
Google: The World's Frenemy - nreece
http://www.theage.com.au/technology/biz-tech/google-the-worlds-frenemy-20091118-im8z.html
======
gvb
My theory of newspapers (and magazines, but focusing on newspapers).

Lets back up a century or three. Many years ago newspapers sold _news_ ,
printed on paper (see Benjamin Franklin
<http://en.wikipedia.org/wiki/Benjamin_Franklin>). They charged a lot of
customers a small amount each for that news, and made a business out of
aggregating lots of pennies. They also could sell advertisements and notices
because they were a conduit to a relatively wide audience.

Google
[http://images.google.com/images?q=benjamin+franklin+newspape...](http://images.google.com/images?q=benjamin+franklin+newspaper)

Front page:
[http://www.ndsu.nodak.edu/instruct/rcollins/436history/pictu...](http://www.ndsu.nodak.edu/instruct/rcollins/436history/pictures/franklin.jpg)

Example advertisements: [http://mitchellarchives.com/wp-
content/uploads/2007/11/1748-...](http://mitchellarchives.com/wp-
content/uploads/2007/11/1748-franklin-ship-ad-and-pay-up.jpg) and
<http://www.earlyamerica.com/image/earlyamerica/past/past.jpg>

Over time, newspapers and magazines reduced their reliance on aggregating lots
of "pennies" subscribers paid and increased their reliance on advertisements.
From a business point of view, this made lots of sense because aggregating
pennies is much more difficult that getting large chunks of money from
advertisers... and they could.

What newspapers ended up doing was outsourcing the bulk of their news
gathering to news aggregation companies like the Associated Press (AP). The
up-side was it was cheaper to buy news from AP than create it independently.
It was also much more efficient, obviously, since only one source could feed
many, many papers. The down-side was that the papers became dependent on the
outsourced news feeds and advertisement money. The dark side is that we can
have hundreds of papers all feeding the same news source - it looks like there
is independence in the news reporting, but it is a mirage.

The result is that newspapers became more and more an intermediary broker
("middleman") and generated less and less actual content. They brokered their
local eyeballs to advertisers and outsourced the creation of the product the
eyeballs were looking for (news) to aggregation companies.

This made/makes newspapers very vulnerable to disruption by Google,
Craigslist, and bloggers/tweeters because they (Google et. al.) are able to
use the internet to bypass the local newspapers, to cut out the middleman: the
newspapers no longer control access to (local) eyeballs. As a result, they
lost their ability to broker eyeballs (acquired by outsourced news stories)
for advertisements.

Just to aggrevate the problem for newspapers, the internet is a _MUCH_ more
efficient path to eyeballs. The cost of the medium is small compared to
physical products (well, internet access is pretty expensive, but it is
already purchased by the eyeballs so the incremental cost to layer news on top
of the internet is nearly zero). Couple that with the internet-based
advertisement to be able to target specific classes of eyeballs, and you have
a compelling case for lots of advertisement dollars to switch from printed
medium to internet medium.

News aggregation companies are also suffering as a "knock-on" effect. The
internet cut deeply into the primary funding source of newspapers -
advertisers. As a side effect, this "cuts off the oxygen supply" to news
aggregation companies.

Moral of the story? You can make a _lot_ more money as a middleman than as a
company that produces a product, but it also makes you _very_ vulnerable to
disruption by companies that are more efficient (or more hungry) brokers.

------
greyman
I see Google as a biggest disruptor nowadays. Since they have two huge cash
cows (Adsense+Adwords), they can basically offer any software service (Gmail,
Office, Photo storage, Maps, GPS, webhosting, etc. etc...) for free or very
cheap, since their advertising clients can pay for that. More specialized
services often cannot compete, since they don't have such ads money. And this
I see is a potential danger, that Google will totally crush a lot of
competition in several IT-related industries, and what's more, collect a lot
of personal data of all their users in the process.

Microsoft was often criticized for their monopolistic behavior, and rightfully
so, but it is nothing comparing to what Google does (or plan to do).

Just to clarify: I don't want to bash Google, I am also their user and their
products are usually good, but what I want to say is just the strategy they
choose is very disruptive.

~~~
pavs
There is a very obvious solution to that problem. Don't use Google services. I
have seen that people who usually criticize Google the most (not saying there
is anything wrong with criticizing) are also one of their bigest users.

There are a lot of reasons to not like MSFT's monopolistic business, they
pulled (and still does) all types of dirty tricks, including buying out
government official in third world countries so that they can sell MSFT's
powered notebooks to children and one up "One laptop per child project".
That's probably one of the least evil thing they did.

If you can provide just one example of Google doing anything remotely sinister
like that I would love to listen to it.*

Google, in most cases, provides the best possible service with the best
possible price (often free). Some of these services in all likelihood probably
is not even profitable by any margin anytime soon - or if at all, ever. This
causes companies that do provide similar services at a cost to improve what
they do; otherwise they would do nothing and stay content with the way things
are.

Google drives innovations to their competition.

IE9 and its improvements would not happen if there was no Chrome.

Firefox would not rethink its approach (their next release concept looks
almost like chrome) and improve in performance at the pace they are now.

MSFT would not aggressively improve their OS performance with windows 7 to be
functional on a netbook. (Some of us knew about Google OS way before it was
officially announced, in all likelihood MSFT did too).

Bing would not exist.

While there are real concerns about privacy, in the days of online
applications and services, privacy never existed in first place, regardless
whose service you are using.

I think Google contribution far outweighs its negative points. However I can
understand why some HN crowd can feel threatened by them.

\-------------------------------------------------

* There was one incident in China I can remember.

~~~
greyman
I was only commenting about a global effect I see Google is causing to the IT
industry. I personally do not have a problem with them, nor do i feel
threatened. It's not about me, but the Tech industry in general.

[This causes companies that do provide similar services at a cost to improve
what they do; otherwise they would do nothing and stay content with the way
things are.]

I agree in a general sense, but in reality, in some sectors you are just not
able to compete with free. Google can offer it for free, just because they pay
it with the money they earned from another service (online ads). But, I don't
say this is inherently evil or monopolistic, I just wanted to express my
observation that this strategy causes disruption.

------
mattmaroon
""The evidence was now visible that Google was attracting more internet
advertising than anyone else, and these dollars were being siphoned from
traditional media," we read."

That's just not true. Much of Google's ads come from sources that simply would
not have advertised in traditional media, at least not in the same way.
Performance marketing, which isn't really possible in a magazine, is a
humongous share of their revenue.

I know of people who make a load of money selling things like obscure
electronics or truck parts through Google. They pay dearly for those ads, and
were never going to be placing them in the New York Times.

------
alexandros
"Is it a friend to the fourth estate, on which democracy depends, or an
enemy?"

Just.. wow. Suddenly changing the business landscape for an industry(hastening
the change, really) becomes a political issue?

~~~
spot
Sadly, it is typical of journalists to see themselves in this way, and to see
anything that threatens the system that gives them so much love in a negative
light.

Ironically, after how they covered the Iraq war, it seems it it is the fourth
estate that has sold their soul.

~~~
anamax
> Ironically, after how they covered the Iraq war, it seems it it is the
> fourth estate that has sold their soul.

You seem to think that coverage of the Iraq war was special/different. How
cute.

Journalism and journalists haven't changed recently. Your awareness of them
has. (I like to say that there was a change in the mid 70s, but that's
probably my awareness changing.)

~~~
spot
> How cute.

would you say that to my face?

~~~
anamax
> would you say that to my face?

Why not? Are you a thug?

~~~
spot
because it's quite rude to be so condescending.

journalism has changed in the past 30 to 40 years with the rise of the 24/7
news cycle and consolidation of TV news organizations under corporate control.

~~~
anamax
> because it's quite rude to be so condescending.

So? I'm occasionally rude.

The changes in journalism are distribution and a perception of who is pulling
the strings. However, strings were always being pulled.

And, the perception of who is pulling the strings hasn't actually changed.
Folks have been complaining about big biz, "outside agents", etc for as long
as news has existed. They wouldn't have called it "big rail", but ....

------
robryan
Wonder if there is much in this book different to The Google Story, sounds
like another rehash of the same story.

