From their blog (and the first post of any consequence, IMHO):
For last week’s launch of the Chinese-language edition of Google News, we had to decide whether sources that cannot be viewed in China should be included for Google News users inside the PRC. Naturally, we want to present as broad a range of news sources as possible. For every edition of Google News, in every language, we attempt to select news sources without regard to political viewpoint or ideology. For Internet users in China, we had to consider the fact that some sources are entirely blocked. Leaving aside the politics, that presents us with a serious user experience problem. Google News does not show news stories, but rather links to news stories. So links to stories published by blocked news sources would not work for users inside the PRC — if they clicked on a headline from a blocked source, they would get an error page. It is possible that there would be some small user value to just seeing the headlines. However, simply showing these headlines would likely result in Google News being blocked altogether in China.
We also considered the amount of information that would be omitted. In this case it is less than two percent of Chinese news sources. On balance we believe that having a service with links that work and omits a fractional number is better than having a service that is not available at all. It was a difficult tradeoff for us to make, but the one we felt ultimately serves the best interests of our users located in China. We appreciate your feedback on this issue.
“It is possible that there would be some small user value to just seeing the headlines. ” No, I disagree. It’s more than possible, it’s a fact, and it’s not small, it’s all. The value is in knowing that you’re not seeing All That’s Really Out There. I wish Google would take a stronger public stand on this, as this rather fence-sitting statement could well strain the company’s credibility in otherwise untainted areas of its endeavors, and that’s too bad.
I’m not claiming Google should have tempted fate and forced China to shut them down (thought that would have been pretty f*cking cool, I have to say). And while I am sure this clarification was quite considered, it’s not exactly what I and others counseled. On the other hand, who the hell are we to judge? It’s a good start – they copped to the real situation, which is that if they added the blocked sites’ headlines, they’d most likely lose the service altogether. In the end, that’s why they did what they did. The user experience hoo-ha, while defensible in a Letter of The Law kind of way, is political legerdemain. I respect and agree with Google’s main decision – it was hard to make, I am sure. Yet I still wish they’d be more open with us over here in the Free World – let us know that they understand the value of what they had to take away from Chinese users in order to provide them Google News. Maybe even lodge a formal, if diplomatic, protest to the Chinese government in some way. What, no other company does that? Well, sure, but no other company opens their S1 with a statement like “Google is not a conventional company. We do not intend to become one.”
With time, the company will get there. It’s not easy learning to be public, I am sure. Plus, it’s got to be hard to be the one everyone looks to for leadership. And it’s doubly hard when you set the bar for yourself at a subjective (though admirable) goal like Don’t Be Evil.
Co-lead underwriter CSFB says GOOG will hit $145.
From The Street’s coverage:
Contrasting with mixed reviews for Google already published by analysts from firms that didn’t participate in Google’s IPO, CSFB’s report, along with initiations from fellow joint book-running manager Morgan Stanley and underwriters Thomas Weisel Partners, WR Hambrecht and J.P. Morgan, all assigned Google ratings equivalent to a buy.
GOOG responded with a rally, up more than 6 so far today to $124.
Initiating coverage on Google with Overweight-V rating – Google has helped change the direction of the Internet and has built impressive market share and an especially strong business model. We believe Google should continue to help pace the growth in the still early-stage online search market and benefit from related revenue growth. Google shares could have upside as implied by a variety of valuation methodologies, most notably our DCF, discussed beginning on page 56.
Estimating strong financial results for C2004E and C2005E – We forecast net revenue growth of 93% and 60% in C2004E and C2005E, respectively, with 76% and 42% operating income growth (excluding stock compensation expense) driving estimated levered free cash flow of $394MM and $908MM in C2004E and C2005E, respectively.
Her report is, as usual, very comprehensive, and I’m still reading through it. But I have to say, it reads well, in the meta view – she mentions that Google is well positioned to be the front end to audio and video content (as I’ve said before, TiVo + Google = VOI), and ends her opening section with this very Web 2.0 passage:
Particularly, with the launch of Gmail, we became intrigued at the possibility that Google could create a distributed computing model layered over user-generated content. Right now users can have 1GB of webmail storage—but with potentially tens of thousands of servers, and commensurately cheap storage space, we wonder about the possibility of Google providing a thin application “desktop” that resides on the browser, where users could jot brief notes (GWord?), do basic calculations (GExcel?), and of course, search. The April 2004 registration of gbrowser.com by Google could lend some credibility to this line of thinking. Ultimately, we believe the company could have a significant opportunity ahead of it in Search / Find / Obtain well beyond the Google.com domain.
Now the hard part – execution – begins.
Instead of “you can add anything you want, as long as it’s on the list of My Yahoo content” you can now add pretty much any public RSS or Atom feed. In other words, the content model is open.
Let me say that again, just for dramatic effect: the content model is open now…..
This not only makes My Yahoo relevant in the modern wave of syndication, it does something else–something that Yahoo is in a unique position to do: bring RSS to the masses.
It also integrates local content, if you’re registered, and…yup, Local Search will be there too. Coooool.
PS – Here’s Yahoo’s overview.
In preparation for Web 2.0 next week, I spoke today to Gian Fulgoni, founder of Comscore. He’s giving a great talk on the things a major research house knows about the web. One of the slides he showed me I just had to steal to give you a sneak preview (click on image for a larger view).
What this tells us is pretty interesting: the heaviest users of search, who are a minority of total search users, account for the vast majority of search queries. This seems a case where the tail is not as powerful as the head….And clearly, the more folks use the web, the more they use search. What happens when the majority of us are heavy users of search? Time to buy more servers….
I spent some time today talking to the founders of Fathom Online, a SF- and NY-based search marketing firm. I wanted to get a view of the search economy from a firm that makes its livelihood betwixt and between – optimizing campaigns for advertisers, employing software-based analytics and database mining techniques to eek out the best possible performance from paid search. As many of my readers know, Fathom represents a booming industry, one that will only prosper as performance-based marketing gets more and more complex. I spoke with Chris Churchill, Founder and CEO, Rob Middleton, Executive Vice President New Business, and Jay Webster, President and Chief Technology Officer. Between them they have a boatload of experience in traditional and online marketing, search, and the internet industry.
Our discussion ranged (headline: The Big Agencies Still Don’t Get It), but the meme I found most interesting was their take on contextual advertising. I pushed on this piece, both because I feel traditional ad networks fail to take advantage of the endemic value of an audience/author relationship, and because I’ve heard over and over that AdSense performs miserably compared to AdWords/Overture. But the Fathom guys saw opportunity in my line of questioning. Instead of agreeing that contextual advertising was something of a low-end, low quality option, they said that contextual would benefit from the next wave in marketing spend.
Why? Simply put, the margins on “quality” PPC – search-related keywords on the major engines – are getting too low. The competition is fierce, and there’s less money to be made optimizing in those areas. Instead, there’s a whole new landscape to navigate, a landscape opened up by AdSense, but which, to date, has yet to benefit from the full attention of the market. But Kanoodle, Quigo, and many others are beginning to play there, offering solutions which, at first blush, are performing far better than AdSense, and for far less cost than AdWords. In fact, Chris said that Quigo was his best performing network last month, so he bought a bunch of inventory there to resell to his clients.
So I then asked the obvious question, at least for me: When would ad networks be able to price both on the keyword/PPC model, as well as price in a “premium” for a particular site, so that an advertiser could say “I’d like to spend up to X dollars to acquire a customer for this particular campaign, but I’ll spend X plus 1 dollars if that customer comes from (name your site here – say…Searchblog, for example, or, alright, the New York Times).”
I took comfort in Jay’s response: If it can be turned into math, we can do it.
The bottom line: I still predict that within 3-5 years, we’ll have ad networks that combine the best of CPA/PPC networks with the best of CPM/Endemic buys. We really are in the early innings.
There are a raft of reports lately talking about how short sellers are moving in on net stocks, Google in particular (one story notes that 21 percent of Google’s shares are shorted). This CBSMW piece rounds up the others, stating that the short interest in Google is in fact 15 percent.
Also of note: The Google underwriter’s quiet period lifts tomorrow, meaning that those banks which helped the company go public can now start coverage.
(Where VOI = Video Over Internet)…
Gary points us to a Journal piece (sub required) in which Comcast chief Brian Roberts has this to say:
We’re approaching seven million users on Comcast’s high speed Internet service… We also have video on-demand and a very exciting arrangement with Sony and MGM to get lots of movies and a deal with the NFL. In fact, we think eventually 10,000 hours will be available on demand. And if you then overlay that with access to the Internet, there is virtually unlimited content that consumers will be able to access on a television, a PC and perhaps on a mobile device. There is constantly going to be a need to make it easy for consumers to access what they want when they want it. Call it a search engine. Call it a portal. Call it an on-screen guide or navigation device.
Gary points out that Comcast is starting to think about search, and yes, that’s important in and of itself (caveat: I am not a fan of Comcast’s gatekeeper business model). What I find interesting is why they decided to think about search: they are seeing that soon the world will have PVR+Web-based delivery, and that means Comcast’s “we own the means by which video enters your home” model is hosed.
I’ve long fantasized about having a web-like search interface to video (who wouldn’t want to type “The Office” Season 2 into a Google video search, and get all the episodes listed, ready for download or drizzle?). But a Comcast version sounds, well, like a Comcast version. If they decide that those 7 million plus broadband users must play by Comcast’s rules when it comes to video, well, implosion ho!
Add to that the fact that others are competing on both sides of the equation: the RBOCs for the broadband pipe, the satellite guys for video, and this battle is shaping up very nicely. I spent a couple hours talking about this with David Dorman, the CEO of AT&T last month, and it was a revelation. The interview will be published soon, but I for one very much hope Comcast decides to play in search. The rules are different out here on the Web – and I hope they stay that way – you can’t control who uses you, or when. If you try, you lose.
I was on the Google campus when the AP’s Google News China story broke (it’s been followed by the Merc and others). I’ve been hanging back and not commenting as it percolated earlier in the week (ie this Slashdot thread), waiting for something which advanced the story. David Krane, who’s been helping me with my interviews on the campus, mentioned the story and I asked where things stood.
David explained that Google made the decision to omit a small number of Chinese government banned sites (about eight) because to include them would create a damaged user interface experience. Google China users would see results and links, but be unable to click through to the actual pages, because China in fact filters those sites – they can’t be seen behind the Great Firewall of China.
This line of reasoning is echoed in the Merc’s coverage:
Google acknowledged that headlines from government-banned Web sites were intentionally excluded from Google News because they are inaccessible within China’s borders. The company said that providing links to inaccessible Web sites would degrade the “search experience” of its news site.
“Google has decided that in order to create the best possible search experience for our mainland China users we will not include sites whose content is not accessible,” the company said in a statement, “as their inclusion does not provide a good experience for our News users who are looking for information.”
I think this is half an answer, to be honest. It’s always best to know that you are not being shown something, even if you don’t know what that might be. Clearly the best approach, in a perfect world, would be to show links to that which is censored, even if users can’t click through. That way, at least they’d have an inkling of what they’re missing (Google already has a practice like this in place through the Chilling Effects website for stuff like the Scientology dustup and DMCA requests). At the very least, Google could acknowledge to Chinese users that there are results which can’t be seen due to government restrictions (sort of like what they do with duplicates and such – “In order to show you the most relevant results….”).
However, to do either would clearly irk the Chinese authorities, and Google, like every other company that wishes to do business in China, has to play by those authorities’ rules (the Slashdot thread was, in fact, quite balanced on this point.)
I think the company might consider avoiding the “we’re trying to make the best search interface” excuse, which has some intellectual defensibility, but feels rather cold, and rather admit that they find it frustrating to have to keep this information from Chinese users and would prefer to at least inform them that the information they are seeing is not complete. Then admit that they have to play by Chinese rules, which honestly are the real culprit here. In the process, Google could and should point out that on balance, they do far more good than harm by making all the rest of Google News, and Google writ large, available to China’s burgeoning internet population.
If you want to track this story, I’d wager CDN would have the latest.
Update: Worth reading: this piece by a editor at a paper that has been blocked by China, and therefore Google News.