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Business

Why Google will never pay for content

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!
Written by Donna Bogatin, Contributor on
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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?

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