A few posts drew my attention this morning. First, Nick Carr points out that Google is changing the way the web appears, depending on whether or not you are using the Google search engine:
First Click Free allows publishers that restrict access to their sites (to paying or registered customers) to give privileged access to visitors who arrive via a Google search. In essence, if you click on a Google search result you’ll see the entire page of content (your first click is free) and you will only come up against the pay wall or registration screen if you try to look at a second page on the site.
At the very least, First Click Free provides another boost to the web’s centripetal force, as Google further strengthens the advantage that its dominance of search provides. Google doesn’t like to think of itself as locking in users to its search engine, but if you get a privileged view of the web when you go through Google, isn’t that, as Lenssen suggests, a subtle form of lock-in? Isn’t Google’s web just a little bit better than the traditional unmediated web?
Mathew Ingram disagrees with Nick and takes quite a different stance:
As Matt Cutts notes in his comment, there’s nothing preventing publishers and websites from providing exactly the same service to anyone who comes in via search, whether it’s through Google or not. There’s nothing proprietary about it, nothing restrictive or exclusive. In fact, publishers would be dumb not to extend the same policy to anyone who arrives from a search engine. It’s an easy way to give someone a sample of what you’re offering to entice them to pay. I think Nick was just looking for a nice, fat stick to beat Google with, and First Click Free seemed to fit the bill.
I agree with Mathew on this one. Google has already changed the way we use the web. We browse less and search more. The web has already been Googlified as it is the most dominant search engine. We look at what Google presents us. What First Click Free does is provide publishers a nice way of providing potential customers a first glance at what is available in a paid environment.
It’s a smart business model, and resembles Freemium. Google is executing the advertisement model really well. They will, unlike other web services that try to leverage advertisement in their on business model not be hit as hard by the financial crisis. Henry Blodget has a good article on that. He writes about the current financial crisis and concludes that online advertisement will take a hit.
It’s time we woke up and faced reality. Online display-ad spending will fall in 2009, probably sharply. It will probably fall again in 2010. Hundreds of startups counting on advertising as a business model will be flattened. Yahoo, CNET, AOL, and other big display-ad properties will get hammered. Legions of me-too video sites will croak. Ad networks, the “hey, let’s just start an Internet company!” flavor of this second dotcom boom, will get decimated.
The reason for this is not just the current financial crisis. Henry shows that the slowdown has already started before the crisis. The underlying reason is that the advertisement business model is severely flawed. In most cases it adds no value to the user experience. I already mentioned this in many different posts, the latest one entitled “How 475Bln customer views can lead to ZERO value”, and another one called “A shakeout of unhealthy advertisement sponsored web 2.0 businesses”.
I do not object to advertisement or a business model based upon advertisement revenues. But this model is misused in a way that doesn’t add value to the end user. And I only believe in business models that provide the end user value. The FREE ads based business model has become a “standard” in web 2.0 thinking, but it hardly ever pays off, not for the startup or the user.
Google continuously proves to be an exception, but they have taken care of the most important aspect to make advertisement work. They have provided a context in which the advertisement itself contains value to the user. The context being search of course. But advertisement as a means to sponsor free services hardly ever provide the user value. They have to put up with the advertisement in order to get a free service. Hardly a sustainable or value adding model. It’s a lose-lose scenario at best.
This business model only has one purpose and that is to attract old school media companies to invest in it as they don’t have a clue of on-line value either. If anything the current financial crisis will force advertisers and media companies to rethink their strategy and simply look at the value that is being generated with online advertisement. And while the transaction and distribution costs are near-zero they will have to conclude that their value and the value for the end-user is also zero. There are better ways to spend your money. And honestly, Google may have startd once without a clue of a business model. But now they are simply so much smarter than anyone in this advertisement business. They keep on innovating the whole model making it better all the time. Working on the context to make sure there is value. Who is going to beat that?