who create something have a fundamental right to profit from it.
Google defenders argue that the Web free model has in television a precedent — people consuming content for free supported by advertising. That’s no comparison at all. Television content distribution is limited by the number of broadcast networks and cable, IPTV or satellite services delivering the content. Broadcast or cable networks don’t receive programming for free, they pay someone to create it. Then there are the fees paid by consumers for non-broadcast distribution, like cable or satellite services. The Web is different because there is so much content available, which dramatically reduces advertising value and for which there is more space than advertising can fill. Additionally, Google’s search dominance mandates the distribution of valuable content for little or nothing. The models aren’t comparable at all. In fact, free is a flop on TV. So-called free or open TV is so-called public access, and who really watches these channels.
Breaking Google’s Contract is Hard
Google’s search monopoly wouldn’t be a problem if not for its pervasive, and often compelling, supporting free services. Seven years ago, when working as a JupiterResearch analyst, I made the same observation as some of my colleagues and peers from other firms — that Internet users could easily give up Google by typing in another search engine’s Web address. At the time, Google was the US search leader but with nowhere near today’s usage share. I warned that without sticky products or services, Google couldn’t rely on search because users could so easily switch.
Now Google has those sticky products and services, and it has rapidly expanded into new markets, like phone operating systems and Web browsers. Wherever Google goes, free follows. For example, Microsoft licenses Windows Phone 7 for a fee, while Google’s Android is available for free. Sure Google collects fees for keyword bids or advertising, but bundled with free search and other services. Google deserves praise for making search sticky, in part by wrapping so many supporting services around it. But is the approach evil, or at least disruptive?
I’m astounded by just how many Google products or services that I use, and ask: How many and which Google services do you use? That’s a question for comments. Please respond and generate some debate about Google. What do I use:
- Google Alerts
- Google Analytics
- Google Blog Search
- Google Books
- Google Buzz
- Google Checkout
- Google Docs
- Google Goggles
- Google Earth
- Google Maps
- Google News
- Google Reader
- Google Search
- Google Talk
- Google Voice
- Google Webmaster Tools
Until June, when I switched to iPhone 4, Google’s Nexus One was my smartphone. So I used Android, and even more Google products and services, just a few months ago. My wife still uses Nexus One, and she loves it. This is a staggering list of Google products and services. From one perspective, Google’s success selling me — and many other Internet users — testifies to software/services development and distribution excellence. But behind it all is the free economy of search and creating products and services that stick Google users to the search monopoly. I’m here to confess that I’ve sold my soul to Google, but I want it back.
In the folklore of selling souls the to devil, the contract is seven years. If I count Gmail as the starting point of my first Google non-search product then seven years would be sometime in Spring 2011. I’m baffled seeing where I could replace all the Google stuff used today with something as good for less. What’s cheaper than free? But my goal is to cut back something. Facebook is one option that is more attractive because of the new messaging service and some of the search and supporting services provided by Microsoft. But I wonder: Is the devil you know better than the one you don’t? Content going into Facebook doesn’t easily come out. I could, or you, trade one devil for another.
Bottom line: As I asserted in February, “Google is a dangerous monopoly — more than Microsoft ever was.” The post is a good primer for understanding why the European Union is investigating Google. But that investigation may miss the broader context beyond the search monopoly — how Google’s free worldview and business approach is fundamentally changing the value of content and other intellectual property produced at cost. I’ll end with this question: Should people be paid for things they produce?
Quick reminder, I am on sabbatical for most of December as I work on a book project. Posting will be considerably lighter than usual.