Google Should Give You Some of Its Ad Revenue

Here’s a link to a Marketplace radio commentary that aired yesterday in which I argue that search engines should give you a cut of their ad revenue when you click through on an ad. Microsoft’s cashback system pays you if you click through and buy. But just the act of consuming the ad should have some value even if you don’t buy.

We’re used to thinking of Paypal and Google checkout as micro-payment services, but they can also become micro-compensation services. If you watch a commercial on Google TV, Google could credit your account.

I’ve written a (long) academic article showing how compensated calling could be easily incorporated into the current “do not call” regs — so that you could even set whatever price you wanted to listen to telemarketing calls. (I’ve also published OpEds on the idea here and here.) Instead of making an all-or-nothing choice about whether to block all telemarketing calls, a lot of consumers would prefer to set an intermediate price and just block those calls that aren’t willing to pay their price.

Compensated advertising fits perfectly with Google’s revolutionary model. It gives advertisers even better incentives to make ads relevant for specific consumers. Compensated ads are literally valuable.

Of course you have to worry about moral hazard. Some consumers will insincerely click through just to get the compensation. But advertisers have simple counter strategies to limit these shenanigans — such as limiting the total compensation or blocking consumers who click but never buy.

A bunch of other firms besides Microsoft have started down this path. After my commentary aired, I got an email from the president of mindshare.com. Mindshare will compensate you if you click through on their ads (but it seems you have to accumulate $100 before you can actually retrieve your compensation).

The big question is whether larger services — like Yahoo or Microsoft — will push Google toward a system where consumers can trade their attentions for dollars.

Microsoft’s cashback service is an important step in the right direction.


Dean

Shawn right on, I just discovered Scour and it's the search engine i've been looking for.

Jerry Powell

Where is the price of gas going with the falling oil per barrel! Hopefully down but poor big oil

companies will have to settle for only 40 to 50 percent profit!

Nylund

Google makes many great products which I love and use regularly and at no cost (like gmail). I am very happy with what they do with their money and it has benefited me in a much greater way than the pennies they'd throw my way for looking at ads.

And, this is sort of a dumb idea. If I get paid to see ads on the internet? Why not TV and magazines? Are you saying someone should pay me to read a magazine? I'm sure the publishing world would love that. And, think about all the checks ABC would have to write every time they air a new episode of LOST.

Seriously, the internet, is by and large entirely free. That is awesome. Let's not wreck a good thing by encouraging an idea that may just bankrupt (or make financially unviable) the companies that make the internet so great.

Imad Qureshi

@Silvanus: Sir (I keep calling you Sir because you said you are a Professor - the profession I respect most)

I don't understand your point. When you say someone puts a price tag on information, its extortion. But its ok to charge for "medium" or packaging. So whats wrong if Google makes money through ad revenue while it provides you the best of services. It brings you information for free. Charges "Greedy Capitalists" for what they advertise. Google is the medium.

Beside Google is of course there to make money. Not to help people. Google employ people at darn good salaries. One more thing. Until Google came up with 1GB mailbox, Microsoft and Yahoo were both giving us a 2MB and 4MB mailbox respectively. Now they want to share their ad revenue. Its all about competition.

Thomas Brownback

Compensation would be nice, but I'm fine with the current arrangement, where it's trivially easy to simply opt out of all internet advertising via AdBlocker.

Erinn

I have a google Blogger Account and they have a program called Google AdSense that works in the same way, $100 needs to be accumulated in order to reach payment. It links the YouTube service, google referrals, ads, banners and the like to your blog.

Imad Qureshi

Silvanus

Sir

Based on your last comment I think Google should charge us for its search services and then pay us back for what it advertises.

Is that what you are suggesting?

Newspaper writer

If all information is free, it is valueless economically. There's no incentive to produce or share information, so the amount of information produced is likely to decrease, and the reliability of information may also decrease.

Research and newsgathering are unlikely to be hobbies for enough people in enough fields and locations to provide a wide range of free, fact-checked, well-researched information.

Praising the Google model, which has distributed costly information freely to people who don't pay for the product, misses the point. People such as college professors, newspaper and magazine writers, scientific researchers and other information providers depend on salaries and income from research to pay to put food on their tables.

Are we heading for an economy where a person who provides a community with news will have to depend on barter to put a meal on the table?

I like sharing information. Genealogical research, for instance, seems to be a hobby in which shared information has made a big difference. My question is, do we want science and news about government to be hobbies, or do we want to pay for some specialists to go to school board meetings, cover the state legislature, find a cure for schizophrenia, or teach college classes?

I posted my free comment to encourage other people to think about the long-term implications of devaluing knowledge producers. A better-educated society depends on people to provide education. If researchers and other information producers all have to work at dreary (or not-so-dreary but tiring or demanding) service jobs all day, will they always have time for an intellectual hobby?

People don't want to pay for newspapers. Fine. Newspapers are going away. People don't want to pay for college courses. Fine. College courses will go away. People don't want to pay for books. Fine. Writers will not be able to write full-time. Wikipedia will continue to grow. Fine. But it won't always be reliable unless it changes its model.

Researchers will need equipment and Internet access to do research -- and if there's no income from their work, they'll have to beg people for funds. If they aren't good at selling themselves, they won't be able to do research. Do we want all knowledge to depend on a popularity contest?

And to the person who said Washington and Jefferson never asked for royalties, let me note here that by some estimates, Washington was the wealthiest man in the fledgling U.S. Many of the founders of the U.S. were successful businessmen, scientists or landowners. They weren't people who were making rope or barrels or doing the milking every morning and night.

While rebelling against England and founding a new country was dangerous, the work was also a luxury. Only those who could find a way to afford it helped write the Declaration of Independence and the U.S. Constitution.

Read more...

Silvanus

Imad- at no time did I ever use "greedy capitalists"- I'm afraid you're trying to pin another Straw Man. I also do not condone packaging- I'm simply calling it what it is. People need to make value judgments for themselves whether selling packaging is ethical- for instance, I would love to buy the package of Morgan Freeman doing a reading of War & Peace. That is a package I would gladly buy. The information is still the same (Tolstoy's text-at Project Gutenberg, you can download this text for free and do keyword searches).

Newspaper writer- Actually, Socrates was given a choice- Death or Banishment from Athens. He chose to drink Hemlock to prove his point and stand by his ethics (also, for him, there was no life outside of Athens). My suggestion of needing more people like Socrates in no way is a plea for mass suicide, but rather, a plea for principled stands. Socrates was infamous in his day for tearing down false realities (what Marx called false consciousness). It is to this spirit that I am freely giving my view in this forum, as there are many assumptions prevalent in corporate ideology that are simply, false, and demonstrably so. Would that more economists took more philosophy courses- their discipline would be better off.

Ah- And Newspaper writer- in case you never knew, the top 20 inventions of the last century were all given freely. The assumption that all research ceases due to no financial incentive is rather silly. The radio (invented by Tesla, not Marconi), television, the Internet, Relativity, etc., were all done without profit in sight- but simply for discovery. If you're not into research- then you may not understand the beast of invention and discovery.

Read more...

Silvanus

Imad- Wow, nothing you said even remotely looks like what I'm arguing. Looks like a Straw Man argument to me.

Thomas- hear hear.

In addendum to the reality deniers about information- what we pay for is the medium. This is fairly simple to posit- take for instance, two texts of War & Peace by Leo Tolstoy. My copy of this seminal work cost me 8 bucks at Barnes and Noble. It's a soft back and is "no frills." Now, say my friend has a leatherbound, autographed copy of War & Peace which s/he paid 5 grand for. Same information, different packaging.

To further exemplify why information is naturally free- simply look out your window. No one can charge you for seeing what you see- all that information your eyeball is taking in, and making into a coherent field of vision? Yeah- the only cost for that bad boy are the calories you're burning on eyesight.... so in sum, if you can trick people into buying the package, you can claim to be an information broker. But you're not- you're a package broker.

Kent- I finally got your joke! Very clever! Imagine accusing someone on a blog forum of being a Luddite. Might as well start the Amish jokes too.

Read more...

Thomas Brownback

"No. Information is the most precious commodity there is. Why should anyone give you information for free when they had to spend effort, time, and money to obtain it or to create it?"

Because:

a) a better educated society confers enormous benefits upon its citizens

b) if they don't, someone else will. Open Source software projects continue to be supported. Ivy League colleges are increasingly putting their courses online for free. Thousands of contributors work to improve wikipedia and other free public resources every day. Outside of knowledge, garage bands form every day in tiny cities all across America while there's approximately zero chance of making it big or often no intention of "selling out." If you want free high quality books, they are just a google away (check out Cory Doctorow or Tor Publishing). Hell, look at the blogging phenomenon.

We're opinionated and knowledgeable and talented, and we like sharing our skills with those who appreciate them. Call it social or aesthetic or moral benefits, but knowledge sharing is something we love to do, and will continue doing even if you think the exchange price of free is too low for you personally.

Of course, if that's really true, why did you post your thoughts in a comment?

Read more...

Newspaper writer

@Nylund:

You say "Let’s not wreck a good thing by encouraging an idea that may just bankrupt (or make financially unviable) the companies that make the internet so great."

A lot of information on the Internet comes from newspaper and magazine Web sites. Google makes money providing that information at no cost, but they don't pass search revenue back to newspapers and magazines. So publishers are losing revenue and they are laying off reporters and editors.

Google is helping to make newspapers "financially unviable" because it is parasitic. It has a great search engine and it has found a way to make a profit, but it is making that profit by using the work of others without paying for it. That's not a beneficial economic model.

To Silvanus, a reminder about Socrates -- he was executed. You say there's no advertising in your classroom. But if your university shut down, who would pay you to do what you do, and how would you feed your family? Would you feel the same about free information if you were unemployed?

Yes, you can look out the window and gather information. But getting access to original documents in Greek in order to study the life of Socrates is a little more complicated. Access to a synchrotron is expensive. And somebody has to collect those frogs that are dissected in biology class. Is your classroom cleaned by a janitor? Does it have lighting and heating or air conditioning? Education isn't free. Don't confuse education and scientific research with checking to see whether you need an umbrella.

Read more...

grizzly adam

Adsense?

Imad Qureshi

@2: Silvanus - "a fundamental truth about information… it is free until someone puts a price tag on it. Then its called extortion"

So what Professors do is extortion.

pfdstudio

As #2 points out, the content is supposed to be the compensation. If looking at ads has a direct value, there'll be no place for content at all. People are no longer willing to pay for music or books or movies, since they've come to expect them for free. If not even ads can bolster the content market, then how how can anyone make money creating content?

L

I remember back in 99 or so, there was a program that paid you for having a small banner on. The banner would have ads, and you were paid so much each minute you had it running.

Once in a while, you would have to click on it to verify you were still there and not just running the program all day.

Silvanus

Imad and Kent- if your education was worth what you paid for it, I'm sure you'd understand how Socrates rocked the Pay to Learn system of the Ancient Academy. Take a look at Berea College sometime- and you'll see a model of education as envisioned by those who invented the Academy, and passed it on to future generations free of charge. The same thing happened to democracy- amazing, that Jefferson and Washington and the other Founding Fathers never asked for royalties. "Deal with it." This is done by denying reality for many corporate capitalist ideologues. It really is sad.

And yes, as an educator in a Big 12 University, I do have to work in a place that extorts students. However, each credit hour is the same price- so a credit hour of biology is priced the same as a credit hour in rhetoric, or chemistry, or whatever. However, I don't have advertising in my classroom. There are no additional fees other than attending university and making use of the facilities. So yeah, I'm fine doing what I do.

And information is meant to be free. Deal with it. All it takes is a few more people like Socrates.

Read more...

Adam

Why should they pay? Surely the same logic should mean that everytime I walk past a billboard I should also get paid. As an advertiser I would also prefer that people were coming to my site to buy or use my product rather than trying to earn some money.

Halle T

I'm not sure I agree.

I'd rather have Google keep the aggregated revenue and continue to innovate and bring us great (free) products than a bit of extra pocket change.

If you really think revenue-share for ads is a good idea, maybe Freakonomics should take the first steps and implement a revenue-share with readers who click on those Liberty Mutual ads...

Mike

Showing me exactly what I was looking for is payment enough. Google can keep the change.