August 12th, 2008
Is Google a media company?
The New York Times recently wrote an article headlined: “Is Google a media company?”
The article was mostly about Knol, Google’s Wikipedia-like service, but it wondered if this meant Google was a media company because it owns content sites such as Knol, Blogger, and Youtube.
A Google spokesperson was quoted saying: “We are not interested in owning or creating content.” That statement is not true and it seemed to be designed to say that Google is not a media company.
But whether Google owns content or scrapes its content off of the Internet, is a red herring, imho. The facts are that Google publishes pages of content with advertising around it. That’s what a media company would do. How is Google not a media company?
GOOG thinks of itself as a technology company and not a media company, and that is how it wants to appear to the world. But what technology can you buy from Google?
I can buy microprocessors from Intel–that’s a technology company. I can buy operating systems from Microsoft–that’s a technology company. What technology can I buy from Google?
It is vital to Google that is not be viewed as a media company because it could jeopardize billions of dollars in revenues. Large media companies such as the New York Times outsource their online advertising to Google. Would the New York Times outsource its advertising to a media giant such as Tribune or Gannet? No, it wouldn’t. But Google is a technology company therefore it’s OK to do that.
But Google is a media company and in many ways, a competitor to the New York Times and many other large media companies.
Why are large media companies partnering with a competitor, and a competitor that has a far more efficient business model–it gets its content virtually for free. The New York Times and other content producers can’t compete against that business model.
That’s why online advertising is so cheap–it’s value is largely set by the business model of Google and other companies with similar business models–publishing pages of nearly-free content with advertising around it.
The New York Times and other traditional media companies create content using legions of people. Google plugs in another bank of servers, and scrapes the content off of the Internet or harvests it from users of Youtube, Blogger, etc. That’s a much more efficient media business model.
That’s why Silicon Valley’s media industry is thriving and New York’s is in the dumpster.
Is Google deliberately mischaracterizing itself as a technology company? It seems that way.
Tom Foremski reports on the business and culture of Silicon Valley and beyond. And also blogs at SiliconValleyWatcher.com See his full profile and disclosure of his industry affiliations.
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| 08/13/08
