Is Google A Content Company? Of Course It Is. So What Should Publishers Do?

For the past week, I've been fielding calls about Google's new content play, called Knol, "killing" Mahalo. Knol stands for "unit of Knowledge" and it's a very well-designed Wikipedia/Mahalo style content publishing play. It's very similar to the New York Times' forgotten About.com, Seth Godin's spam-filled Squidoo, the flawed-but-fascinating Wikipedia, and of course my new project Mahalo.com.

Four important points about Google Knol to put it in context:

1. Like Wikipedia, users create Wikipedia-style articles on Knol about various topics.
2. Unlike Wikipedia, and very much like Squidoo, users can create multiple pages on the same subject.
3. Authors can put Google's advertising on these pages and make money.
4. Google (GOOG) is indexing these pages amazingly high in their search results.

This is a real change from last year when we launched Mahalo at the WSJ D conference. At that point everyone asked us, after comparing our superior search results (when we have one!) to Google's, if we were going to "kill" Google. Note: I would never engage that line of thinking because I've always seen Google as the modern day operating system, and our job to work within their framework.

Their operating system is search results, and About.com, HowThingsWork.com, digg.com, NYTimes.com, Engadget.com, etc. are all applications in that operating system. Our job is to create the best possible products that operate -- aka rank -- as well as possible with Google's OS.

Why all the focus on death?

The life of a startup CEO dealing with the rabid but sometime naive blogosphere is one of extremes. You're killing or you're killed, you're the shiny new object or yesterday's news. You can couple the link-bait based blogosphere with main-stream media journalists who, instead of acting like the voice of reason and "sticking to what got them there," have taken the link-baiting bait. The MSM has had to incorporate the flame warring, rumor mongering and link-baiting ethos in order to keep up in the page-view cold war.

This is either the shot in the arm MSM needs to compete, or they're chasing the blogosphere Thelma and Louise-style off a cliff. Time will tell I suppose.

Anyway, Facebook has had crushing success while MySpace continues to grow. Apple is hitting the ball out of the park while Microsoft continues to set sales records while fumbling into various markets. If Microsoft and Apple, MySpace and Facebook, and a Coke and Pepsi can't kill each other why is everyone obsessed with death?

Well, because Microsoft did kill Lotus, Netscape and thousands of other software companies when they decided that the operating system just wasn't enough.

Knol: Google becomes a publisher

Now, I want to believe David Eun, Google's head of partnership, when he says they are not in the content business. David was hired from Time Warner to be the easy-going, friendly face of Google to the content players of the world in the heat of the dual disasters of YouTube's copyright problems and Google's "we're gonna scan your books with or without your permission" absurdity.

Last year in an interview he said:

The biggest misconception is that they (content companies) fear Google has aspirations to become a media company, meaning that we would produce and own content that would compete against theirs. That's a major misconception. We don't produce our own content. In fact, we see ourselves as a platform for our partners that do.

On one level, I believe that the Google leadership does not want to be in the content business, but I think they've diluted themselves into an odd definition of what it means to be a content company.

Let's run a test: what is the role of a content publisher?

1. Secure talent
2. Distribute their work
3. Monetize that work
4. Pay the content creator for their work
5. Build a library of that work for future monetization

So, if you're the New York Times or Wall Street Journal you:

1. Hire John Markoff and Walt Mossberg (on staff)
2. Distribute their technology reportage
3. Sell advertising against that reportage
4. Pay Markoff and Mossberg
5. Create an archive on NYTIMES.com and WSJ.com of their work.

Let's run Google's Knol through this same process:

1. Hire writers (on contingency) -- check
2. Distribute these pages in Google's search results -- check
3. Sell advertising against it in the form of AdSense -- check
4. Pay the writers via AdSense split -- check
5. Create an archive on Knol for future monetization -- check

Any objective person would look at these two cases and say that the only difference is that Google hires folks on a revenue split basis and content companies pay people up front. Except of course, About.com is paying folks partially on spec.

Google believes because they don't own the content that they are not in the content business. Nice try, but no, that's not how it works. If you pay writers, distribute their work, and create a library of their work you are--in no uncertain terms--a publisher.

Google-dependent businesses

There is a huge debate in the Valley today as to the value of Google-dependent business. Many of the biggest and best companies today have Google as their top source of traffic. Reportedly digg is 50% Google traffic, About.com 85%, and Wikipedia 70% Google traffic. That means that people don't go to these sites directly, as much as they go to Google and do a search and click on their result.

This means Google makes money from you while you are on their search results, but only makes money on the second click if the content provider has put Google Adsense on their pages. Some do, many don't.

It seems that Google, the greatest web-business ever created, is not satisfied with owning over 70% of search--now they want to own the first couple of pages in their search results. So, if you're digg.com, About.com, NYTimes.com, and Wikipedia you're faced with not only being traffic-dependent on Google, you're now competing with them for the traffic within their search result.

Ouch.

This feels exactly like what Microsoft did to its application vendors. Microsoft convinced folks to build WordStar, WordPerfect, Lotus 1-2-3, and Quattro Pro for their operating system. They grew that business together until the point that Microsoft had massive market-share in operating systems--then Microsoft pulled the rug out from under the 3rd party application vendors.

The result? The streets were littered with dead software companies, Microsoft faced massive lawsuits, and the industry became stagnant until the Internet shook things up again two decades later.

Are we facing the same thing on the web today?

Can we trust Google?
I've got a lot of friends at Google, and I've worked with and defended them for years. They've been an amazing partner to me. The revenue from Google Adsense reached over one million a year for Weblogs, Inc. when we were still a private company. The $4,000 a day we were making paid our bloggers' salaries and gave me the biggest win of my life.

In other words, I'm a "Google man." I want to believe Google... I love the Google. The Google has been, very, very good to me.

Now, Google says they will do no evil and since I've worked with their team across three companies I tend to believe them. However, with the launch of Google Knol I feel like they are not being totally up front with us--their partners. It feels like they've stabbed us in the back to be honest. I'm not the only one who feels this way--even if I'm the only one stupid enough to say it.

If Google is going to be in the content business and compete for the top ranking in the operating system they control why not be honest about it? Why not have David Eun say, "listen, we're experimenting with content and we want you to be involved in it. Put your content in Knol!"

Frankly, it's insulting to say you're not in the content business and then launch Knol and compete with content companies for their authors, users, and placement in the rankings that you control.

For the record, dishonesty falls under evil in my book. Intellectual dishonesty? Well, that's on the bubble as they say.

Cry babies or canaries in the coal mine?

For a period I thought the video companies were being cry babies when they said Google was coming after them with YouTube. At the time I said "just put your content on YouTube and partner with them.... it's not like they're signing Hollywood talent to make content for them... grow up!"

Then "Family Guy" creator Seth MacFarlane -- the most successful television creator today -- signed a huge 50-episode deal with YouTube. Still, Google says they're not in the content business.

When the book companies complained about Google taking their content without permission I said "come on, it's not going to replace folks buying books."

Then I started using book search to find specific pieces of information in books instead of buying them.

You get the idea, it's not an issue until it's your issue. About.com, HowStuffWorks.com, digg.com, and Mahalo.com now going to feel the Google "we're not competing with you" burn--to what degree only time will tell.

What should startups do?

First, I think startups need to be honest with Google when they feel Google is going over the line. Most folks in the Valley are terrified of Google and they don't want to publicly criticize them for fear that their Google rankings might drop, or for fear that when it comes time to sell their company Google might blacklist them.

This simply isn't the case. Google is filled with a lot of great folks I've known for a long time. I've had many conversations with Matt Cutts, Megan Smith, David Eun, and even Larry Page once, about Google being in the content business. They've all said they are not going to compete with their clients and they are not a content company.

It's up to us to tell them when we feel they are crossing the line. With Knol, I feel like Google is competing with their partners. I've told them all this, and I hope they either a) remove Knol from the Google index as a sign of good faith or b) just cancel the project as a sign of good faith to their content partners.

For Google's own good they should not try to take over their own search results. If Google results start showing 20-30% Knol pages and YouTube videos then that is going to do four things:

1. Raise major anti-trust concerns.
2. Give Google haters something to point to--"ha! ha! you're evil!"
3. Drive partners away from Google into the arms of Microsoft--which isn't in the content business and never will be.
4. Drive users away from Google in search of more diversity.

Second, startup companies should probably hedge their bets. If Google is going full-bore into content that means they are going to start buying more content companies--at least ones that are not "pure content companies" by their definition. It's Google's world right now, so they get to define the industry. If they feel Knol isn't content, OK, well, than About.com isn't a content company so New York Times sould sell it to them.

Now, we could all be reading into this massively. Google Knol, Google's book scanning, and YouTube's deal with Seth could all be tiny pet projects on the side that will never move the needle for Google. In fact, you can almost be sure they will not move the needle given the power of Google's Adsense machine.

So, are we all just overreacting out of fear of the unknown?

Is David Eun a Jedi master letting us know "Google is not a content company.... and these are not the droids we're looking for?"

Frankly, I'm not the smartest guy in the world so I can't tell.

What does it mean for Mahalo.com?

Our goal as business is to get the majority of traffic from direct and non-search referring sites, so if Knol pushes us down one result on every search result it's not the end of the world. If Knol results are three or 10 of the top 30 results? Oh, then we might have a *slight* problem.

When designing Mahalo as a business, my model was to get our pages within the first 30 results on Google and Yahoo *some* of the time--like 20% of the time. We never expect to beat Wikipedia on a ranking. It seems that Google is going to ram Knol into the top search rankings--which they did during week one. So, we're gonna to all have to build a model where almost always being behind Knol and Wikipedia works. I think this isn't that big of deal--right now.

Also, as hedge we're partnering with Google. We've put 30 of our How To articles into Knol, and we're very big partners with YouTube on our Mahalo Daily show.

If you can't beat them join them. If Google is destined to be the new Microsoft then it's best to get into the tent early.....

Right?

Jason Calacanis is founder and CEO of Mahalo, and founded and ran both Weblogs Inc. and the Silicon Alley Reporter. This post was originally distributed via Jason's email list; subscription information available here.

See Also:
Google Not Cheating: Knol Buried
Google Launches Wikipedia Killer Knol