Last Updated Sep 8, 2008 3:01 PM EDT
- The Find: For Google's 10th birthday a little present: a clear and concise explanation of the company's business model. (Hint: it's more about compliments and less about ruling the world.)
- The Source: Rough Type, the blog of Nicholas Carr.
When you boil down its business strategy, you find that it's not quite as mysterious as it seems. The way Google makes money is straightforward: It brokers and publishes advertisements through digital media. More than 99 percent of its sales have come from the fees it charges advertisers for using its network to get their messages out on the Internet.
Google's protean appearance is not a reflection of its core business. Rather, it stems from the vast number of complements to its core business. Complements are, to put it simply, any products or services that tend be consumed together. Think hot dogs and mustard, or houses and mortgages. For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes.Google, it seems, just wants to lure you online longer, and they know that the best way to do that is to make all things Internet either very cheap or totally free, hence the company's,
strong strategic interest in reducing the cost and expanding the availability of the complements to its core product. It's not too much of an exaggeration to say that a company would like all complements to be given away. If hot dogs became freebies, mustard sales would skyrocket.... Nearly everything the company does, including... fighting copyright restrictions, supporting open source software, launching browsers and satellites, and giving away all sorts of Web services and data, is aimed at reducing the cost and expanding the scope of Internet use. Google wants information to be free because as the cost of information falls it makes more money.Well, then, that clears that up. Thanks, Nicolas Carr. There's plenty more of interest in the post, including how Google is actually a lot like Microsoft, and why the cost of failure for Google is so low. And if you're interested in even more of his insights, check out his new book, The Big Switch.
The Question: Google: embodiment of scary messianic tendencies, example of business brilliance to be emulated, or over-hyped one-off?