Should We Pay For Google
from the take-an-economics-class! dept
MW writes “Thought you might be interested in this Google vs. Yahoo analysis from Jimmy Guterman. He asks the all important pay-for-content question – If Google is the most useful site on the Internet, shouldn’t we be willing to pay for it?” I’ve always found Guterman to be a thought provoking columnist who I very much enjoy reading, but I also think that he doesn’t have a very good grasp on economics. This is why his most recent (failed) venture, Media Unspun, discovered that it couldn’t charge for content. So, now, in an effort to vindicate himself, I guess he’s trying to bring back the idea that paying-for-content makes sense. He thinks that most people would end up paying to use Google, if they instituted a “toll-booth”. Leaving aside the fact that Google has found a way to be profitable without needing to do that, this also doesn’t make any economic sense. Putting tollbooths across the internet decreases the overall usefulness of the internet, and takes away many of the opportunities. By keeping Google free, it allows them to leverage all of their visitors into something greater. Guterman’s “charge for everything” strategy is short-sighted in that it doesn’t look at the overall landscape to figure out where the most reasonable money making strategy is. Instead, it looks for the easiest target for money – which, in turn, cuts off much larger and more sensible money making ideas. If they were to charge, it would destroy Google. It would (1) make them lose all of their ad sales business, which accounts for 2/3 of their revenue while (2) bringing in incredibly tiny amounts of revenue from paying subscribers. While some people certainly would pay the toll, it wouldn’t nearly replace the ad sales they’re making. Part of Google’s strategic advantage is the eyeballs they bring in by being the best in search. Google is trying to leverage that asset by doing things like selling ads. Guterman’s strategy is to try to destroy that asset by taxing it.