… while Google is an unusual company in many ways, when you boil down its business strategy, you find that it’s not quite as mysterious as it seems. The way Google makes money is straightforward: It brokers and publishes advertisements through digital media. More than 99 percent of its sales have come from the fees it charges advertisers for using its network to get their messages out on the Internet.
Google’s protean appearance is not a reflection of its core business. Rather, it stems from the vast number of complements to its core business. Complements are, to put it simply, any products or services that tend be consumed together. Think hot dogs and mustard, or houses and mortgages. For Google, literally everything that happens on the Internet is a complement to its main business. The more things that people and companies do online, the more ads they see and the more money Google makes. In addition, as Internet activity increases, Google collects more data on consumers’ needs and behavior and can tailor its ads more precisely, strengthening its competitive advantage and further increasing its income. As more and more products and services are delivered digitally over computer networks — entertainment, news, software programs, financial transactions — Google’s range of complements expands into ever more industry sectors. That’s why cute little Google has morphed into The Omnigoogle.
Because the sales of complementary products rise in tandem, a company has a strong strategic interest in reducing the cost and expanding the availability of the complements to its core product. It’s not too much of an exaggeration to say that a company would like all complements to be given away. If hot dogs became freebies, mustard sales would skyrocket. It’s this natural drive to reduce the cost of complements that, more than anything else, explains Google’s strategy. Nearly everything the company does, including building big data centers, buying optical fiber, promoting free Wi-Fi access, fighting copyright restrictions, supporting open source software, launching browsers and satellites, and giving away all sorts of Web services and data, is aimed at reducing the cost and expanding the scope of Internet use. Google wants information to be free because as the cost of information falls it makes more money.
There’s one more twist. Because the marginal cost of producing and distributing a new copy of a purely digital product is close to zero, Google not only has the desire to give away informational products; it has the economic leeway to actually do it. Those two facts — the vast breadth of Google’s complements, and the company’s ability to push the price of those complements toward zero — are what really set the company apart from other firms. Google faces far less risk in product development than the usual business does. It routinely introduces half-finished products and services as online “betas” because it knows that, even if the offerings fail to win a big share of the market, they will still tend to produce attractive returns by generating advertising revenue and producing valuable data on customer behavior. For most companies, a failed launch of a new product is very costly. For Google, in general, it’s not. Failure is cheap.
But while Google has an odd business model, it’s not an unprecedented one. The company it most resembles is, ironically, its archrival, Microsoft. Just as Google controls the central money-making engine of the Internet economy (the search engine), Microsoft controlled the central money-making engine of the personal computer economy (the PC operating system). In the PC world, Microsoft had nearly as many complements as Google now has in the Internet world, and Microsoft, too, expanded into a vast number of software and other PC-related businesses – not necessarily to make money directly but to expand PC usage. Microsoft didn’t take a cut of every dollar spent in the PC economy, but it took a cut of a lot of them. In the same way, Google takes a cut of many of the dollars that flow through the Net economy. The goal, then, is to keep expanding the economy.
Are democracy, capitalism, freedom and the concept of romantic love unique inventions of the West? No. In his new book, anthropologist Jack Goody shows that the superiority of the West is largely unreal, even if we look to the recent past.
In “The Theft of History”, Goody criticizes both Western historical writing and his own discipline anthropology,
I also learn from the post that the introduction to the book is available for free at the Cambridge University Press:
And then there is Bella Ellwood-Clayton, sexual anthropologist. Ellwood-Clayton got written up some time ago at Antropologi.info because her work is open access. But I think the site, and her career, might take the prize as the most public, applied anthropologist that I’ve seen in quite some time.
She treks through mud and sleeps with pigs to discover traditional tattooing practices in the jungle. She writes poetry. She is multiply-orgasmic (link to PDF of a relationship column—sfw). And of course she also publishes about cell phones.
I am not quite sure what I think of Ellwood-Clayton’s website, or the way that she is spinning her career. But I have to admit that in an era when anthropologists spend more time arguing about what they can do to become relevant than becoming relevant, it is sort of refreshing to see someone hanging out their shingle in a highly… shall we say… unambivalent way. Carrie Bradshaw, move over.
Happy reading times!