November 21st, 2005
Why not fund on-demand with ... money?
I can’t let John Carroll’s latest posting about ad-supported software pass without comment, because he repeats a misconception right in the middle of it that is really central to why I get so steamed up on this topic. Here’s the bit that made me fume:
"Ad-funded software already exists, though it’s most successful on the web. Google makes stacks of money from ads, as does MSN, MSNBC, CNN … or even ZDNet."
Sorry, John, did you say ’software’? I was not aware that Google advertisers pay for their use of AdWords with money. Now there’s a thought.MSNBC, CNN and ZDNet were software publishers. Surely what you meant to say was ‘ad-funded content,’ not ‘ad-funded software’? I find it simply incredible that otherwise highly intelligent people seem suddenly to be unable to tell the difference between content and applications when they’re discussing the Web.
John isn’t alone in repeating this canard. It seems to be received wisdom among industry analysts. According to another ZDNet news report last week, George Colony, CEO of Forrester Research, went as far as to write this in a recent column:
"Google’s programs are free, funded through advertising and syndication. This is a prescient move. I foresee a world in which even enterprise applications like financials, ERP (enterprise resource planning), and supply chain software will be advertising-funded."
I’m sorry, George, John and everyone else who believes this, it’s utter baloney, it really is. You can fund content with advertising (up to a point) but you cannot fund applications with it. Do you not see the difference?
Maybe it’s a technology thing — geeks perceive them both as payloads, so they ignore the fundamental differences in the ways users interact with one or the other.
Maybe people get confused by Google, which makes money from advertising in two very distinct but highly sophisticated ways. One of them is by monetizing its content with ads. The other is by providing an automated service called AdWords that allows advertisers to buy and manage those ads. AdWords allows Google to profit handsomely from selling its unique form of advertising, but the application itself is not ad-funded. When a user goes into their AdWords console to choose some new keywords, there are no ad panels down the side promoting third-party keyword directories and AdWords optimization services. No, Google is much more cunning than that. Its advertisers pay for their use of AdWords with money. Now there’s a thought.
Maybe people have got the wrong metaphor stuck in their heads because they’ve spent too much time listening to Tellywood and the telcos. Here’s a selective extract of some of the many things Doc Searls had to say on the dangers of that in his latest essay on the future of the Net:
"Most significantly, the Net is a marketplace. In fact, the Net is the largest, most open, most free and most productive marketplace the world has ever known … When we talk about ‘delivering content to consumers through the Net’, rather than ’selling products to customers on the Net’, we … unconsciously agree that the Net is just a piping system … one way of framing the Net — as a transport system for content — is winning over another way of framing the Net — as a place where markets and business and culture and governance can all thrive."
To adapt Doc’s language, I can’t understand why people are still thinking about ‘delivering software as a service over the Net’ instead of ’selling software-based services on the Net’. Why persist in befuddling their brains with this absurd conflation of content and applications? All we’re talking about is competing in an open market at a fair price for services rendered. Why on earth would anyone find that such a difficult concept to get their heads around?
Phil Wainewright is a commentator and strategist on emerging software industry trends. See his full profile and disclosure of his industry affiliations.
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| 11/21/05
