Hey Google, let me introduce you to Wal-Mart.
You’re both looking a little out of place at this swanky party, and you don’t look like natural friends, but actually you have a lot in common and you’ll get along fine. Oh I know you are a lot more attractive than Wal-Mart – younger, cooler, and with much better taste in office furniture. But underneath all the surface appearances you share the same hobbies and even the same values, so you’ll overcome any awkwardness pretty soon. Trust me, you’re birds of a feather.
What hobbies? Well, you love to collect vast amounts of crap and then make it easy and cheap for people to get at it. And guess what? So does Wal-Mart. Don’t get me wrong, Wal-Mart isn’t in your league. He only gets crap from a small number of people compared to you. But he does have some great stories about making bargains. Just ask him to tell about the time he told Coca Cola to go back and redesign their Diet Coke recipe just for him – it’s hilarious.
And you know that crowdsourcing thing you do, where you get other people to work for free because it’s fun? Well he’s pretty good at that too, except he does it with whole companies. Like, he gets deodorant companies to manage his deodorant shelves for him, so he doesn’t have to! Wouldn’t you love to pull a trick like that with NBC or Fox? Look, I know he wears crappy clothes, but he can be a hoot when he’s in the mood.
It’s not too surprising that you have these things in common when you think about it. You’re both really good with technology and numbers to start with. And I heard some stories about you from Eric Clemons. Actually he was telling me that you remind him of airline customer reservation systems (CRSs) Sabre and Apollo. He told me that you come “between the shopper and the ultimate service provider (hotel, airline, retailer, or manufacturer), just as we saw in the case of the airline CRSs. The conditions are right for Google to enjoy enormous market power over service providers, who feel they must bid for positions in Google’s sponsored search keyword auctions.” Well that’s Wal-Mart to a tee.
Plus, you and Wal-Mart both have a sense of mission – that you are acting on behalf of your customers and bargaining for them against these powerful institutions like Coca Cola or CBS. You know what Wal-Mart says? He says “There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else”. Isn’t that the kind of thing you would say? Except you would be classier about it. You wouldn’t talk about anything as crass as money.
So you could learn a lot from Wal-Mart, but it wouldn’t just be a one-way conversation. I think you could tell Wal-Mart some pretty good stories too. There’s a thing you both do which I love. You’ve both got (I hope you don’t mind me saying) piles of money, but whenever someone asks you to pay for something you have this great way of showing your empty pockets – and they are always empty – and saying “I’d love to, but I just can’t afford it. I’m nearly broke as it is”. It’s a hoot! But you do it even better than Wal-Mart. His line is always that he makes only a penny or two on each sale so he’s nearly broke. Even he doesn’t have the gall to say he makes nothing.
You should tell him the story about the musicians. You know the one. Where you got Billy Bragg and Robin Gibb to work together. Not singing together – that would be a thing – but writing a letter at least. They said that YouTube should pay artists a royalty when someone listens to a song, kind of like when radio broadcasters or TV stations do. And after paying $1.65 billion-with-a-B to buy YouTube from these guys, you just stood there with a straight face and said “I can’t afford it”. It was hilarious! What were your words? Oh yes, you cannot be expected to engage in a business in which you lose money every time a music video is played. And you got plenty of people to buy it as well even though you never said how much money you make on advertising. They think Billy Bragg is the privileged jerk and you’re the poor guy on the corner just trying to make a living and on the side of the little guy. Really, you’ve outdone Wal-Mart on this one.
So let me introduce you. Google, meet Wal-Mart. Wal-Mart, meet Google. You’re two of a kind.
Down on the corner
Out in the street
Willy and the poorboys are playin
Bring a nickel tap your feet
Credence Clearwater Revival
Wal-Mart is not a monopoly. Claiming Google is a monopoly because they have customer facing services just like Sabre/Apollo is goofy. Google does not act as an intermediary, they charge for eye-balls (or clicks) just like television. They even use an automated auction for the ads which makes it a little difficult to claim they are using their market share to increase pricing. The customer also ends up having a direct relationship with the advertiser rather than Google which is completely unlike Sabre/Apollo.
The debate about the internet and music licensing is an interesting one but I think it is wrong to choose one position over another simply because one side can afford it. This holds true for Metallica as well as YouTube.
Well the customer ends up having a direct relationship with the airline too. I agree the argument doesn’t prove Google to be a monopoly, but it is getting might close.
And I do agree that pocket-depth is not the only factor to consider in music licensing.
Sabre/Apollo is like Ticketmaster… they are the gatekeeper. Google is more like the guy on the street in the gorilla suit waving you into a charity car wash. No one can wear the gorilla suit and wave like Google but I don’t think it is equivalent to a gatekeeper scenario.
Google does indeed claim they paid $1.65 billion for a site where they lose money on each use — in their annual report. That’s why some shareholders are pushing for them to shut it down. There are some numbers here: http://www.internetevolution.com/author.asp?section_id=715&doc_id=175123&
I’m curious if you have any alternative numbers.