Product Development and Internet Marketing

Interesting that my first post is about blogging, but it's that self-referential spirit that's kept the subculture going, right? Last year's most powerful brand, Google, just got into the publishing business with an acquisition of Pyra, creator of the blogger blog system. Whew, that was a lot of links.


As with any acquisition, only time will tell whether this makes any sense. My gut reaction is negative, mainly because I don't see where the value is going to be created. In an acquisition there is a presumption that the combination of firms creates some value which wasn't there when separate. So where is the value going to come from here?


Unlike the Deja acquisition a couple of years ago, there is no inherent value in the content they are acquiring. Deja was on the verge of collapse at the time, having put all of it's post-bubble resources into a comparison shopping service that never got any traction. If google hadn't purchased them, the newsgroup archives Deja had compiled could have been lost, or at the very least would have been very expensive to reproduce. It's instructive that Google never added Deja's support of newsgroup posting, but rather just exploited the unique content. Pyra's content is not unique and is currently incorporated into Google's offerings through the standard search services. So there's no value there.


A second obvious area where this acquisition could add value is on the advertising side. Bloggers could incorporate Google AdWords into their content, thus making both parties money. But there are far easier ways to go about this than acquiring the company! A simple distribution deal could suffice to lock up the blogger community.


Some commentators on this deal have talked about the advantage for Google of having a business which charges for software. I think this one might have some legs. For the past year or so Google's been selling its "search in a box" to corporations as an intranet tool. Corporate blogging is definitely a trend on its way up, so maybe this is part of the thinking. Once again, I'd have to wonder if there wasn't an easier way to get into this market. Could there be a need for additional revenue as they ramp up to a rumored IPO?


Finally, there's a potentially subtle rationale that the MBA-types would call "strategic positioning." Here's the logic: (1) Google dominates the ecosystem of HTML-based content, AKA webpages; (2) Pyra and the bloggers are pushing the envelope on the very definition of a webpage, incorporating the latest technologies (RSS, XHTML, etc) and creating strange new things (can't think of a better word) like GoogleFight; (3) these technologies could either be beneficial or harmful to Google's core search business. On the benefitical side, a semantic web could allow people to use Google for much more interactive activities like shopping, advanced research, etc., on the negative side, syndication and other technologies could feasibly allow people to find information without using traditional search services; (4) therefore, Google needs to have a hand in the publishing side in order to protect its interests on the search side. Not sure if I buy it, but its certainly an area worthy of further speculation.

February 16, 2003 7:02 PM
Comments

interesting how things have changed since when you wrote this article. Google Groups now allows news posting; services like blogger have proved to be very useful for google. Why don't you blog more often?

Posted by: Seun Osewa on May 4, 2004 5:14 AM