Ken Auletta's new book, “Googled: The End of the World As We Know It,” is out. I'm just starting to read it, and I'm sure it's very good.
But I'm going to jump ahead and address some opinions Auletta has expressed outside the book, based on what he learned from writing it. It's just my humble opinion, but I disagree with some of his conclusions. Patrick Phillips at iwantmedia.com got him to explain in an interview some of his views.
Auletta claims that Google is now a media company. As evidence, he points out that Google has made production deals for others to create content for YouTube. And because of that, "tensions between remaining the Switzerland of search and pushing its own content will only grow."
Wrong and wrong. A media company creates media. Google is a media distributor. Yes, it owns companies that publish media, like YouTube and Knoll. But the content is still produced by others. Google may pay some people to create content, because we need more good content, not just videos of cute cats.
As for "pushing its own content," most other companies would do that, but Google does not. Before Google, all the "portals" did it -- and were then destroyed by Google's unbiased searches. Do a comparison between the hugely successful Wikipedia and Google's own lukecold Knol. Google searches put Wikipedia articles at the top of the search results, with Knol nowhere to be found. So where's the tension?
Google executives have a tendency to put the users' interests first, not their own. As long as they keep playing fair, there is no conflict here. Even Auletta points out that Google "is not obsessed with killing competitors; they're obsessed with eliminating inefficiencies." Knol didn't catch on because Wikipedia isn't inefficient -- a strategic error from Larry and Sergey that violates their own criterion.
Perhaps Google will someday try to buy Wikipedia. When it created its own unsuccessful video site, it couldn't compete with YouTube so it bought the company. I doubt that plan would work with Wikipedia, though. Too many people want it to remain an independent non-profit. Rightly or wrongly, they don't trust Google because it makes money.
Auletta points out one step Google considered that would have put it at the center of the media business: "Larry Page and CEO Eric Schmidt told me that they had discussed buying the New York Times,” Auletta says, “but in the end decided that if they succeeded it would sabotage their identity as a neutral search engine." Doesn't that show that Google is trying to avoid conflict with the content providers it depends on?
So why even consider such a step? CEO Schmidt has told me that he has grave concerns about what the Internet is doing to newspapers and other media. He'd like to figure out how to help, which probably led to the consideration of buying the Times. Google could probably figure out how to make money from online advertising linked to NYT content.
However, keep in mind that it's the Internet itself, not Google, that's destroying news outlets. If Google didn't collect and link to articles, someone else would, including bloggers. And nobody has demonstrated that those links, which drive traffic to the original sites, has done one iota of damage to publications' revenues.
Auletta himself points this out, citing the "conundrum" for media companies. If they really don't like Google News, why don't they just opt out? Auletta explains, "Opt out of search and reduce the number of people exposed to your newspapers,” he says. “Opt in and risk becoming a commodity." That's why Rupert Murdoch is simultaneously claiming that Google is turning news into a commodity, while at the same time refusing to opt out of Google News. He's contradicting himself, betting that Google's search engine actually adds value to media sites. He cannot have it both ways. The media conundrum is self-inflicted.
Here's an argument I strongly disagree with: Auletta asserts social media sites such as Facebook or Twitter are a threat to Google's search engine. In these sites, your friends point you to interesting items on the Internet. "That's a more trustworthy search result than a flood of anonymous search results," Auletta claims.
Nonsense. Yes, friends can point out things of interest to you. But they won't replace search engines. Several search engines have tried to out-search Google by relying on “industry experts” to point to sites, on the theory that the results will be better than "a flood of anonymous search results." None of them have succeeded.
Google has a different model, complementary to that of the social networks: Google masses together the interests of millions of people to find the most relevant sites. It's a different method, relying on the “wisdom of crowds,” and it often produces better results. I wouldn't be surprised to see Goolge buy Twitter or Facebook, though.
One interesting observation from Auletta: the Google founders are often naïve. When Sergey told him that all books should be free online, Auletta asked him who was going to pay for the writers, editors, indexers, marketing and legal folks. Sergey changed the subject.
I'm more optimistic than Auletta. He says he will never offer his books free online. "Writing is how I earn a living. For me 'free' would send me to the poor house." He seems stuck in the same mode of 'don't mess with my paradigm' as Murdoch and the other old-line business executives.
Larry and Sergey may not have the answer – I'm not sure anyone does – but I am sure there is one. There always is. There's a demand for good writing, and where there's demand there is profit to be made. Somewhere out there, some clever person will come up with a new revenue model. Advertising seems the most likely to me.
It may even benefit publishers. Right now they have to take a huge risk on what books to bet on, and if they don't sell, the bookstores get to send them back. If books are online (or sold through e-readers), the costs of bookstore returns, paper, ink and shipping are eliminated. They may be able to take more risks and give opportunities to lesser-known writers.
And don't forget Google's controversial book search efforts. Whatever you think of it, Google is trying to make “orphan” books available again. Putting them online might provide more revenues by reviving sales if the book is re-published for the kindle. It's the only way to give orphan books a chance.
Auletta, like executives running older and obsolescent businesses, just seems afraid to take that leap of faith to maintain relevance. That in itself is the best commentary on the conflict between the old world and the new.
Confession: I haven't taken the jump either, because I don't see the revenue model yet. But if I really want to write a certain book, and can't convince a publisher to give me an advance, I'll try an online model.
I'm less pessimistic in general than Auletta, who seems very concerned about the companies Google is killing. True, the world will be different, and companies will die. But the industries will not. We're in a transition time, as is always the case when new technology changes the world. Existing companies always have an incredibly difficult time switching to new models, especially when it calls for cutting prices. They're used to making money one way, and understand how to make money from that approach. So they resist while new companies come along to exploit the new paradigm.
Microsoft and Intel killed off old computer companies, but not the industry, which is bigger than ever. Google is now one of the companies killing off the old, like Microsoft. Think about the change required at Microsoft: In order to compete with the new “cloud computing” companies, it will have to stop selling $300 software programs and figure out how to offer them at greatly reduced prices (or for free and supported with advertising.) Would you like to be in charge of that transition?
I'll write more when I've finished Auletta's book.