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« Last post by mouser on November 20, 2010, 12:59 PM »
It's really a fascinating exercise to try to map what happens on the internet to what the analogy would look like in terms of "real world" stores.
This has nothing to do specifically with google, but all web services.
Let's try a thought experiment:
Imagine the next time you go out to do some shopping, you go to your favorite shopping mall, and next to your normal grocery store is a new food store, where all the food is high quality and completely free. Wow! No more paying for food, now that's cool. While you are picking up your free food you are seeing lots of ads for some new shoe shops down the road offering free shoes for all, and a new bookstore offering the latest books for free. What a great day this is.. On your way home you pick up some great new shoes and some great new books. What a terrific day this is turning out to be -- everything is free.
Your shoes have these tiny adverts advertising the new free bookstore and free food store, and vice versa, but the ads are tiny and the stuff is free, so who cares.
The tv has news stories every night about these amazing new stores by brand X where you can get free food, shoes, clothes, cars, etc. They are all the rage and no one will even consider paying for food or clothes or cars or books anymore -- why would they? that would be like throwing money in the toilet.
This continues for months and you can't help but wonder.. who the hell is paying for all of this free stuff? But still, why ask too many questions, after all you are getting all this great stuff for free. All of the other stores go out of business and your neighborhood is now populated only with the free stuff stores from brand X. They have nice people working in them, nice clean stores, and everything is free.. what's not to love!
Of course it turns out that these companies are losing tons and tons of money on all this free stuff they are giving away.. but they are succeeding in killing off all their competition which doesn't have the money to lose hand over fist day after day, and who don't have the marketing dollars to capture your attention. In the back of your mind you know that the companies running these stores and losing all this money *MUST* have some kind of plan to start making a profit at some point, or must be making their money from something else you don't see, but you can't quite figure out what the plan is.
That's kind of where we are on the internet... And the answer to the million dollar question about what the "plan" is to profit at the end of it seems to be something along the lines of "it doesn't matter what the plan is, because if you can succeed in capturing such a huge marketshare, you gain these incredible monopolistic-effect benefits that come from the momentum of having such a huge userbase that you can market to and keep in place. And once you have such a userbase locked in (whether you are facebook, microsoft, google, or whatever), your possibilities for inserting new mechanisms for profiting from them are immense, and the possibility of a competitor stealing away customers is drastically reduced.
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The idea of lock-in is not new, what's fascinating about google SEARCH is that unlike facebook and microsoft and other google services, it's hard to lock someone in to a search engine, because they can pretty easily switch to using a different search provider.. Which i think helps explain why google is so aggressive about cross-marketing all of their other products and pushing their own browser, to help them ensure they can keep nudging you to their search engine and other services and keep you in the google "network".
I think one way to think about this kind of stuff is that these companies (google, etc) have a very small isolated area of their universe where they make immense profits (or plan to make profits in the future once they have secured their userbase).. and then they build this entire infrastructure of other sites and services and marketing and free stuff in order to herd you into that one isolated area. And for many of us this kind of indirect system rubs us the wrong way, and the more indirection the more uncomfortable we get.
Regarding this indirection approach to profit making, I find it irritating and frustrating wherever I see it, and the bigger the company the more you seem to see it. Think about banks and credit card companies, they are always setting up these complicated convoluted systems and plans with unpredictable fees and penalties, and rewards and free toasters and random montly winners, etc. Just tell me how much it's going to cost to deliver the service i need and let's keep it simple, i don't want to play this game.
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