Wednesday, February 14, 2007


During the class discussion on 2/13/07, we talked about how Google may be walking a fine line as they increase their role as a news content aggregator. The example given in class was that if Google posed too much of a threat to a traditional media company such as Time magazine, a possible competitive response from Time would be to have their content pulled from Google’s data aggregation service.

Thinking about this potential conflict reminded me of Wal-Mart and their legendary bargaining power that allows them to dictate the relationships they form with their suppliers. This power stems from their sheer scale as well as having superior information technology to track consumer behaviour [i.e. better than their suppliers]. At what point will Google have too much scale and knowledge about the consumer that even a prestigious magazine such as Time will not be able to resist them without shooting themselves in the foot?

Where I think it becomes interesting is that Wal-Mart is sometimes credited with starting the global outsourcing movement. An interesting article on this can be found at Taking a fairly shallow view of global outsourcing being nothing more than the elimination of excess value capture from the supply chain, it would seem that if Google were to hit a critical mass, that they would be poised to dictate the terms by which traditional media companies supply information to them.
If this were to happen, could this spur a global “outsourcing” of media content creation similar to the manufacturing outsourcing that Wal-Mart helped drive? Assuming that any difference in quality between high cost and low cost content is rapidly converging toward zero, why would somebody pay a premium for a news story based on the agency it came from?

20 years from now, will the New York Times have "All the News That's Fit to Print" in one corner and "Made in Malaysia" on the other?

1 comment:

Peter Kirkwood said...

Interesting point but I question 2 points. First, I do not feel that content is a commodity. The source provides credibility to the story. Second, and there is considerable skill in presenting information in a concise and interesting form. The difference between well and poorly written material is significant.
That being said many individuals with the skill and credibility required live in other parts of the world and can provide their stories directly to Google without the need to work through the New York Times