Paid Content reports today that The New York Times Companies’ Martin Nisenholtz is talking about charging for the paper’s mobile app.
On the face of it, this seems to make sense: People are paying for mobile content and functionality (ring tones vs. earth-shattering news, ferchrissakes!) and for mobile apps. The New York Times iPhone app is downright wonderful. It’s far better than The Times’ Kindle app (no fault of The Times; all the Kindle news sites are sucky). I’d pay for the app – once.
But would I pay for an ongoing subscription to it? Well, here’s the problem: my iPhone brings me the web and I can read The Times there without paying. Damn, that genie; doesn’t know his place (in the bottle).
Nisenholtz says, quite rightly, that one problem with the iPhone app is that there are fewer opportunities for advertising. And even so, the few ad avails I see are all filled with free house ads for The Times itself; obviously, the sales staff hasn’t taken seriously the opportunity to sell this prime audience (why is it always thus?). So The Times’ app makes bupkis. Even the house ads are irritating, so I might pay for an app without ads. But then I’d be paying for less irritation rather than for the content.
Tim Leberecht, frog design’s VP of marketing and communications, riffs on my post about moving past selling advertising as scarcity and about decency as the new ad (my emphasis):
Equity is the accumulation, the repeated occurrence, of actions, interactions, and transactions that add value. The best way, then, to build brand equity is to repeatedly and consistently add value through all your interactions with customers. Advertising doesn’t add value; branded content does (information). Promotions don’t add value; branded entertainment does (entertainment). When you brand something, you don’t just market scarcity and advertise your products and services, you market your ability to add value that is relevant.
The web, and the social web in particular, reconciles artificial scarcity with relevance, and that’s why more and more branding dollars are moving online. It is the ideal forum for creating an abundance of scarce moments, thousands of small great ideas instead of one great big one. These small great ideas come to live in brief moments of attachment with customers that are personalized and truly relevant for them.
“Advertising is failure,” says Jeff Jarvis, and he thinks “media only get in the way of customer relationships.” And indeed, how will you make more friends at a party? Showing up with a big banner around your neck that says “I am a great friend” or engaging in a handful of conversations with strangers, listening to their stories and detecting affinities whilst accomplishing a sense of privacy that gradually becomes intimate? Right. In the end, that’s what we should be doing as marketers to build real, sustainable brand equity – creating publicity through intimacy, loyalty through decency.
You have to love – or at least pay attention to – Digg’s new advertising system enabling users to vote on ads: The more that users digg an ad, the less the advertiser pays. That’s a reversal of advertising but it’s the way advertising probably needs to go: The better your relationship (which springs from a better product and service), the more your customers will market it for you, the less you’ll have to pay to market it. That is the ideal. Advertising is failure.
Or look at it another way: We in media – including us online with our banners and buttons – are still selling scarcity – and pricing it that way – when there is no scarcity. Google sold performance instead and that motivated it to create ever more ads across more of the internet – aka Adsense – to get ever more relevant ways to be ever more effective.
I’ve been wanting for sometime to have users vote on ads and tell a site which ads are worthwhile to them and which are not. This creates data that valuable for the advertiser (who likes me, who doesn’t?) and it enables media and marketing to become far more effective (Google allowing us to correct the targeting assumptions it makes about us reduces our irritation with irrelevant ads and improves Google’s effectiveness).
When I tweeted this earlier, Angus Batey worried that popularity can be a danger, and that the better-resourced companies that can create better (more entertaining, popular) ads will win. Except I’d say that may be the case with old advertising – commercials – but it’s hard to do that with text ads on Digg: Fool me once (”Free Sex Now!”) and I’ll vote you down the next time. The Digg system rests on a Cluetrainy need to deliver authentic value and relevance – like Google’s ads.
The future of advertising needs to be selling – that is, enabling – relevance instead of selling scarce space, time, or eyeballs. The future needs to be about adding value – relevance – rather than selling scarcity (extracting what the market will bear). I’m not sure whether Digg’s system is a step in that direction; Batey’s right that there could be unintended consequences. But it’s worth watching. I hope Digg shares data and experience in its fascinating experiment.
Steve Rubel sent me some questions for his AdAge column and I sent him some answers. A snippet:
Mr. Rubel: Are customer service and peer-to-peer advocacy the new advertising? And if so, how does that change the ad industry?
Mr. Jarvis: Advertising is failure.
If you have a great product or service customers sell for you and a great relationship with those customers, you don’t need to advertise.
OK, that’s going too far. There is still a need to advertise — because customers don’t know about your product or a change in it or because, in the case of Apple, you want to add a gloss to the product and its customers. But in the book, I suggest that marketers should imagine stopping all advertising and then ask where they would spend their first dollar.
In an age when competition and pricing are opened up online and when your product is your ad, you need to spend your first dollar on the quality of your product or service. If you’re Zappos, you spend the next dollar on customer service and call that marketing. If the next dollar goes to advertising, there has to be a reason — and if the product is good enough, that reason may fade away. . . .
Mr. Rubel: If Google were a Super Bowl ad, what would it look like?
Mr. Jarvis: It wouldn’t. Google does not treat us as a mass. And it has better ways to spend its money.
We already knew that newspapers’ classified business was as good as gone, but even so I found these stats from the Wall Street Journal this morning devastating:
Last March, Baylor Health Care System, a large Dallas-based nonprofit, began purchasing keywords on Google, Yahoo and employment-related search engines SimplyHired.com and Indeed.com. The search-engine ads generated more applicants, at less cost, than the other recruiting methods, says Eileen Bouthillet, director of human resources communications.
In the first six months of the program, Ms. Bouthillet says, the search-engine ads delivered 5,250 applicants, at an average cost of $4. By contrast, Baylor paid an average of $30 for each of the 3,125 applicants who came via job boards, and $750 each for the 215 applicants who replied to a newspaper or magazine ad.
As a result, Ms. Bouthillet says Baylor has reduced spending on job boards and print ads. . . .
UPS says it received more than 150,000 applications from [its holiday hiring] campaign, at an average cost 75% to 80% cheaper than print ads. “We’re cutting newsprint wherever we can and trying to move more to online media,” says Matthew Lavery, corporate work-force planning manager. “Google is outperforming other online media.”
If this is true of job advertising, it will be true of other categories – including papers’ last hope: retail – especially local ones as mobile makes Google even better at targeting. Google has the mechanism to serve small, local advertisers who were never served by papers; papers don’t. I think this probably means that the best opportunity local outlets have is to help local advertisers with their SEO – to place ads on Google for them. (See Fred Wilson’s tweet on this model at CUNY’s New Business Models for News Summit.)
Print has always been inefficient. Now advertisers are learning just how inefficient as online becomes more efficient. This is another reason to develop the strategy to drop print now.
PR magnate Richard Edelman takes me to task for arguing in What Would Google Do? that PR people, like lawyers, can’t be Googlified. After saying nice things about the book, he adds: “But it is hard to love a book that assigns your profession to the scrap heap of history. Jarvis contends that lawyers and PR people cannot evolve their business models ‘because they have clients….’” He urges me to reconsider (or at least to separate PR from lawyers).
OK, I’ll try. I’ll take inspiration from Doc Searls’ VRM (vendor relationship management, as opposed to customer relationship management) and from adman Rishad Tobaccowala’s argument, in the book, that agencies should focus on consumers – on agencies’ customers’ customers – and “should be the champions of those people.” [Snippets below.]
PR and ad agencies are at war – undeclared or at least quietly declared – to take over more of clients’ marketing budgets and also to help recast companies’ and brands’ relationships with their customers given the realities of the new world I describe in WWGD?. Those goals may be in conflict. Let’s start with the latter.
I argue in the book that the goal of companies and brands must be to have direct relationships with customers, cutting out the middlemen of ads and PR (and – newspapers, magazines, and TV be warned – media). This new agency should try to help them have that direct relationship. Then it should, in the words of Craig Newmark in the book, “get out of the way.” In that sense, the agency is a consultant and when its job is done, it should exit. That’s not a very sustainable business model, particularly for ad agencies, which make a cut of what they spend for clients and thus are never motivated to help companies spend less on ads. In that way, PR agencies have an advantage; they already act as consultants.
PR also acts as a company’s mouthpiece and that puts them in conflict with the ethos of the Google Age, when we distrust the institutional voice and expect to have a human conversation (see Cluetrain: markets are conversations held by humans). Don’t you hate it when so-called customer-service people at phone, cable, and airline companies say they they won’t do what you want as they insist on explaining their policy. I tell them that I have a policy, too, and they should listen to it. They don’t. It’s not in the script.
So if there is any vestigial middleman in our relationship with companies, shouldn’t that be our advocate who explains our policy to the company? That would be the new, inside-out agency. It would represent our interests and help make our case and make the company smarter (which will make them more money). If you want a good relationship with your customers, doesn’t that simply make sense? When I visited Google, I met someone at the book talk who said her job was “customer advocate.”
There’s just one problem with being a customer advocate as an employee or agency: Who pays you? Who’s the boss? I come back to the reason I argued in the book and the reason Edelman argues with me: Being paid by the client puts you in the service of the client. Can there be a church/state wall, as there has been in newspapers, that allegedly separates the holder of the public’s interest – the journalist – from the revenue – the advertisers? Well, indeed, perhaps a PR agency could be that. Perhaps it could act as the voice of the customers.
But to maintain its credibility with those customers, this advocacy agency would need to fire clients when they don’t behave. To get quite specific, if I were the agency for Wal-Mart – which Edelman is – I would have fired them (or as an employee, I would have quit) after so many of the deaf-and-dumb things that company has done to harm its relationship with its public. (I’ll let you fill in your own litany of sins.) But Edelman hasn’t fired Wal-Mart and I well understand that. Wal-Mart pays them a lot of money. Wouldn’t it be foolish to pass that up? Wouldn’t firing them make the next client skittish about hiring an agency might embarrass them by firing them?
Richard Edelman argues in his blog post, as he punctures my myths: “No client is worth the risk of long term damage to the reputation of the PR practitioner or its firm. We recognize that relationships with reporters, with the public and other stakeholders are a true asset, imperiled by obfuscation or prevarication.” Does that necessarily say that Edelman endorses Wal-Mart’s behavior and its sins, or at least slow learning? Or if they are trying to fix Wal-Mart, aren’t they judged on that success? It does affect the company’s reputation with consumers and those other stakeholders.
That is the PR agency’s risk. That is why I still wonder whether PR people can be open and transparent and keep their income.
But perhaps there the possibility of creating a new kind of agency that is really is owned by the public – the people formerly known as consumers – that is so good as representing customers that companies gain credibility by working with it and paying attention to its precepts. That, I think, is what Doc Searls is trying to build with VRM: a platform for that new relationship. Is that the new agency?
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For today’s 30 Days of WWGD? snippet, then, we bring you snippets from the advertising chapter:
To quote Google’s own No. 1 rule, “Focus on the user and all else will follow.” Australian ad executive Peter Biggs spoke for much of his industry when he told ABC Radio National’s The Media Report: “It’s a consumer-driven business, but they are not our most important audience. Our most important audience is our clients, and their brands.” Tobaccowala says the opposite. “Our fixation should not be on our clients. It should be on the people our clients want to engage, sell, and interact with. We should be the champions of those people. That is where we are missing the boat.”
I wonder whether focusing on the consumer instead of the client ends up usurping much of the job of the agency as we know it. Fixating on customers should be the job of everyone—everyone—in a company. In business, we’ve long said we’re customer focused. But today you have to mean it or your customers will call your bluff. Focusing on customers can’t be outsourced to agencies.
Agencies will resist change until the economics of the industry change. Because agencies make a cut of what they spend, they are motivated to spend more on ads rather than to replace ad dollars with more valuable relationships between brands and customers. So clients may be the first to evolve. Just as I tell newspapers to imagine a day when they stop the presses and book publishers to think past the book, so I advise marketers to imagine as an exercise firing the agency, canceling the ad budget, throwing out the ads, and starting over. What is your relationship with your customers then? Where should you put your money? Where should you spend your first ad dollar and why?
Start, of course, by investing in your product or service. Tobaccowala said no amount of advertising will make up for a bad product. “Stop this yelling and screaming about what’s your Facebook strategy,” he tells clients. “Make absolutely certain that you have a great product or service. Make absolutely certain you have great customer service. Those are the first two rules of so-called advertising in this world. If you don’t have those, don’t pay any money to anyone to do anything.”
Then turn the relationship with the customer upside-down. First, invest in customer service, making it a goal to satisfy every single customer. Remember that your worst customer is your best friend. Second, invest effort in social tools that enable customers to tell you what you should be producing; hand over as much control to them as you can (I examine this idea from another perspective in the chapter on manufacturing). The goal must be to produce a product people love. All companies claim that customers love their brands. But I mean customers love your product so much they want to tell the world—that kind of love, Apple love. Third, hand over your brand to your customers—recognizing that they have always owned it. Don’t tell them what your brand means. Ask them what it means.
Every product is great; every relationship is satisfying—shoot for nothing less. So now you are spending quality dollars and relationship dollars over advertising dollars. You have handed over control of the product and the brand and gotten out of the way. If you haven’t gone out of business by now and convinced every boss, board member, analyst, reporter, and stockbroker that you’ve gone mad, then it probably worked.
Won’t you still advertise? Ask yourself why. To interrupt and irritate random people? No. To convince customers that a bad product is good? No. To inch ahead of your competitor with the brute force of media spending? No. To get people watching Sunday morning shows to buy your stock? Please, no. Do you advertise to tell customers something they didn’t know and need to know about your product, such as an improvement or a better deal? Well, OK. Tobaccowala defines advertising as “the economics of information” (the title of a 1961 essay by Nobel laureate and University of Chicago professor George J. Stigler). Advertising is supposed to tell us about a product or its price so we can save effort, time, and money in our search for it. The internet has made that much more efficient. If the customers’ goal is to reduce their transaction cost—the effort to find the right product at the right price—then doesn’t the internet itself replace advertising? Often, yes. . . .
The agency and advertising need to get out of the way in the relationship between companies and customers. Agencies may help solve problems—teaching companies how to build networks with customers, assisting them with product launches—but once the consultation is done, the good consultant leaves town.
And here is what I said about PR people and lawyers (note that lawyers already protested):
The problem for public relations people and lawyers is that they have clients. They must represent a position, right or wrong. As they are paid to do that, the motives behind anything they say are necessarily suspect. They cannot be transparent, for that might hurt their clients. They cannot be consistent, for they may represent a client with one stance today and the opposite tomorrow, and we’ll never know what they truly think. In a medium that treasures facts and data, they cannot always let facts win; they must spin facts to craft victory. They must negotiate to the death, which makes them bad at collaboration. It’s not their job to help anybody but their clients. They are middlemen. They won’t admit to making mistakes well; clients don’t pay for mistakes.
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Here are the other “myths” Edelman answers in his post:
Myth #2—PR people must spin facts to craft victory. This is to define PR by a tiny minority of political PR agents who are masters of leaking, attacking and exaggeration. The best PR work combines policy and communication, because truth is the most effective approach. Jarvis himself notes the possibility of companies having sites where they share information and are factual as part of “the new ecology of information online.”
Myth #3—PR people only help their clients. PR campaigns work when they premised on both public interest and private gain. There is a mutuality of benefit from a partnership forged between a non-governmental organization and, say, a corporation to grow bananas in a more environmental manner.
Myth #4—PR folks won’t admit to making mistakes well—quite to the contrary, we constantly fight lawyers to get clients to acknowledge their actions, to apologize, and to provide a way forward that is measurable and accountable. . . .
In Jeff’s world, companies speak directly with consumers, giving up control of product development, focusing on customer service instead of marketing/advertising, building strong relationships within communities of interest. Public relations actually plays a vital role in this new construct by making valuable information easily accessible and open for improvement. We provide big ideas that bring together constituencies (such as the Quaker Oats Substance) for action. We also offer advice to companies, encouraging them to take on the big issues of our day that inspire employees while offering new opportunities to make money.
What do you think? Can PR live by the ethos of the internet age: open, honest, transparent, collaborative? Is the inside-out agency possible? Or does the paycheck rule the relationship?
The promise of local ad support for news will come only if a new population of very small businesses can be served in new and effective ways – before Google beats everybody else to it. That’s apparent in the results of Webvisible and Nielsen surveys reported by MediaPost (via Marketeting Pilgrim and Frank Thinking), which show that local marketers are leaving newspapers and the yellow pages but are still dissatisfied with – and don’t pay enough attention to – internet marketing. Factoids:
* 42 percent of small businesses say they use the local paper less and 23 percent use yellow pages less – while 43 percent use search engines more.
* “Though 63% of consumers and small business owners turn to the internet first for information about local companies and 82% use search engines to do so, only 44% of small businesses have a website and half spend less than 10% of their marketing budget online.”
* “Only 9% are satisfied with their online marketing efforts.”
* Mediapost found a disconnect in how small-business owners act as business people and marketers vs. how they act as consumers. That is, as consumers, they use and are satisfied with the internet and search to find other local businesses, but as marketers themselves, they use online less.
In these stats lies a big – but fleeting – opportunity: serving local businesses by helping them use online well. By this, I don’t mean doing what local newspapers have been doing: trying to sell them display or directory ads, just as they did in papers but in a new medium. Instead, I mean redefining what it means to help them succeed online. This might mean helping them place ads smartly on Google with good SEO (see Fred Wilson’s tweet out of our New Business Models for News Summit at CUNY). It might mean finding was to help local businesses interact more meaningfully with their own communities. It might mean enabling armies of citizen sales people – neighbors who really know their local businesses – to serve and sell those advertisers. It might mean providing tools to help local businesses create better (more informative, more SEOed) online presences and providing them data to show them their return on investment. I might mean finding other means to efficiently sell local businesses (can phone rooms ever work?). And so on…..
The assumptions I so often hear about local advertising – it doesn’t work; it doesn’t pay enough; small businesses are ignorant – need to be updated. The assumption that most needs to be updated is that a business needs an ad. It may need other tools to be found in search and to reach the right people and to improve relationships with them. All that may count as marketing, but not necessarily with an old ad in a new medium.
Here’s a second day’s snippet from What Would Google Do? I’m going to jump all around the book, picking bits here and there. Today’s is on advertising. But first, here’s a link to a Newsweek Q&A about WWGD?
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For more than a century, the public face of companies has been their advertising, slogans, brands, and logos. How much better it would be if a company’s public face were that of its public, its satisfied customers who are willing to share their satisfaction, and its employees who have direct relationships with customers. Brands are people.
If that’s the ideal, then here’s the goal: Eliminate advertising. Or at least fire your ad agency. Oh, you won’t get rid of advertising entirely. You should be so lucky. But every time a customer recommends you and your product to a friend is a time when you don’t have to market to that friend. It is possible today to think that one good word can spread as far as an ad would. This scenario is not hypothetical. When I had my problems with Dell, I could see them losing sales as people came to my blog and left comments saying they’d just decided not to buy a Dell, often adding that they’d told their friends their vow as well. There’s no telling how much one pissed-off customer costs you today. The contrary is also true. A happy customer can sell your products. Now that bloggers are praising Dell online, new sales accrue as customers reconsider the company. When Dell started offering discounts to users of Twitter, who passed the word to more users, the company added $500,000 in sales in no time.
The more your customers take ownership of your brand, the less you will spend annoying people with your ads. I can hear your agency: You can’t hand messaging over to the people; they’ll be off-message. Well, tell your agency their message may be off. Your customers have always owned your brand.
Advertising is your last priority, your last resort, an unfortunate byproduct of not having enough friends?.?.?.??yet. Learn this lesson from Google, which spends next to nothing on advertising. It became the fastest growing company in the history of the world without marketing. It grew thanks to its friends, not through ads. In its “10 things Google has found to be true,” the company says its “growth has come not through TV ad campaigns but through word of mouth from one satisfied user to another.” The generation that has that damned “Yahoo-ooo” sound stuck in their heads thanks to untold millions spent on commercials is the same generation that used and spread Google instead, for free.
I’m not shocked that Google abandoned its effort to sell print ads for newspapers. When the program started, I was dubious because I said that it could commodify print brands (magazines at first). As it turns out, newspapers also didn’t hand over decent inventory — that is, space — to Google and so the program was not of much value to either Google or the papers.
One of the great blown opportunities in the history – yes, history – of newspapers will be their failure to set up networks to get new advertisers and dollars. The disastrous New Century Network should have been nothing but an ad network, but papers overcomplicated it and then didn’t support it because they all wanted to control. I told the AP a decade ago that it should become an ad network for papers but that was never going to happen. Networks could have sold the quality of papers. Now they sell remnant space.
Now magazines are looking bad and worse by the day. The latest: A major distributor is adding a surcharge, according to Keith Kelly in the NY Post.
Anderson News earlier this week informed publishers that it would impose a 7-cent charge for each copy of a magazine that it delivers to stores, and warned that any publisher that refuses to pay the fee could no longer count on Anderson to distribute its magazines….
Publishers, which have until Feb. 1 to agree to pay the new fee, are balking at Anderson News’ move, which would drive up costs at a time when most magazines are hurting. Indeed, American Media, which is already on the brink of bankruptcy, could be hit with a bill of up to $12 million, one source estimated. Another source said People, which has one of the best sell-through rates in the business, could be hit with up to $15 million in extra charges….
Magazines have a sell-through rate of around 38 percent and the surcharge would apply not to just the copies that are sold but to all unsold copies as well.
And magazine advertising is falling in the dumper – and it’s sure to get worse as the impact of the crash deepens. The Wall Street Journal reports at 17% plunge in ad pages in the fourth quarter against a year ago. For the year, they were off 12%.
TV’s next as auto, retail, and consumer categories suffer.
And they say the business model for the internet is crazy. At least it has no physical costs. Oh, I know, media online is supported by advertising, too, but the real opportunity there is to replace mass ads with a mass of niche ads. That is what Google did. Though Google, too, will feel the impact of the crash, it has room to grow while mass media do not. The crash is only accelerating — as in pouring accelerant on a fire — the fundamental shift in the economics of media. The change is big, fundamental, and permanent.
Joe Nocera tells a cautionary tale in today’s NY Times about Google’s power in advertising. The man who runs Sourcetool.com complained to the Justice Department after Google found that his site didn’t live up to its standards and raised the rates on him (Google’s way of shooing away sites it doesn’t approve of). The implication is that Google can wield too much power as a monopoly.
But in the Google age, nothing is as it seemed.
I don’t want to be accused of being an apologist for Google (which will happen anyway because my book is admiring) but I can see their stance on Sourcetools. It’s not a splog — the owner puts effort into building a useful directory, Nocera says — but it does look and act like one. Google is trying to protect us from sites — even paying advertisers — that detour and delay us from getting the answer to our question. If I ask for earthmoving machinery, I’d like to get the link straight from my first search (on Google) rather than being directed to Sourcetool, where I’ll take five more links to get a not-very-satisfying list of companies. Google says it always focuses on the end-user.
Nocera and Sourcetool point out, though, that Google holds the power to raise prices and disadvantage sites without explanation or appeal. That raises fears that it can and will act as a monopoly.
Except the issue isn’t that Google is a monopoly. It’s that Google has become the marketplace. It where we all go for information. It’s where advertisers go for us.
It’s no different from a newspaper. Even when there were two papers in towns, one of them was the marketplace for homes, cars and jobs. That allowed the paper to set rates as high as the market could bear, which was very high. Google would say the difference is that it doesn’t set rates, the market does in auctions for keywords. Except in this case, by punishing Sourcetool, Google did set the rate. And it has the power to do that.
craigslist is also no different, except that Craig Newmark set most rates at zero. He’s the marketplace now and now that he has us by the neck, he could raise rates — as eBay did once it dominated the marketplace it created (though that invited competition from Amazon, Etsy, et al).
What it comes down to is trust. Once a service becomes the marketplace, do we trust them not to use that position to gouge us? There really is no alternative. The closest was Yahoo and now even it is coming to Google to sell ads because that will be far more profitable — that is what the Justice Department antitrust division is investigating now.
But if the Feds rule against the Yahoo deal, it is in essence stealing hundreds of millions of dollars not from Google but from Yahoo. It is restricting Yahoo’s access to the marketplace. That would be as unfair as Google unfairly punishing a site that doesn’t meet its standards.
The first obvious solution is transparency. If we all knew Google’s standards and trusted that they were, indeed, looking out for the end-user and if Sourcetool knew Google’s standards and abided by them, that would blunt Sourcetool’s complaint. Indeed, part of its complaint is that it can’t find out the standards. But then here comes the Google age wrinkle: If Google revealed its standards, it would only be feeding the needs of evil spammers, giving them to manual to game the system.
Still, the bigger Google gets, the more trust will be an issue. I think they need to look at alternatives. Why not, for example, establish an appeals panel made up of advertisers and users to adjudicate issues such as Sourcetool? This would require Google to hand down its laws — or more to the point to draft its constitution: the definitions for good sites rather than spam, not in algorithm-busting detail but as high-level goals. But another Google era wrinkle appears: scale. When the web is developing by the minute, it’s impossible — and potentially limiting and dangerous — to write even the broadest definition of what’s good. And your good is not mine.
It’s all about trust. The question will be whether I trust Google or the government or the market more. I’ll take the market first, Google second, government third. If Google uses its power monopolistically and maliciously, I believe it would hurt Google’s business as some painful proportion — not all — of its audience and advertisers look for alternatives and then as entrepreneurs and competitors see the opportunity to meet that need.
The government didn’t need to go after Microsoft. Google has. That it is say, the market created an opening Google is now trying to fill with Docs and now Chrome. The irony here is that Microsoft, so long burned by antitrust harassment, is not empathetic with Google’s possible plight at the hands of the same tormenters but it wants to join in the tormenting. But that’s a different drama.
I’m not sure whether Google was unfair to Sourcetool or not. I don’t think it’s a very good service; I see it as a delay and detour, though not a malicious one. Nocera is sympathetic to Google’s view: “Listening to Google executives explain how the company’s algorithm works, I came away largely convinced that Google was operating in good faith.” But then, we need to ask whether Google used its power well in this matter.
Larry Lessig famous wrote that code is law. Today, Google is law. It is up to Google to convince us — the market — that its law and enforcement of it is just. To do that, it must be as consistent — which gets harder the bigger you are — and open as it can be.
(My Guardian column, up Monday, also touches on another solution: Competition.)
The Justice Department has hired a litigator to look at going after Google and its growing dominance in advertising.
This isn’t surprising, of course. It’s the yin-yang of American business: we love success stories but we hate too much success.
The problem with going after Google is that unlike Microsoft or earlier monopolies, the industries Google affects handed it its dominance on a silver platter. Google didn’t steal it away. Yahoo went to Google to be rescued from erstwhile monopolist Microsoft and to improve its bottom line by hundreds of millions of dollars. Newspapers–non-French-speaking ones at least–hire specialists to make their content more attractive to Google and happily take its ads–including this week’s announcement about Google digitizing and monetizing newspaper archives. See also this week’s announcement by NBC that it is handing over some ad inventory to Google. That’s not just about the money. It’s about bringing in a new population of advertisers that big media couldn’t serve (being too big–irony noted).
The agency side of the business, too, is eager to do business with Google. When I interviewed Rishad Tobaccowalla of Publcis’ Denou for my book, he explained that the giant agency consolidated all its digital divisions so it would have better negotiating leverage with Google, Yahoo, Microsoft, et al — and also so it would gather more data (as Google does) to learn more about users and target ads better.
But Google gobbles up advertising companies, you say. Well, its acquisition of Doubleclick was approved by the government only recently. Has Google gotten too big since then?
I’ve long argued that we do, indeed, need competition in the ad market but it’s not going to come from regulation. It’s going to come from getting off our asses and creating those competitors. I said that we need an open-source ad marketplace. Nobody’s heeded that advice. Meanwhile, Glam has built a non-Google network that has grown to gigantic proportion–CEO Samir Arora told me at a Burda party the other night that it now serves more than 80 million uniques worldwide, more than 40 million in the U.S. with brand advertisers. That is a competitor to Google.
(Full disclosure: I’m writing a book about Google, What Would Google Do? And I own Google stock.)
