January 24, 2006
Search as leeching and the n-tiered web

Is it just me or isn't there a strange timing coincidence between Jakob Nielsen's Search Engines are Leeches posst and the Bellsouth's web blackmail story?

In both cases Google's profitability is an issue. Bellsouth simply wants a cut, Nielsen thinks Google is gouging advertisers. In both cases the argument doesn't seem to go much deeper than "They have money, they should give more to others (me/my clients)". Sure, Nielsen runs through a toy example of what competition does to profitability (drives it to 0) but the argument is unconvincing, at least in the case of Google: The ads are sold on auction. They are sold to whomever is able to extract the highest value from them. If ads are routinely bought at unsound prices there will at some point be a correction. This is just basic economics. It's not even the case that Google is charging some absurd monopoly premium. It's just an auction. And yes price inflation does happen occasionally - but it gets corrected eventually. (If it's not in fact an auction I'd be interested in pointers)

In fact Nielsens article is not as bad as the title - Nielsen is not proposing stupid schemes to curb Google's "obscene profitability" - but he does call it obscene profitability - and I would just hate for Nielsen's title-meme to germinate into another front in the battle against the unified web in favor of a pay as you go web. Why is everyone so busy for the good days to be over?

Posted by Claus at January 24, 2006 01:14 AM | TrackBack (0)
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