Tuesday, January 1, 2008

The Google Way

You can't help but be impressed by the rise of Google. It's even more impressive when you see them making the right move, time after time, and just cleaning the competition's clock at recognizing emerging markets and opportunities.

What is their secret? What is the core difference between Google's mode of operation and that of traditional firms? I think I've boiled it down to a difference in the approach to new product development. When Google comes up with a new product or service offering, their initial focus is not "How can we make money on this?" but "How can we give this away and make money doing it?" Google has developed and aquired an awesome array of software, service and products and for the most part, gives them away.

The revenue stream comes primarily from advertising, but Google is much more than an ad sales company. By providing free webhosting for blogs like this one and now experimenting with web pages, they are establishing a huge, eternal database of immense knowledge, imagery, entertainment and insights that only gets more valuable over time. You can look at it any time you want, on their platform, with their ads and links and bells and whistles, but the pages belong to them.

How can other industries get in on this model? Free airtime in exchange for rights to the digital product? Free lab time in exchange for licensing or patent rights? Free art supplies and studio time in exchange for reprint rights? The terms of the deals will depend on the risk/reward ratio, but it's certainly a good starting point for a pricing model.

How can we make money giving stuff away?

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