Odd Argument: Google Will Lose Out Once Everyone's Comfortable Paying For Stuff
from the wait,-what? dept
Because it's not culturally disposed to charging fees and has few billing relationships, Google's online search clout has been limited to free ad-supported arrangements. Google's share of total domestic online revenues could be at risk as user payments begin to match or exceed advertising, Mitchell contends. Google claims more than 30 percent of online ad market and a smaller share of online content apps payments.This is wrong on so many different levels, it's hard to know where to start. First, I'd argue that Amazon and Apple haven't really figured out how to make paid content work. Both still mostly use it as a loss leader (or very very low margin leader) to sell higher margin physical goods. Second, the growth projections for paid content are (a) questionable and (b) starting on such a small base as to be effectively meaningless when compared to a market as large as advertising.
But, furthermore, the idea that if paid content/apps actually do become popular, Google couldn't capitalize on that, is difficult to believe. Google has certainly experimented with various forms of paid content and software. The fact that they haven't gone all that well doesn't mean that Google couldn't quickly come in and enable the ability where it does work.
So, yes, there are plenty of places where an attack on Google could be successful. But betting on the success of paid content and paid apps to bring down Google? Sorry, it's just not believable. But, you have to hand it to some Wall Street folks for actually thinking that the way to beat a company that gives away most stuff for free is to charge for it. After all, haven't we been hearing for years that "you can't compete with free?" And, now suddenly we're being told that offering something for "free" can't compete with a paid offering?