Why Google will never pay for content

Why Google will never pay for content

Summary: I hold an MBA from New York University Stern School of Business. No MBA necessary, however, to grasp the American way, the American capitalist way that is: You get what you pay for!

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TOPICS: Google
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I hold an MBA from New York University Stern School of Business. No MBA necessary, however, to grasp the American way, the American capitalist way that is: You get what you pay for! 

Why then does Wall Street darling, $140 billion market cap, 29% profit margin Google wantonly “make money solely on the backs of other people’s content,” without paying for it, as Thomas Rubin, Associate General Counsel for Copyright, Trademark, and Trade Secrets, Associate General Counsel for Copyright, Trademark and Trade Secrets, Microsoft, decried today at the Association of American Publishers Annual Meeting. 

I have asked just such a thing, many a time, at this Digital Markets Blog and in my recent Fast Company Magazine Google debate.

Below is an excerpt from my response to the Fast Company magazine question: Is Google due for a fall?

People are eager to dismiss talk of Google's encroachment on the intellectual and personal assets of the world as "scaremongering," and that is what Google is banking on, literally.

GOOG is fueled by an unsustainable business model: The selling of ads against content that it does not own, that it has not compensated IP owners for and that it has no explicit legal right to exploit commercially. The "millions" of businesses and individuals "voluntarily" forking over their proprietary content and personal data to Google "every day," sell themselves and their assets short, while Google's market cap balloons.

Google's free ride is being challenged by content owners around the world. Google corporate AdWords customers are challenging Google's dominion over their own properties, protesting that Google has become a "toll keeper" on brand names.

If "search marketers aren't fools," then Google's growth is destined to slow, along with its share price.

Is Microsoft brandishing out at Google in the name of copyright owners rights purely for its own Microsoft-centric corporate objectives? Of course. Does that make Microsoft’s cogent arguments any less powerful? Of course not.

As a matter of fact, I heard Google CEO Eric Schmidt today embrace loud, proud and clear, the very content owner be damned modus operandi that Rubin accuses it of fostering: The “taking” of the works of others, without any regard for copyright, or compensation.

I spent several hours over the past two days listening to Schmidt expound upon the Google no need to pay for content, free-ride business model, as I report and analyze in “YouTube: What Google CEO Eric Schmidt really thinks” and “Google CEO extols $800 billion advertising opportunity.”

The Google CEO ultimatum to video content owners victimized by copyright infringing uploads at YouTube:

Users are going to make copies of your copyright content, so you may as well get used to it and embrace it. Video content companies ought to make it even easier for “fans” to use unauthorized copyright content uploads, instead of trying to deprive them of the content they are “fanatics” about.

What will the video content owners really get out of their “fans” exploiting unauthorized uploads of their copyright content? That is still Googley “unclear.”

Amazingly, the Google CEO was extolling its all the world’s information is Google’s free for the taking, fair-use, DMCA inspired business model at perhaps the exact moment that the Microsoft Counsel for Copyright was rallying against it!:

Google’s business model is straightforward – attract as many users as possible to its site by providing what it considers to be “free” content, then monetize that content by selling ads. I think Pat Schroeder put it best when she said Google has “a hell of a business model – they’re going to take everything you create, for free, and sell advertising around it.”

I have put forth at this Digital Markets Blog “Google click fraud audits: When will advertisers demand them?

I now also put forth "Google compensation: When will content owners demand it?"

ALSO: Google warns of Microsoft, Yahoo competition and Google Search: Is PageRank reliable?

Topic: Google

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  • Message has been deleted.

    davidhagel
  • Paid by Microsoft blogger

    Obviously Dunno Bogus-tin is one of the bloggers on microsoft payroll and NYU's stern school need to re-evaluate is MBA program. It is more than disingenuous to argue that people can put their content on the web for all the world to see and actually complain if Google doesn't index their site during searches, and then also complain if it does index their site and makes some money in the process to keep that very search engine running. Microsoft loves DMCA now because it doesn't have brains for innovation, but go back in history and you'll find they started their business by stealing Apple's and many other small companies IP. For once we have a company that can punch a hole in the MS and DMCA balloon. We should do all we can to support these new generation of innovating entreprenuers that Google represents. And what Google has done, Microsoft would have done in a jiffy if it had half the chance and a tenth of the brain.
    davidhagel
    • good points hagel

      i agree completely
      rad1956
  • Content Conundrum

    When you say Google is "'taking' the works of others, without any regard for copyright, or compensation," what is the nature of the taking? First, not all content on the internet is copyrightable. In fact, my understanding is that Google's search services provide mostly (if not exclusively) factual information regarding the location of the actual content for which a party is searching (YouTube notwithstanding). Pure factual information is not subject to protection under U.S. law. Don't content owners [i]want[/i] potentially interested parties to have ready access to the information needed to access pertinent content? I think we can agree that absent search engines, the internet would be something of a vacuum. Isn't it equitable that the search provider be compensated for directing users to content they could not otherwise find? Doesn't the content owner benefit from this service?
    velcrodave
    • sorry == too logical

      the Microsoft shill who wrote this would never admit you are right.
      ChazzMatt
    • Half truth

      True, search engines are providing easier access to places where user can find content. But I fail to see a reason why the same search engine should come forward and start providing partial or complete content itself. The content belongs to the content provider, not the search engine. There is no need to get all excited and take it as your moral responsibility.
      As an analogy, if some one asked me about you and i knew your address, I will tell the guy. What I would not do is take the guy with me to your house, break into it, get some stuff from your kitchen and serve the guy something and tell you - "see not only did I guide you guest, I did you a favor by making him comfortable." and say I am trying to help you. You know what your reaction would be in such a case. That is exactly how content providers feel.
      Give the urls to buy the books or urls where the content provider allows downloading, its none of your business, they did not request you to do that.
      BTW great article and intelligent author who is writing unbiased articles which anyone can understand provided they are not blinded by their love for one company and have some common sense.
      micks_tricks
      • Why Google will never pay for content

        Google is not breaking into any homes(even as an anology) and serving stuffs that others own. There are plenty of disclaimers and they are co-operative. What are you so upset about? That Microsoft reduced Hotmail storage to 2MB and started to say "ha ha ha" when Google announced 1GB email? That Google search is so so far more efficient that the majority of the surfers across the world use it as a de fact? That Google almost became a verb? There is no lack of common-sense in the Google business model. If there is anthing lacking the law of the land will take care.
        dksesh@...
        • This is Why Google Will Keeps Growing

          People seem to still not get it. Google is in advertising -- not IT development and not content sales. As long as Google stays in that arena, the need to pay for content is unnecessary because everyone looking to make money by selling content needs Google to match them up with their customers. The audit so lamented for by the blog author will never happen as long as alternative streams of advertising are even more suspect (and they all are). Attempts to kill off Google's search engine via this kind of conversation are counterproductive as they attack the very means used to spread the point of view.
          klavdivs
  • Wrong Model

    The person primarily and almost solely responsible to make sure their car is not stolen is YOU! The same for copyright material.

    YouTube is free public listing service - one basically similar to both a public library and a public FOR SALE bulletin board. Yes most large public libraries have books showing how locks work and can be broken. They let endless users view copyright material without fee (as long as you return on time). But most complainers don't use public libraries either I bet.

    Fortunately people with common sense realize it is NOT the public bulletin board provider's responsibility to check if items for sale are stolen. They might respond if they notice - but only as a courtesy. Google would incur responsibility if they were charging for the service or particularly for items "sold" (like Ebay percentage).

    Unfortunately reporting theft is often hoaxed or simply not true despite emotions of "the purported victim". Theft generally must be reported to proper law enforcement authorities first. A 3rd party must then comply with return of material.

    Maybe Pawn shop rules can be appplied to online services like YouTube. But really that just means that a credit card or drivers license msut be presented as part of the posting process...clashing with privacy and online security. And REAL theives know how to generate fake licenses and credit cards or steal them. Plus are you as citizens eager to fund the state government for equipment allow 10000 times the online acccess to driver licnese queries (millions in servers).
    wellduh
  • Google come down at least 1%

    Assume I am a publisher and 50 search engines scanning my materials. If I don?t want them to scan means, I have to request all the 50 search engine companies to remove it. But you are asking content owners, when they would demand? Are they in that situation to demand? They have to request. If this issue happened in 2000, most of the people disagree with Google?s stand, but now people wants to be in Google?s Eco-System.

    I am not agreeing for going to court in this matter, people have to talk and resolve it. For each and everything they are arranging camps, conferences?but for this kind of issues they are going to court, create ?Silicon valley 2.0? and make standards for things which we don?t have Law; and protect ourselves from all these kind of issues.

    If anyone blames Google publicly, they would get nose-cut, since lot of people wants to be part of 'Google?s cloud? and Google has large number of viral marketers in the web.

    Google is misusing DMCA. I have no doubt on this.

    Kind rgrds
    Saran
    saran945@...
  • Big Companies No Longer want the search engine?

    I must be missing something doesn't every search engine push ads for income at the expense of others work? Search engines creat a database of information from websites and index that information. When someone searches for a keyword they bring up sites and ads. Are big companies simply not wanting to be involved in search engines because the internet has become so common to many people and they (the big companies) have name/web address recognition.
    urmyteacher
  • Illuminating

    This is an exceptionally useful commentary. It shows dramatically the real value of an MBA: it equips you to concatenate trite propositions into something that appears meaningful while actually saying nothing at all.
    parataxis
  • Why they upload content ?

    Why people are puting content in the Web if they are scared about privacy, copyrigth .. ? Something strange.
    Alexandre Jaquet
  • Is she serious?

    What a strange new twist the author has, one only the twisted mind of an MBA could have figured out.

    Imaging putting up a WEB site and nobody came. Exactly how, without Google and the other search engines, would anyone find anything on the WEB. Sites would quickly die, which is what would happen if the MBA?s of the world have their way.

    The WEB is too big, too diverse, take away the search engines your left with the equivalent of a public library that?s loaded with information, has no index, and all the pages of the books have been ripped out and mixed together on the floor. Sure, whatever you want is probably out there somewhere, so go find it yourself in that mess that would be the WEB without index and search engines.

    Every day, I put something into the Google search engine, and I go to those sites looking for information. Google and other search engines made the WEB what it is today, a valuable resource. That they?ve been well paid for their effort is true, but they took a huge risk, a risk that at the time they were founded looked certain to fail, and one you and almost certainly wouldn't have been willing to take even if we could have worked out the business model.

    Google is in the position of collecting a commission on referrals, a practice held dear by every sales person that ever lived. Google is no different.

    Google isn?t likely to fail anytime soon, and if it ever does it?s because something better, more useful has emerged and the people who matter have switched to it. Those who matter, by the way, are the average Joe and Jane?s who surf the WEB for something to buy, to read or to learn. Take them out of the picture and everything collapses; the IP your so worried about suddenly has almost no value (which most IP never had to begin with), until Google and other search sites came along to made it available and locatable.

    Google and other index sites are the goose that laid the golden egg. Only an MBA would think that killing it is a good thing.
    afhavemann@...
  • Antiquated Intellectual Property Model

    It's about time that IP owners recognize that the current IP model has become antiquated and ineffective. Why can't we come up with a micropayment model for IP owners every time a search engine accesses their content? This would not be difficult to impliment.
    gczerepak@...
  • Re: Is she serious?

    http://www.analogstereo.com
    por_forums@...
  • Craigslist True story about scammers

    http://www.webupon.com/Security/Craigslist-Check-Scams.463811


    This is a true story about something that happened to me, a few years ago, please take a look I hope you enjoy my storys, they are all true, so I have a few more stories just take some time to read and reply.. Thanks for your time
    Dmobile215
  • RE: Why Google will never pay for content

    Google DOES pay for content. However, Google has managed to build a model that makes them to pay an ammount proportional to the revenue; and that's what its competitors like MS hate, because it is a model doomed to success.
    AdSense is merely a trade-off: Google gets revenue from a third-party site's content, and the site owner gets revenue from Google's pool of advertisers. As the advertiser's pool grows, this helps attracting new sites; and as more sites display Google ads this helps attracting new advertisers.

    Is Microsoft brandishing out at Google in the name of copyright owners rights purely for its own Microsoft-centric corporate objectives? Of course.
    Does that make Microsoft?s cogent arguments any less powerful? Actually, those arguments are weak and fallacious, and fall for themselves:
    "GOOG is fueled by an unsustainable business model": this is clearly proven false by the facts: G's model has laster for many years already, and it is in quite good health. There are no symptoms of "unsustainability", and MS is only trying to make people believe so because, as usual, they need to rely to their well-known FUD to face legitimate competitors.
    "The selling of ads against content that it does not own, that it has not compensated IP owners for and that it has no explicit legal right to exploit commercially.": That may well be Microsoft's record of number of lies on a single sentence. There is an agreement between any site displaying AdSense and Google, which explicitly grants Google permission to make revenue of the advertisings there (that's what the whole agreement is about, after all). The owner of the site DOES get a compensation (that's the basic reason to place AdSense on a site), which is also well defined by the agreement between the site and Google.
    "The "millions" of businesses and individuals "voluntarily" forking over their proprietary content and personal data to Google "every day," sell themselves and their assets short, while Google's market cap balloons.": with the money from each ad-click, Google has to pay taxes, maintain its huge distributed server infrastructure, pay the bills (such as power and bandwith), pay the wages to its employees, and there is still enough left for Google to make some profit and to pay the site it's part. It's obvious that Google's big profit doesn't come from a huge profit margin on each ad, but from a huge ammount of Google Ads being displayed over the web. And the ammount earned by the sites is reasonable. Sure, it isn't a gold vein: you are not going to put adsense on your site and suddenly become filthy rich after one or two months with no work; but many webmasters are able to make a living off AdSense: for most sites, devoting an ammount of effort and time comparable to a typical job into creating content, promoting the site, and so on translates into earning an ammount of money comparable to the wages from a typical job. And it has the added advantage that this "virtual job" can be about whatever someone likes most (especially on the content creation task, which accounts for the main bulk of the effort on most successuful sites).

    By contributing to spread Microsoft's FUD without a neutral enough approach, you are contributing to make the entire web and domestic PC market a place entirely controlled and abused by MS.
    herenvardo