• Jeff Matthews

“Only the Leftovers…”

Microsoft May Give Consumers a Share in Advertising Revenue

Thus reads the headline in today’s Wall Street Journal above an article describing the Evil Empire’s plans for beefing up its not-even-close search business, with the following detail: “We’ll actually go to users and say instead of us keeping all that ad revenue, we’ll actually share some of it back with the user,” said Mr. Gates, according to a transcript supplied by Microsoft. “The user essentially will get paid, either money or free content or software things that they wouldn’t get if they didn’t use that search engine.” Not that Microsoft’s plans don’t matter, but with just 12% of searches (compared to Google’s 45% share), and a deteriorating base of unhappy Microsoft Hotmail users (including yours truly) migrating daily to other email platforms—Google’s own Gmail among them, Microsoft has to do something to become relevant.

But paying customers to use the service is not likely to be that something.

Search users want speed and accuracy—and they don’t want to feel like chum for the shark that is Microsoft’s efforts to expand its tenuous grip on internet users.

The most interesting thing about today’s Wall Street Journal story, in my opinion, is that according to Google’s own spokesperson, Google itself has considered sharing revenue with consumers, but, at the moment concluded that this is not the way to go.

That flexibility, and willingness to consider all approaches to its business model, is one of the things that to date has made Google so successful. Microsoft, on the other hand, is famously inflexible, because it has a desktop operating software monopoly to protect.

Lest you think I am being too harsh on Gates and Company, a New York Times article related to the ongoing AOL negotiations with Microsoft and Google quotes an advertising executive, who sums up the need for Microsoft and AOL to get together with perhaps the harshest judgment of all:

“Today, you can’t do search without buying Google. If you want to do a large brand communication, you need Yahoo. Only the leftovers go to AOL and Microsoft. If they combine, they can become a viable competitor to Yahoo for the branded stuff and could become second to Google for search.”

Jeff Matthews I Am Not Making This Up © 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

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The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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