Inflation or Desperation: Pricing Free Online Services

March 14, 2014

Yep, it’s illogical. How can a free online service get a price tag. Easy as Amazon’s boosting the fee for Prime and Facebook’s cooking up whizzy new types of advertising. But the big news is tucked between the lines of “Desktop Search to Decline $1.4 Billion as Google Users Shift to Mobile.”

Here’s a tasty factoid:

In the scope of Google’s overall ad revenues, mobile search is gaining significant share. Up from 19.4% in 2013, mobile search will comprise an estimated 26.7% of the company’s total ad revenues this year. Desktop search declined to 63.0% of Google’s ad revenues in 2013, having already fallen from 72.7% in 2012.

You may have noticed how lousy the search results are from Bing, Google, and Yahoo. Even the metasearch engines are struggling. Just run some queries on Ixquick.com or DuckDuckGo.com and do some results comparisons.

Because most of the world’s Internet users rely on Google to deliver comprehensive and accurate results, users are unaware of the information that is not easily findable. Investigators and professional researchers are increasingly aware that finding information is getting harder, a log harder if our research is on the beam.

As users shift from desktops to mobile the GoTo/Overture advertising model loses efficiency. There are a number of reasons, including the difficulty of entering queries while riding a crowded bus to the small screens to the dorky big type interfaces that are gaining popularity to the need to provide a brain dead single / limited function app to help a person locate pizza.

For Google and other desktop centric companies, the shift has implications for advertising revenue. Smaller screens and changing behavior means the old GoTo / Overture model won’t work. The impact on traditional Web sites is not good. Here’s a report for a company that did the search engine optimization thing, the redesign thing, and the new marketing “experts” thing. Looks grim, doesn’t it.

image

I won’t name the owner of this set of red arrows, but you can check out your own Web site and blog usage stats and compare your “performance” to this outfit’s.

What this means is that services that are free have to generate money. To generate money, online services have to charge someone. The bills will flutter to individual users in the form of “extras”. The bills will crash on the advertisers who either have to pay more to get traffic or to advertisers who discover their ad dollars does not stretch as far as it did in the salad days of 2003 to 2006.

The write up “Desktop Search to Decline $1.4 Billion as Google Users Shift to Mobile” contains some data that can be interpreted as a home run awaits the company able to crack the mobile revolution.

It may be Google. It may be off the radar outfits like Aglaya. It may be a grade school kid lecturing at TEDTeen.

Whatever the solution, the model that spawned Google is undergoing revisionism. The online world is an expensive one to dominate. Money is required just as it was for the Roman Empire as it began to fray.

I expect that I will have to pay. You may be a lucky one and the world will remain as it was in 1998. I am jaded. I expect desperation to kick in and the price of “free” will morph into something of Amazonian proportions.

Stephen E Arnold, March 14, 2014

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