We exchange email yesterday with my CircLabs Inc. colleague, Jeff Vander Clute, about a blog post written by venture capitalist Bill Gurley. Gurley’s post (LINK) argues that Google is giving away the Android operating system — and many things around it — because no one can compete with free and the mass adoption of these free services is making Google’s advertising business unassailable.
Vander Clute remarked about Gurley’s thesis:
Fascinating points leading up to the legal destruction of wealth. It stands to reason that the marginal cost of software development going to zero in the long run means upside going to zero. Entrenched players for whom software > development is cheap or a byproduct can choose to give away a version of *your* product for free or less than free.
Right. So one begins to realize this essential truth — Google is neither a technology company, nor a search company. It has become a marketing company. Currently its business is the selling of advertising. It didn’t start out that way. It started out intending the organize the world’s information and make it useful and accessible. But now Wall Street expects it to feed its advertising juggernaut first.
For the advertising to remain effective, Google is going to have to learn more and more about us. The looming battle: On what terms does it learn about us and operate in what I’ve begun to call the “advisor-tising” space? For Google the engineering and software — Android, maps, apps, wallets — is now focused on drawing more and more of us in, and learning more and more about us, so that we can be better and better packaged and presented to people who want to sell us something.
At least in the world I come from, there is the intention to provide a service — civic information — that rides atop advertising and is served by it rather than vice versa. At least that’s been an aspiration for the news industry and the continuing focus of its best thinkers.
The good news: Gradually, Google — and Facebook — are going to figure out that being the “infovalet” requires a new kind of trust relationship with the user if you want to remain their most-favored agent. And that will involve providing something of value beyond a lot of free, ad-supported services. How about news? Google has for now one of the must trusted and recognized brands in the world. It will need to adopt the role of infovalet to keep that enviable position.
Figuring out that relationship is the next phase of the web and what fascinates me and why I crafted our RJI white paper as “Paper to Persona.” And it’s a playing field where news organizations have strength — if they can just learn to use technology as adroitly and innovatively as do Facebook, Google and Amazon.