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Tuesday, 30 October 2012

Google's extreme digital capitalism is just a different form of socialism

A news story has been rumbling on for a while.  France wants to find a way of taxing search engines; Germany proposed such a law back in March, Italy is reported to be considering such a law and even the US Federal Trade Commission embarked on such a project, in vain, two and half years ago.

This row is separate to the storm over multinationals not paying their fair share of taxes on local profits; although arguably the strength of feeling against Google may have been dampened if Google, as per many multinationals in general, weren't aggressively minimising local profits in an attempt to reduce their overall tax bill.

This row is about journalism and the poor, suffering, local newspapers coming to rely on Google for a large proportion of their readers.

For I doubt any publication worth their salt is worse off in terms of web traffic.

I'm no fan of Google, but the position of Google as an audience generator can't be overlooked.  I've been privy to web stats from companies who mysteriously find themselves de-indexed by Google and it's invariably catastrophic, with traffic falling to between 20 and 40 percent of previous volumes.  Those who do manage to get re-indexed recover pretty much all of their traffic.

And, for the record, I'm sympathetic to the news publishers' plight.  They pay for quality journalism, Google - I would say search engines in general but let's face it, this is an ideological battle against the Big G - reaps the profit.

So let's take this as a given, Firth's lemma, if you like.   Google brings news websites in general more traffic than they would otherwise get.  Additionally, I'll add for the sake of clarity: Google brings news websites more opportunity to present display advertising to its users.

So why the uproar when there's no evidence that the average news website is any worse off and plenty of empirical evidence to the contrary?

Over the last year I spoke to several lobbyists representing UK publishers pushing for similar anti-Google measures here in the UK.  Their message was met sympathetically by MPs - especially Labour MPs - who seem happy to see this as a battle of home-grown publishing talent versus the Silicon Valley leeches.

Publishers seem to be suffering from a mixture of fear, envy and greed.

They're quite rightly afraid of ceding control of their audience up the chain and having their income and very existence reliant on the whims of a bohemoth like Google.  If Google turns off the tap they might go under.

There's also misguided fear - fear that Google is itself too powerful and will take over the world.  I beg to differ - Google's dominance is either benign or transitory;  things have a knack of finding their own level when consumers are empowered and monopolies are not protected in law*

*Irony alert, as this is exactly what the newspaper industry is asking for.

There's envy of Google's profits, plus a form of greed - publishers want to own their own audience.  They're not happy with single visits.  They have wrestled and failed with the notion of visitor retention.

They want the visitor who comes to their website from Google News to see all the other great journalism they offer and become a loyal reader.

But this of course is not just bollocks.  It's utter bollocks, for the editors are happily baiting Google News with trash stories about Hollywood celebrity car crashes then berating these visitors for not staying at the Daily Telegraph to read about Britain's plight in the European Union and how quantitative easing has buggered the pension funds of millions.

Trying to tax web links is dangerous for three reasons:
  1. The law of unintended consequences means such a law will inevitably hit other smaller businesses and in the end prevent any local company growing to rival to Google and tempering the search engine's dominance and power.
  2. It encourages a victim mentality amongst local web businesses who, instead of pioneering new approaches to online publishing become reliant on oppressive laws which end up helping no-one
  3. It will lead to internet censorship and online advertising trade embargoes along national boundaries when offshore French news aggregators flout French law.  French courts might order services to be blocked in France and/or ban French companies from advertising on the service, or any affiliate.  Queue censorship of news and protectionism - neither healthy for France itself
I suspect the attack on Google in all likelihood stems from an idealistic political opposition based on an outdated view of left-right politics and an equally outmoded view of copyright as a monopolistic right over a published work.

Google is today a dominant and profitable organism.  Who could forgive socialist politicians for wanting to tax Google and redistribute some of its wealth?

But Google in its current form is spreading something.  If not wealth it is spreading access to products and services people otherwise would not use.

Granted it's not doing this out of love for the people - it's doing this to corner its own audience; and, to some extent, spike competitors.

Want to set up an internet business that charges for email?  Google will undercut you, offering email for free.  Blogging? Ditto.  Cloud documents, storage, maps... You get the idea - the anti-competitive weapon of free.

All the while Google is enhancing its audience monopoly and its vast data bank on all our online habits and tastes in order to sell-back its advertising products of questionable value to the publisher or advertiser alike.

None of this sounds too pretty, but the end result of this form of extreme digital capitalism is a form of socialism.  Free email for all.  Free shared spreadsheets and documents.  A voice through a free blogging platform for all citizens.  An affordable variant of Apple's £400+ smartphone.

Yes, none of the above is guaranteed to last.  But since Google's dominant position is not protected in the underlying technology of the internet or in law then there will be rivals, just as Google is attempting to chip away at Facebook's own monopoly.

We all benefit from the brutal competition in the digital market - including online news websites, who already have a choice to get their websites de-indexed from Google News.

Businesses need to help themselves and adapt to survive, not pressurise governments into enacting restrictive retrograde laws that will offer only short-term protection whilst ultimately harming the overall digital economy.


(As you can probably tell from my tone, I'm in no way paid by or affiliated with Google)


  1. For all your "sympathetic" pandering you're nothing more than a thinly veiled apologist for a right wing agenda. "Who cares if the poor can't afford to eat or get internet access, there's a free email account waiting for them when they can!" You Make Me Sick.

    1. Erm, thanks *Anonymous*... So "thinly veiled" that my blog is called Slightly RIGHT of Centre.

  2. I have an alternative view. Publishers are taking their frustrations out on Google for the poor revenue on offer to publishers from their advertising products.

    Yes, publishers are getting increased traffic, but the value from that traffic doesn't pay for the journalism. Since Google are both the gatekeeper to traffic and complicit in the poor returns to publishers from ads there is clearly a problem.

    However I agree with you that the solution does not lie in crazy plans to tax links. As you hint at, what the internet needs is rivals to Google, not insane laws to "protect" "victims" from an invented problem.

  3. Perhaps if journalists actually journalled important events, and not just recycle official views and press releases, they would find that people may ever directly pay them let alone suck up ads.

    Look at wikileaks. People were DIRECTLY and VOLUNTARILY handing them millions and millions in gratitude of the genuine journalistic bombs they were dropping, before the bank blockade.

    People know that 95% of journalism is total sludge these days, and thus complete commodity. Google simply capitalises on that.

    1. Buhaha, Your first sentence actually sums up Google modus operandi (recycling).

  4. Well, yes, the same old argument. Let's sweep away all protection to copyright, release the info, it's good for everyone, free journalism, free music, free film, free photography, what's not to like ? And if you're a consumer, it's 7th heaven. If you're in the tech industry- it's money, big money. If you're a pirate (often recycling the profits back into porn sites or trafficking women) it's bigger money still.

    Yet still bloggers keep saying 'it's all good folks!', conveniently forgetting that at the bottom of this money-making food chain are real people, trying to make a buck from their work, and these days, usually failing. While thousands enjoy their work for free. Yes, some newspapers might just be able to get some income from advertising, but it sure as hell won't be anything like the money that Google makes. And as for the average photographer or music artist, there's absolutely no way there's any kind of advertising model that's going to help them.

    As for assuming that competition or rivals to Google are the answer - look, in the virtual world, monopolies are king. There is one Facebook (even Google couldn't take them on with the struggling +), one Twitter ... and one Google. There is basically no real competition to Apple's iTunes. The net favours monopolies and actively works against competition because you always need huge numbers to make any cash at all. The bigger you are the easy it is to trounce any competitor. More and more, in music, film, journalism, search, etc, you're either truly mass market or you're in a niche that's so small you may as well do it for a hobby. Getting the 'traction' to even begin to think about making money from these activities costs an arm and a leg in promo. There will be very few takers to try and topple Google's crown. It just costs too much.

    There is nothing remotely 'socialist' about any of this. In the last ten years the tech industry has used its considerable muscle to make sure that all the profits from 'free' go into its coffers, with absolutely no investment back the other way to the people who create the 'free' content the tech industry makes so much money out of. It's about as capitalist as it gets, and they're doing it by waging constant war on copyright, accusing (as you do) copyright holders of being 'monopolistic' when the tech industry itself is a far bigger monopoly with far greater power.

    And its making a huge amount of money out of it. While copyright holders of all kinds are being cheated out of their just desserts by an industry which has got it made. The tech industry is now the middle man, enabling criminals to make money out of content which isn't theirs. And the consumer just trots along after both of them, happily taking the freebies and conveniently forgetting that back down the line somewhere is a content creator who isn't making a living anymore.

    That is nothing else than pure, vicious, unbridled capitalism of the worst order.

    1. Tom, it's not that I don't see your point (despite what the first commenter says) : I wrote about the issues you raise in Audience Monopoly ( http://www.sroc.eu/2010/11/audience-control-and-why-net-neutrality.html ) and hinted on similar issues of big audience/very thin margins in Identonomics ( http://blog.opendigital.org/2012/02/identonomics-economics-of-online.html )...

      But it's simply not true to say these ventures are monopolies - in the traditional economic sense of the word at least - because there are no false barriers to rivals.

      The cost/scaling issue is a worry, but I firmly believe the problem will play out as people get bored of Facebook and move on.

      I've also speculated that an online ad revenue correction is overdue after looking at the macroeconomics ( http://badculture.wordpress.com/2011/09/05/what-happens-to-the-vast-sums-of-money-spent-on-online-advertising/ )

      The thing to bear in mind are that these symptoms are not a conspiracy by big tech. They are an accident of a free and open underlying technology and time must be allowed for these problems to self-correct through market forces because regulatory intervention will actually bugger things up worse than they are now, I'm sure of that.

      And yes it's pure, vicious, unbridled capitalism - but seriously, who's really losing out? Show me the studies showing genuine harm to society, to culture, to journalism and the economy.

      Yes some industries are losing out, but also tech-based companies are employing creators, artists, photographers, copywriters and journalists.

      Is technology creating an injustice? I seriously doubt it.

    2. @Tom Green It would be wrong to overlook the massive investment these big tech companies have made to improve technology for all. To paint them as leeches is unjust. Yes Apple, Amazon etc have carved their own brutal "monopolies" but they've also invested in products that improve most people's lives.

      In Amazon's case it is in part an amazing warehousing and distribution system that has slashed distribution and transport costs for everyone.

      Many of your arguments were played out when factories started to use robots in place of workers on the production line. Workers don't like losing their jobs, but progress ultimately pushes everyone up a notch or two.

  5. @Anonymous - yes, if people decided that music, photography, film, or journalism wasn't needed - or that machines did a better job of creating the content, I'd agree with you. If no one wanted our work, then fair enough, But they do. Demand for all these types of content is higher than ever before. We're not redundant. We just don't get paid for it anymore. And both of you argue that the general benefit (to consumers, mostly) outweighs the benefit to content creators of actually being allowed the time to create the art. Few of us are interested in fame or fortune. We just want enough to allow us to continue creating without having to push it into a tiny window that comes after the dayjob, family, and everything else.

    If it really was truly 'free' - and no one was making money out of it - then I'd probably (if grudgingly) accept the situation. It's the fact that both the tech industry and criminals are making a lot of money out of it that grates.

    There are plenty 'losing out'. Like a friend of mine who killed himself because he felt his vocation as a musician had become worthless, that although many listened to his music and loved it, the fact that few of them thought it worth paying for meant he, as a person, was also worthless. It's all the 'team players'- producers, engineers, session musicians, etc who behind the scenes have contributed enormously to so many great records who now find there are no jobs for them. It's the freelance journalists who can now no longer survive financially from their work, and can't afford to do proper investigative journalism. I could go on ...

    And, I think, the consumer, eventually. These days most of my work is in 'media music' (for film, tv etc) because there I can, just about, make a living. But all plans to make 'art music' are on hold, because mine happens to sit in that middle ground between jazz, world, classical, 'modern contemporary' (just about anything...) and electronica - precisely a territory where it was possible, if only just, to make a living if you managed to get about 20-30k sales. That allowed us to make the kind of music - 'real' music, written for music's sake, not money- which so many consumers tell me they now find harder to find. Yes, there's more bad electronica than you can shake a stick at, but music that requires more than a laptop on the kitchen table... not so easy to get made, these days. Most of my contemporary music makers are either doing what i do - writing media music to brief- or they've given up.

    Yes, I know, I've heard it all before - if we're 'true' artists we shouldn't ever expect money in return for our work, Van Gogh survived, didn't he ? Yes, by leeching off his brother, all his life. And I'm not cutting my ear off just to make you think I'm a 'true' artist. I'm just trying to make a modest living doing what I have a vocation to do, feed my family, and pay my bills, Like anyone else. But I'm told that to achieve that I will need 20 million plays on Spotify, every single month, just to pay the rent. Not the food, just the rent.

    This is not helping society, or culture. It's creating a generation who feel they're entitled to get something for nothing, just because the tech allows them to. Well, I have the tech (in the form of a car) to crash into a cashpoint and steal all the money, but I don't feel entitled to do so and you wouldn't support me in so doing.
    It's actively making any form of cultural artefact that can be digitised harder and harder to produce.

    And it's leading those who create the art to think that it's not just worth the trouble to go on producing it.

    Believe me - that's a thought that's crossing most of the minds of most of my colleagues. Every. Single. Day.

    1. Tom - really sorry to hear about your friend. I know it's tough out there and I'm not arguing for "free" as a sustainable future. It's clearly unsustainable.

      The point I'm making is that there are jobs being created by the tech industry for creative types. I know stacks of freelance writers, journalists, the odd photographer and a good few graphic artists who now work in tech or tech-related.

      Many are freelancers, all perhaps have had to adapt their specialism (ie. turn to corporate event photography from news/photojournalism - corporations want this to enhance their social media presence).

      People need to get paid, and I'm sure given time the market will correct and there will be more paid jobs for creators.

      That doesn't mean that all jobs that previously worked as a career will continue to work as a paid career. Photojournalism is one area where e.g. citizen journalism, any fool with an iPhone etc can fill the gap.

      It doesn't make sense any more to pay someone to be in the right place at the right time when locals on the scene can send photos directly. Yes this is a generalisation and there are exceptions and is still a trust issue with any photograph.

      But this isn't the tech industry's fault - it's just a by-product of modern digital/photo tech being in the hands of many.

      Some people will lose out, and that hurts, and we should of course try and at least minimise the shock during this massive step change in technological capability.

      What we mustn't do though is enact bad law which threatens to stymie progress purely to preserve the old industries at the expense of the new - because actually the two industries are not really at such loggerheads. Tech still needs many of these skills.

      I'm also not saying don't regulate, ever. It may be the case we need to enact laws to preserve our cultural heritage or promote quality journalism, etc.

      But we should do this only when clear evidence emerges that society is worse off because of the upheaval, and I don't think we're anywhere near that point yet.

      And I do think we have to wait to see what I hope will be a massive correction occurs (more ad revenue filtering down to publishers, more competition to Google and Facebook, etc).

    2. @Tom Green looks like you've fallen for The Man's lies. Even the BPI had to admit music sales in the UK were stronger than ever. If musicians are not getting their fair share blame the music elite, not Apple. On that point Apple only have their monopoly because of the music industry's combined bloody-mindedness to only make deals with the big guys - partly because of their irrational fear of music sharing but mainly because they are, every single one, a control freak. I'm in the musicindustry myself and I don't know who to hate more but I don't look around me and think we'd be better off without the internet and part and parcel with the internet comes the ability to link and share.


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