google, continued

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Posted by: stak
Posted on: 2005-10-18 22:59:48

ah, my favorite topic again.. world domination by google.

so today in my econ 101 lecture, larry smith talked about google. surprisingly, he said much of the same stuff i've been saying for a while. if even he's saying it, then it can't be all that crazy.

anyway, so he also didn't have an answer to the question of how google plans to make money off this web-centric model, and mentioned the new google payments/wallet service in passing. i agree with his suggestion that getting micro-payments from people via an online money transfer service is probably how they're going to do it. however, they can't just start charging people for services out of the blue. even if they got a whole bunch of web services up and running and ran them for free for a year, they wouldn't be able to just suddenly start charging money for it. their user base would drop like a rock.

so what then? i thought about it on the way home, and i think there's a way out. the main problem is that in this model, you're changing the type of relationship you have with google. right now, it's a non-financial one. in the subscription model, it's a financial one. that's a big jump to make. even worse, you're just paying for computing services, which you don't usually do (not in this sense, anyway - probably why sun had such a big problem getting their computing-for-sale ideas off the ground).

the point is, if google suddenly just asked me for money, even if it was just one cent a year, i probably wouldn't do it, because that changes the nature of my relationship with google. however, if i were able to buy some product THROUGH google, i would.

remember froogle, the forgotten child? now imagine froogle on steroids. it not only allows you to search for items on the web, but allows you to buy them. you give your credit card number to froogle, tell it what item you want, and it goes out and scours the earth for the cheapest instance of that item, and buys it for you. it'll search amazon, wal-mart, best buy, ebay, and that mom-and-pop store on the other side of the planet. it'll factor in shipping, taxes, currency conversions, and all that overhead, and figure out the cheapest way to get you what you want within the timeframe you want it. now there's a service i would use. and that's the whole trick. if google can put out this service (and i think they can), they can change your relationship with them, but do it so subtly that you don't notice. it's like ebay - when you buy stuff on ebay, you usually don't notice that ebay is also making money; you're just buying products online (never mind ebay an auction-based site).

google could probably improve froogle to the point that everybody would buy everything through it and they'd make a ton of money just off commissions. however, that would just be the stepping stone to paying google directly. once they've proved they're worthy to handle your financial matters, it's a whole different ballgame. they'd already have your credit info on file, so they could just add a little subscription button for computing services somewhere. i get access to the entire GoOSe system for a flat rate of $1/year? with a company that i trust to not screw me over? that has proven it's capable of handling financial issues in the same non-evil way that it handles everything else? where do i sign up?

Posted by Crypto at 2005-10-19 23:45:28
Problem with that Froogle system is that sites like to be listed on there. Not to sell through it.
I'm nearly 100% sure that companies like Amazon don't actually care about the individual sale, they care about the entire experience. I.e. You buying more stuff from them. As well as reviewing products and things like that.
So what's in it for them? :)

As it stands, Froogle takes them to the site, so suddenly you are in their domain. Places like Amazon are happy :)
Remove that...well, then they get less happy.

I love this debate Kats :)
[ Reply to this ]
Posted by stak at 2005-10-20 00:26:11
What's in it for them? More customers, mainly. It's just another source of referrals. And of course companies like Amazon care about the sale. That's ALL they care about. The other stuff is just to keep you happy and coming back to their website to buy more stuff. Product reviews and all that stuff - the only reason it's there is to attract people so they can sell more.
[ Reply to this ]
Posted by Crypto at 2005-10-20 10:13:54
I didn't phrase my argument properly. bleh.
I meant it as, they want you on their site to buy more then one thing. Hence the experience.

You are right that they will get more sales, but I don't think they want to just be a warehouse. The reason being that it would lead to stagnation. For most places, that's ok. Places like Amazon don't want to just drift off until someone better comes along.

This will be so fun. You at Google, me at MS. We can be arch-nemesis :)
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