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If Only The Media Understood The Economics Of The Media

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Of course a newspaper will be all in favour of the antitrust dunning of Google. They see the search company as a competitor and in that Arab sense of the enemy of my enemy is my friend they’re cheering on the attempted evisceration. It would help a bit if they understood the economics of the business they’re in though:

Convinced? You shouldn’t be. There are four reasons, at least, why the DoJ is right to fight this case. First, a product that is free (or free at the point of use) can still cause harm to consumers. The process is just indirect. An overly dominant search engine can, for example, raise its prices to advertisers, who then recoup the extra expense by charging more for hotels, flights, electronic gadgets, books, insurance, and so on.

Companies can charge more for their product because their costs go up, can they? A pay rise for journalists means that The Observer can put its cover price up? Its ad rates?

Or perhaps that’s not how it works then. Possibly prices are determined by that interaction of supply and demand curve. If the punter’s not willing to pay more for it then prices cannot be raised that is.

We might even consider the deeper meaning of what is being said there. A pay rise for Observer journalists means a rise in the price of the flights etc advertised in The Observer. We must, therefore, break up The Observer, no?

Then there’s complete stupidity rather than just lack of economic knowledge:

Second, Google’s cereal comparison doesn’t work. A key point about a dominant search engine is that it can gather more data to enhance the offer and thereby achieve greater competitive clout. It has a self-reinforcing aspect that doesn’t apply in the non-data world of cornflakes and Coco Pops.

Oh, cool. So, being dominant leads to an ever better search engine being created. This ever better search engine being created harms consumers in what manner? The insistence on reducing the dominance meaning, ineluctably, that the newspaper is insisting the consumer experience must decline – using their very own argument.

Third, most users don’t change their default settings. Yes, it’s technically simple to do, but most people don’t.

And revealed preferences. Most people don’t change away from Google. That means – by definition – that Google meets most peoples’ needs. The degradation of the consumer experience here is what?

Fourth, there is the deep problem of Google’s sheer size and effective control of 80% of the search market. How could new ideas and approaches ever get a look-in?

The Guardian gets 80% and more of public sector job advertising in the UK. We will break this market dominance when?

As ever, the Gell Mann hypothesis. Whenever we read something in the newspaper that we actually know about they get it wrong, don’t they?

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6 COMMENTS

  1. As always, I judge a thing by the way it affects me. Google seems quite adequate, so I use it. If I find I don’t like it any more, I’ll change.

  2. Revealed preferences: I’ve been changing my settings away from Google for as much as I can due to Google’s services deteriorating and negatively impacting on my utility. “Maps” aren’t maps, I use the OS maps via free StreetMap and paid-for ViewRanger; the search is adequate for my needs; StreetView kills my PC – literally, after a few “moves” around the landscape it stalls the machine so much the insert-paperclip routine is needed. And that’s not just me, I’ve encountered more and more other people having the same user experience. I am stuck using Google’s usenet interface for newsgroups via web as I haven’t found a replacement that doesn’t require local installation, and that they are gradually killing the usability. They’ve even black-holed the entire archives of groups like soc.history.what-if because *recent* posts became full of spam.

    StreetView used to be hugely useful for work – licensing and planning applications I could “walk” around the site without having to go out in the rain. Now it’s actually easier to drag my arse out of the office and interact with the real world.

    • Tend to agree there, the advertisers are the consumers.
      Bit like insured medical care, people think they, as insured individuals are the consumers, but really they are insurance consumers, and the medical care consumers are the health insurance companies, not the insured individuals.

  3. The problem has nothing to do with money.
    Google started out pointing you to the information you asked for. More and more it is pointing you to the information it thinks you should have.
    Of course this leaves a potential opening for a start up.
    Question is are we prepared to wait for the market (which Google itself will manipulate) to come up with a solution, or do we want to accelerate the process, bearing in mind the damage misinformation can have on the decision making process.

  4. “Fourth, there is the deep problem of Google’s sheer size and effective control of 80% of the search market. How could new ideas and approaches ever get a look-in?”

    How much better does anyone want this to be? Other than direct neural injection, I’m struggling. If I type in a place name, Google gives me good general pages and a map link. If I type in an actor, I get a list of their top films and something like an IMDB link. I have to get pretty obscure to get onto page 2 of Google.

    The interesting area with search is specialised engines. So not just “type in a phrase”, but like where you can search for an actor on Letterboxd and then select genre or decade from their filmography. Cloud computing and off-the-shelf search engines are making that easier and easier.

    What about a really good news archive search engine? With filters for publication, author, date range and tags?

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