Google Tries To Be the Gatekeeper to All Things Informational

(MoneyWatch)  The news of Google's deal to let people listen to and buy music from the search pages may come across to some as another battle in the search wars with Microsoft-Yahoo and an attempt to further shore up its lead. That may be true, but something far bigger is happening. The company's true motivation is its desire to get out of the trap of advertising as its one revenue source.

Technically, of course, Google does make money in other products and services, but 96.6 percent of its revenue is still advertising. What's not to like? Plenty. Q3 year-over-year growth from 2008 to 2009, 7 percent. From 2007 to 2008, 34 percent. Advertising can be horribly unpredictable, and if any economic sector is likely to take it on the chin when it comes to slowdowns, you can bet that advertising will be at the front of the line.

Google has tried selling search appliance, selling corporate seats of Google Apps ... and still almost 97 percent of revenue comes from the one source. That's a percentage that's barely moved in years. Years. To be that dependent must make management extremely nervous, even as Eric Schmidt assures everyone that things are about to turn the corner. Darned straight he does. He needs the economy to turn around before people start asking why executives can't improve things.

The answer is to be the gatekeeper of convenience to information distribution. You might sit back and say, "Doh. That's what they've always said." But, in fact, it's not. To be exact, Google's stated corporate mission is "to organize the world's information and make it universally accessible and useful." Noble, but left out is how the company makes money. The answer is simple: find a way to get cuts of the transactions that occur around information. That's what Google Books and the settlement of the class action suit around the book scanning was really about. It's why Google wanted YouTube and why it created Google Checkout.

Google says that it doesn't want to be a publisher. However, the online equivalent of a news stand is just that, a publisher. Content is not neatly confined to the covers of a book or magazine, or two hundred. To make content available is to essentially publish it. After all, publishing without creating is where the money is.

Image via stock.xchng user nicootje, site standard license.