Wednesday, June 22, 2005

Liar, Liar and Pipe Dreamer

Jon Battelle wrote the following regarding Google's plans to launch a pay service, an ad listing service, and a media player:

I recently sent a note to the folks at Google PR. It went something like this:

So, in the last week, it's been

1. Google is starting a Paypal killer.
2. Google is starting a
craigslist killer.
3. Google is starting an
iTunes killer.

So, any thoughts about all of this?

To which Eric Schmidt replied:

"We believe that ecommerce can be improved and we are working on ways to improve the user experience. We are working on things in ecommerce."

It's the typical political rhetoric from Google. I am sitting at the edge of my seat waiting to see just how Google will improve internet commerce taking into account the stellar job they did with Froogle. I mean, Froogle was a real quantum leap in internet commerce.

I have heard rumors on the net that Google was trying to acquire Craigslist. They either failed and will try to go at it alone, or are still trying to buy it. My two cents is that if they go at it alone, they will fail because they won't be able to get the locally-focused following that Craigslist got. Why would anyone switch? They will probably bury it deep behind the main page in a beta receiving whatever drip-through traffic they usually get to their 'other' products.

Regarding iTunes, Money please! There are a ton of music players out there. This is probably meant to lead to GMusic Store or something like that. There are already many players in that game too. Of course, they will make marginal money from these ventures because they have a captive audience from their internet search, but I don't expect that they will make a killing like they did with AdSense.

On the other hand, the internet is not a new market free from traditional economics. In fact, it is probably one of the purest forms of economics in real life due to a low barrier to entry, seemingly endless resources, etc. As competition increases (it will quickly) their margins will be squeezed. As we saw with American car makers, to be 3rd best in an industry now means bleading red. And that is the car industry!

The internet is still the wild west-unexplored and sparcely populated. Look at any other industry a decade or two after it began. Look at television, or radio; things will really become interesting in the upcoming months and years.

Take into account also, that Google does not hold to it's word. If you look at how many linked entries they have to any site, it is vastly less than either Yahoo or MSN. Their claim that they search X number of pages is simply absurd. (Try it- 'link:' on Google vs. 'link:' on Yahoo) This pattern holds true for nearly all entries that I have tried. If every site, has fewer links that logically means that Google's index is smaller. Simply put, it's a sham.


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