Why websites don’t get their money?
Posted by Alexander Ginzburg on October 24, 2007
Filed Under Search Engines |
First of all I’d like to put in order the sequence of the discussion in this blog. Earlier, I’ve claimed that the quality of the information on the Internet is too low due to the failure of the search engines to perform their role as mediators in the information market. At this point I’m focusing on the failure to transfer payments from the information consumers to the producers. In the last few posts, I’ve managed to show that those payments are being collected by the search engines via advertisements. However, for some reason these funds haven’t been reaching their destination. I wonder – why is it so?
The answer to this is obvious – search engines keep the money in their own pockets. Even though it is not theirs to keep, they are not to be blamed, since they do it under the protection of the law. Seeing that I have no legal expertise, I’ll try to examine this phenomenon from an economic point of view. For this purpose I’ll use an analogical situation occurring out side the Internet.
Let’s compare between the functionality of a search engine and a radio station. The role of a radio station as a mediator is to provide the listeners (consumers) with the most suitable songs (content). At the same time, they receive an income from advertisements and use it to reward the singers (producers) by paying them royalties. Similarly, the search engines provide the internet users (consumers) with the most suitable web pages they can find (content). However, even though the search engines receive income from advertisements as well, they don’t reward the websites (producers) which supply the actual content to the users. There is no doubt that Google deserves to enjoy a slice of the income cake for the search service it provides (just like a radio station). However the fact is that Google gulps the whole cake. That is the main reason for its phenomenal financial prosperity. However, that is also the cause of the reality in which the best content producers don’t share their content for free.
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2 Responses to “Why websites don’t get their money?”
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I agree with the basic assumption that the question of what search engine is going to change the search market is neither gui or search technology related. The alternative search engine market is extremely rich in both areas however nothing happens. We reached a point, when Google results are good enough for the majority of users and as the author says Google has the financial ability to push its product through a lot of channels. So the economical environment of the search market should be changed in order to expect any change in this.
It would be extremely interesting, if Wikipedia would decide its going to give its results for example to Yahoo only, for a share of advertising revenues. Actually in the short run it would loose a lot of visitors (however because it is non profit organization, it would make the whole thing more profitable, because it would need less servers), but in the long run it could really shift the current market.
Hi Endre,
Folks in Google probably share your thoughts, though they are probably frightened rather than intrigued by the notion of Wikipedia becoming unavailable to them, and that is the main reason, in my opinion, for the launch of Knol.