Ahem google in case you don’t know sharing drives commerce
December 5th, 2009
http://www.flickr.com/photos/16230215@N08/4066005402
WHY is Google winning? And what does it tell us about the future?A fortnight ago, Rupert Murdoch told Australian Sky that he would stop Google from indexing all of his content, preventing it from becoming a one-stop aggregator. Murdoch has been saying for a while that he wants to stop his newspapers haemorrhaging cash by charging for online content. He is right to wage the paid content battle – but there is a bigger battleground. Today everything in business is structured around networks. Everything which was linear is now network-oriented, and the winners are those companies who can align the economics with the ecosystem. That can be a start-up or an established player with vision. Google’s innovation was its business model – not its search technology. Alta Vista was the better search engine, and Yahoo the more dominant one, but Google developed the business model that home-grown Espotting had pioneered.
That twist of fate gave it a clever ruse to be in control without looking in control, to establish massive network effects not by organising the world’s information, as it claims, but by organising the economics of the world’s information.
Sharing drives commerce in the networked society
Writes Julie Meyer, and she continues
When the consumer wakes up and realises the value of the personal information they give away in the process of browsing and searching the internet, then Google could find itself in trouble. Consumers – like every other kind of content creator – will want a cut of the value of their personal information, and will shift to a new search engine that offers them one.
Something that I have been exploring over the last few years – the business model for the networked society is different to the business model of the industrial society. Something that enrages certain people – but it is inevitable.
The unknown, or the incomprehensible makes us naturally fearful, and so we instinctively withdraw. This is the time to replace our fear of the unknown with curiosity, to embrace the true possibilities of the networked society because in doing so will make you and your company commercially more successful.
You can't be nimble when you tool big 2ost Century business models are as redundant as the 35 acre Packard Plant in Detroit
The Packard Plant in Detroit, a 35-acre site, that once was considered to be state of the art engineering, lies derelict, its workers long gone. Today, Detroit and Flint Michigan are the equivalent of a third world country in a first world one. You cannot be nimble when you scale big. But it does not have to be this way, we need to discard the baggage of a linear way of doing things and embrace a No Straight Line approach to the networked society. Then we are ready to not only survive but, thrive in a non linear world. To do nothing means ultimately the costs of maintaining the status quo will inevitably exceed the cost to change – Detroit and Flint Michigan are testament to that.
SMLXL archives on the economics of sharing
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4 Responses to “Ahem google in case you don’t know sharing drives commerce”
By aphid on Dec 6, 2009
Ahem, Alan, Google’s doing pretty well commercially. I think they know a thing or two about networks.
1) I don’t think you have to choose between saying that Google’s innovation was its search algorithm or its business model. Getting them to work togeher and at scale is really the success story. Using citations as a way of ranking site relevance was fairly innovative for its time. The business model, which is to provide content to people that interests them alongside classified ads that are meant for people with those interests is straight out of the ndustrial-age newspaper business.
2) What Google doesn’t share is what in part helps it stay the most preferred search engine: its algorithm. Whilst it wants to make all the “world’s” information available to people, it’s careful to hang on to what it considers to be Google’s intellectual property.
(Google thinks that information belongs either to the world or to Google – which I think is what Murdoch is taking issue with).
3) Google’s forays into sharing, particularly YouTube, have not been all that commercially succesful for it especially compared with its transactional, one-to-many classifieds+search offering.
4) Google absolutely needs scale to succeed. It is a scale business. Only seriously big money could ever hope to challenge it.
4a) Its success lies in being able to sell ads in most territories in the world, that’s why there are ‘Googleplexes’ in so many cities in the world.
4b) To be useful, people have to be confident that Google indexes most of the web. Doing that requires a lot, I mean really a lot, of computing power. They are estimated to have more than 800,000 servers around the world in many data centers. Just one of them, in North Carolina, cost over US$600 million to build, and is more than 216 acres. Some estimates are that they own 2% of all the servers in the world. I think this puts your example of a car plant in Detroit into perspective. It would take serious scale to challenge Google, which is why Bing is the only one that’s even beginning to bite.
4c) Google needs scale in terms of numbers of users too. Advertisers buy Google because they can slice and dice their way through most of the world’s internet users and still be left with a sizeable market to sell to. Who are you going to advertise with – the company that reaches 85% of the market several times a day or one that reaches one tenth of that?
sources
found with Bing because I hate Google
http://www.straightupsearch.com/archives/2008/04/google_builds_d.html
http://perspectives.mvdirona.com/2008/06/11/JeffDeanOnGoogleInfrastructure.aspx
By DHibbard on Dec 7, 2009
I do not disagree with your premise that business today has to move with the times – and technology. But please don’t kid yourself that Flint, Michigan, is anything akin to a developing nation (BTW, “third world country” is as archaic a phrase as the Packard Plant in Detroit). The city that birthed General Motors was the first to suffer its decline – however, the news of our demise is decidedly premature.
There is a lot of new development and nimbleness still left in this city, and a lot of dedicated people committed to it’s resurrection.
For example, this alleged “third world country” just mustered the support to vote our local farmer’s market the best in the nation – the Chicago Tribune even said ours was better than the one in Chicago! The four colleges here are working to change the face of Flint with new student housing and collaborations on many levels. Two grocery stores are opening downtown to service the new influx of young residents. On top of that, four restaurants have opened in our once beleaguered downtown and our Cultural Center campus rivals that of many bigger cities.
While we may never recreate the days of “Generous Motors” in Flint, we will come out of this in good shape. Don’t believe everything you see in “Roger and Me.” While Michael Moore has an entertaining way of making a point, one must remember that good news doesn’t sell as well as bad news.
By Alan Moore on Dec 10, 2009
Thank you for your note. And I apologise if I have touched a raw nerve.
I am in fact trying to bring the issues to the attention of a wider world and draw the analogy that large scale can leave areas their econmies and their people blighted when the world moves on. Its not to say you are not fighting back, and its not to say that you are making progress, but it is fair to say that your country has not treated you kindly.
I am not Michael Moore, and have done my own research – I also have people close to the ground in Flint and Detroit.
Please let me know what you are doing as I am happy to post about it.
Thanks for posting
Alan Moore
By ArielFerreira on Dec 10, 2009
DHibbard, I feel you! Flint is not a third world country, nor has it experienced full-on demise. With people like you at the helm it will experience revitalization, and it seems our city is on the way.
Alan was using a metaphor to drive a point home – that Flint and Detroit are like our VERSION of a third world country. I understand his message, and I hope it does not blur the point: the business model for the networked society is different than the business model for the industrial society. That increased agility is necessary for a sustainable and scalable business. This is true.
GM is not sustainable nor is it agile. It is responsible (as are we for our reliance) for the partial destruction of Flint.
Now we know better.
Ariel