Henry Porter on Google

** PLEASE NOTE: I am not Mark Wadsworth **

Henry Porter in The Observer:-

Google presents a far greater threat to the livelihood of individuals and the future of commercial institutions important to the community. One case emerged last week when a letter from Billy Bragg, Robin Gibb and other songwriters was published in the Times explaining that Google was playing very rough with those who appeared on its subsidiary, YouTube. When the Performing Rights Society demanded more money for music videos streamed from the website, Google reacted by refusing to pay the requested 0.22p per play and took down the videos of the artists concerned.

It does this with impunity because it is dominant worldwide and knows the songwriters have nowhere else to go. Google is the portal to a massive audience: you comply with its terms or feel the weight of its boot on your windpipe.

No, it doesn't do this because songwriters have nowhere else to go. There are at least half a dozen major video sites out there including Dailymotion and Yahoo Video. I know about these because Google themselves advertise these other companies videos through its search engine.

The other thing is that at 22p/play, Google simply can't make money from it. Google make the vast majority of their money from their Adwords programme where advertisers pay for each click on an ad. These ads start at about 10p/click. But the impression rate is much, much higher than the click rate. The ads are rarely clicked. My guess is that at best they're clicked once per 50 impressions. Which means that Google would pay £10 for videos, and maybe get 30p-£2 back. Ain't gonna work.

Despite the aura of heroic young enterprise that still miraculously attaches to the web, what we are seeing is a much older and toxic capitalist model - the classic monopoly that destroys industries and individual enterprise in its bid for ever greater profits.

Monopoly? Google? Google exists as a business in one of the most frictionless markets around, competing with at least 3 other search providers and no network effects. If a new search provider came along who did it a lot better, Google would lose a huge amount of their market share within months.

Despite its diversification, Google is in the final analysis a parasite that creates nothing, merely offering little aggregation, lists and the ordering of information generated by people who have invested their capital, skill and time. On the back of the labour of others it makes vast advertising revenues - in the final quarter of last year its revenues were $5.7bn, and it currently sits on a cash pile of $8.6bn.

I like the word "merely". Building a search engine that makes sure that people get the best results rather than a load of spam is very difficult. Google employs a whole load of people with PhDs to make sure this happens.

They're no more a parasite than a librarian, a tourist information office, Yellow Pages or the people who build atlases. They help people get the information they want and people use them because they do it very well. They save them time and money. And in exchange, Google runs some ads which make them some money (in an innovative keyword-based manner).

One of the chief casualties of the web revolution is the newspaper business, which now finds itself laden with debt (not Google's fault) and having to give its content free to the search engine in order to survive. Newspapers can of course remove their content but then their own advertising revenues and profiles decline. In effect they are being held captive and tormented by their executioner, who has the gall to insist that the relationship is mutually beneficial. Were newspapers to combine to take on Google they would be almost certainly in breach of competition law.

I'm not sure what Henry's saying here, because Google doesn't hold very much of the actual content of newspapers. They might index the headlines and a brief summary, but then that acts as a bit of a teaser for you to enter the newspaper site and read.

What's really happened is that newspapers are losing revenue because they're having to compete with Google for ad revenue (as are the terrestrial TV channels). The benefits of online ads aren't just that you can target people using keywords, but also that it is far more powerful in terms of measuring the results than newspaper ads are.

There is a brattish, clever amorality about Google that allows it to censor the pages on its Chinese service without the slightest self doubt, store vast quantities of unnecessary information about every Google search, and menace the delicate instruments of democratic scrutiny.

Google had a simple choice with China: censor or leave China. Either way, people weren't going to get information about Tibet. No-one ever mentions that Yahoo and Microsoft do exactly the same thing.

And, naturally, it did not exercise Google executives that Street View not only invaded the privacy of millions and made the job of burglars easier but somehow laid claim to Britain's civic spaces. How gratifying to hear of the villagers of Broughton, Bucks, who prevented the Google van from taking pictures of their homes.

Street View didn't invade anyone's privacy. The outside view of your house is public. Google did nothing more than taking photographs of streets, a perfectly legal activity. You don't have a right to stop someone photographing your street, even if you do consider yourself more likely to be burgled as a result (the publicity for Broughton has probably done more to inform burglars than Street View ever would have).

I'm not against criticism of large corporations, but it's quite hard to really find a fault with Google except for "look how big they are, and how much information they know about me (which I willingly gave them)". But it is quite normal behaviour from lazy columnists who will always try and find fault with the brand leader despite the fact that they often run to a higher level of ethics than their competitors.