Bloggers keep trying to analyze Google, and they keep getting it wrong. They focus on Google a piece at a time like the blind men and the elephant1.

Finding Fault is pleased to give you a more enlightened perspective. We will present our analysis in multiple parts. In this part, we will give you the simple big picture.

The Simple Big Picture

Google states its mission as:

[T]o organize the world’s information and make it universally accessible and useful.2

Google achieves its mission, and makes money while doing so, as follows.

  1. Crawl the Internet, index the content, make it available in searches.
  2. Host content on Google’s own servers, index it, make it available in searches.
  3. Buy fame, not advertising.
  4. Sell relevant advertising to make money.

Consider these Google services:

Blogger, Books,3 Code, Docs, Groups,4 Health, Knol, Life Photo Archive, Mail, Newspaper Archive, Patents, Picasa Web, Scholar, Sites, Voice, Youtube.

What do all of these services have in common?

Here’s the answer we wanted you to give us: Content. Specifically, content hosted by Google. Content that Google can index better than anybody else can, because Google doesn’t have to crawl it remotely.5

Some of the services we listed contain include private content: Mail, Voice, Docs, Picasa Web, Sites, Health.

Private content is important:

  • Private content can be included in search results.6
  • Private content can be used for selecting relevant ads.
  • Private content cannot be indexed by competitors.

Now let’s talk about advertising versus fame.

When you buy billboard space and TV ads and newspaper ads and radio ads and web page ads—that is advertising.

Fame is different.

Do you remember the publicity that Google got from Gmail, when it was announced on April Fool’s Day with a one-gigabyte mailbox size? And then more publicity when people realized it was true? And then even more when people begged one another for Gmail invites and bought them on Ebay?

That is fame.

Google didn’t put ads into Gmail until some years later, but the monetization had begun.

You might have seen bloggers claiming that Google doesn’t know how to make money from Youtube.7 Or that Google Docs has failed to replace Microsoft software.8 Or that Gmail, Docs, and other products somehow distract Google from search.9

All this is probably true, in a literal sense, if you miss the big picture. Finding Fault is pleased to set you straight.

The bloggers consistently miss the synergy between Google’s many products.10 These products obviously do compete with one another, because resources expended on one product can’t be expended on others. But there’s a bigger picture.

What if Youtube is just a mechanism for Google to get an opportunity to collect and index and search petabytes11 of content? Then that mechanism is working extremely effectively. Google has access to this content in a way that no competitor is ever likely to match. Everybody else crawls websites that link to Youtube content, or crawls Youtube remotely; Google indexes Youtube directly. Everybody else indexes text surrounding Youtube links; Google indexes the audio within the video.12

Yahoo announced audio searches several years ago,13 but Google has the content.

Youtube as a mechanism for buying fame is working awfully well. Do you know of any other product that presidential candidates publicly use and argue about and, by doing so, implicitly endorse? Not to mention famous athletes and big corporations. Money can’t buy this type of fame.

Is Finding Fault just guessing, or can we verify this?

Finding Fault is guessing—which is our most favorite activity next to finding fault—but that doesn’t make us wrong.

Google made high-resolution videos (first “high-quality” and then “high-density”) available on Youtube, which must cost Google much more bandwidth.14 Google has spent programming resources to provides a Youtube application for the Android platform (hence for G1 mobile phones).15 To make this possible, Google now dispenses videos in mp416 format.17 The upload limit for Youtube vides used to be 100 megabytes. It’s now up to two gigabytes18—taking up up to twenty times more disk space, but providing more content for Google to index. Google is clearly treating Youtube like a valuable property. If Youtube was as big a burden as bloggers would have you believe, Google would not be expending such significant resources, especially in a down economy.

If we recognize Google Docs as a mechanism for Google to collect and index and search more content, then it’s working exactly as it should. Because most Google Docs content is private, no Google competitor can crawl this content and index and search it. And what matters is not Google Docs’s19 market share relative to anybody else, but the total amount of Google Docs content. The more there is, the more there is for Google to index. Plus, any time you share a document with anybody else, you double the opportunity for Google to search the content—for you, and for the person you shared it with. Triple if three people, and so on.

And don’t forget that Google uses optical character recognition to let you search text within images to a great extent. Its Catalog service (now discontinued) consistently did this, and its Patents service has been quietly doing it for some years. Recently, this feature became official.20 The consequence of this is not only better searches, but searches within Google’s growing collection of older printed content that is only now being scanned into images.

Almost every Google service enhances Google’s brand recognition.21

Let’s analyze one Google service that you might naively think is a sure money-loser: Google Code.

If you are an expert programmer who uses Google Code to host his22 project, you will very likely also use Google for all your searches. Because:

  • All your Google Code stuff will show up in those Google searches more reliably than anywhere else. Who among us isn’t a little vain? It’s like looking into a mirror as you walk by one.
  • Google makes it easy to cross over from each of its services to the others.
  • You are using something useful from Google, and you will likely be loyal and stay in the Google world.

But there’s more.

If you are enough of a programmer to be uploading to Google Code, the ten or fifteen people among your friends and family who are struggling with computer crashes, hangs, and viruses, will likely come to your for advice.

Quite likely, your advice will mention Google now and then.

And when you fix these people’s machines, quite likely you will remove those “other” annoying search engine toolbars.

So one Google Code user translates into ten Google Search users.

The bloggers who claim that Google is losing hundreds of millions of dollars on Youtube have no idea how much companies pay for advertising that doesn’t get them a tenth as much publicity. Here are a couple of advertising numbers for the fiscal year 2008.23

  • Microsoft; $1.2 billion.
  • Google: $25 million.

All the content Google now hosts is slowly becoming part of its search results.24

Let’s look forward a little. What else could Google add to its enormous collection of information? Finding Fault is pleased to make some wild guesses.

  • Old movies. Audio indexing and search will come first. Indexing and searching of video images will eventually follow.25
  • Ancient sheet music. Not easy to encode via OCR, but should happen eventually.26
  • Other ancient handwritten manuscripts. Again an OCR challenge.
  • Old source code, retrieved from punched cards, paper tapes, and other media.
  • Old binaries, yes, old binaries. There is a wealth of ideas locked up in old binary-only software. Somebody should collect it and save it so it can be reverse-engineered in the future, long after the original authors are gone and forgotten. Google is the likely candidate.27
  • The Internet Archive and its Wayback Machine.28 An acquisition or a cooperative search agreement.

And, by the way, those of you obsessing about antitrust,29 this is where the problem, if it exists at all, might lie in the long run. Not a search monopoly, but a content monopoly.

Concluding, then:

Google doesn’t make money from Youtube,30 or Google Docs,31 or Google Code.32

Google makes money from content: collecting it, indexing it, organizing it, searching it.

And the key to the simple big picture, Dear Reader, is not the indexing, not the organizing, and not the searching, though they are critically important too.

The key is: collecting the content and owning the copy. Not necessarily owning the copyright, but owning the physical copy.

In a future part in this series, we will give you the simpler even bigger picture.

  1. Article “Five Blind Men and an Elephant” by unknown authors in online encyclopedia “Wikipedia the free encyclopedia” visited 2009-07-08.
  2. Web page “Corporate Information—Company Overview” on Google’s web site visited 2009-07-08.
  3. Google has apparently expended significant resources in developing book scanning technology. See US Patent 7,508,978 at
  4. Some years ago, Google bought Dejanews, and hence acquired Usenet archives dating back to the late eighties. These became Google Groups. A good place to look for prior art in patent cases.
  5. Some bloggers have claimed that Knol competes with Wikipedia. Why on earth would any for-profit company even want to do that? Wikipedia essentially makes no money. Knol is about generating content that Google can index.
  6. Google Desktop does this today. Finding Fault expects that in the future, links to private content will be included in general search results for logged-in users.
  7. Here’s a typical blogger mis-analysis: “Launched in 2005, YouTube has become a video sharing giant despite a lack of profit as of Q1 2008. Google bought YouTube back in November 2006 for a whopping 1.65 billion (in Google stock) and currently shells out around $1 million a day in bandwidth costs for YouTube alone. With those numbers, it would seem illogical to increase user storage of each file to 1GB. Only time will tell if the move cripples YouTube entirely, or propels it into the next generation of publicly shared videos.” Note terms such as lack of profit, illogical, and cripples. Taken from article “YouTube Cranks Up Upload Limit” dated 2008-10-01 by Kevin Parrish in website “Tom’s Guide”,news-2668.html visited 2009-07-12. Here’s another mis-analysis: “YouTube, the video site owned by Google, sells ads but runs at a loss.” Article “It’s Time to Pony Up” dated 2009-07-23 by Daniel Lyons in online periodical “Newsweek” visited 2009-07-27. Here’s yet another one: “In November 2006, Google (GOOG) bought YouTube for $1.65 billion. There is a fairly good chance that the search company will never get a return on that investment. YouTube has not come up with a model to make money by either selling advertising or charging for premium content, even though it has an a enormous audience and library of content.” Article “The 10 Biggest Tech Failures of the Last Decade” date unknown by Douglas A. McIntyre in website “TIME in partnership with CNN”,28804,1898610_1898625_1898631,00.html visited 2009-07-27; notice how the author seems to miss the significance of his own words, “enormous…library of content.”
  8. A set of comments that went like the following actually won a $30 gift certificate prize: “Open a Google doc. Paste an image. Oh, that’s right, you can’t Ctrl-C copy, Ctrl-V PASTE an image into a document. … Now insert a table. Now grab the edge of a column and resize the column. Oh wait, you can’t. Now delete one of the columns. Oh wait, you can’t.” Article ‘Comment of the Day: “Google Docs is Chock Full of Fail”‘ dated 2008-02-22 in blog “Read Write Web” visited 2009-07-12.
  9. Article “On2 Purchase Spreads Google Even Thinner” dated 2009-08-06 by Tony Bradley visited 2009-08-06. The author claims (in the headline) that Google is spreading itself thin and also claims (in the text) that by developing Gmail, Docs, Chrome, and Android, and other products, Google is “perhaps biting off more than it can chew.”
  10. In “products” will will include services too, for this discussion.
  11. A peta prefix stands for 10 raised to the power of 15, or 1 followed by 15 zeroes.
  12. Article “Google audio search graduates to Labs project” dated 2008-09-16 by Stephen Shankland on website “Cnet News” visited 2009-07-09.
  13. Article “The World is Listening” dated 2005-08-03 by Ethan Fassett in blog “Yahoo! Search Blog” visited 2009-07-09
  14. For example: “But now YouTube has apparently decided that they are ready for the bandwidth shock as thousands and thousands of users default to HD instead of SD—increasing the average amount of bits being sent by a huge amount.” Article “YouTube Increases File Size Limit To 2GB, Now Allows Direct HD Embeds And Links” dated 2009-07-01 by Devin Coldewey in blog “TechCrunch” visited 2009-07-12.
  15. Article “Google on Android: YouTube” dated 2008-10-14 by David Sparks in blog “Official Google Mobile Blog” visited 2009-07-13.
  16. Article “MPEG-4 Part 14″ by unknown authors, in online encyclopedia “Wikipedia, the free encyclopedia”, visited 2009-07-11
  17. Web page “Learn More: Viewing MP4 files”, on Google’s web site visited 2009-07-11.
  18. Article “Upload Size Doubles + HD Tips” dated 2009-07-01 by Ryan Junee in Youtube blog visited 2009-07-12.
  19. Apostrophe fiends are going to have a field day with this. Is “Google Docs” plural or singular? We think it’s singular.
  20. Article “A picture of a thousand words?” dated 2008-10-30 by Evin Levey in blog “The Official Google Blog” visited 2009-08-04. We hope they can use a better font in the future—it looks cramped and ugly to us right now.
  21. For one estimate of the value of the Google brand (PDF, alas), see: visited 2009-08-06. Picasa Web and Blogger are the exception to literally including the “Google” name, but Google is still mentioned often.
  22. We use “his” in a generic sense. See our glossary entry for He versus she.
  23. The figure for Microsoft is taken from its SEC “Form 10-K” form for the fiscal year ending June 30, 2008, on the web at visited 2009-07-10. The form says in the “Sales and Marketing” section: “Sales and marketing expenses include payroll, employee benefits, stock-based compensation, and other headcount-related expenses associated with sales and marketing personnel, and the cost of advertising, promotions, tradeshows, seminars, and other programs. Advertising costs are expensed as incurred. Advertising expense was $1.2 billion, $1.3 billion, and $1.2 billion in fiscal years 2008, 2007, and 2006, respectively.” We did not find any advertising costs mentioned in Google’s 10-K form for fiscal year 2008 ending December 31, 2008 at visited 2009-07-12. But the article “Microsoft May Rename Live Search ‘Bing’: Massive Ad Campaign Planned” dated 2009-05-25 by Ian Paul in the online priodical “PC World” visited 2009-07-08 quotes the online periodical Advertising Age as mentioning the $25 million figure.
  24. Article “Behind the scenes with universal search” dated 2007-05-16 by Bailey et al in blog “The Official Google Blog” visited 2009-07-09
  25. Finding Fault proposes that the technology to recognize people in movies, when it becomes possible, be called MCR. This means movie character recognition, analogous to OCR which means optical character recognition. “Movie character”—get it?
  26. Imagine clicking on an image of an ancient hand-transcribed composition and hearing it play on your computer. If this ever happens, we suspect Google will do it first, because its competitors aren’t even trying.
  27. As with the well-known book settlement, there might be an old binary settlement in the future.
  28. On the web at visited 2009-07-27.
  29. See our posting:
  30. Things could change.
  31. Things probably will change.
  32. Things probably won’t change.