Friday, July 28, 2006

Trying to Keep Pace with the Google Juggernaut

In my
most recent media column, I mentioned AOL's not-so-successful attempt to tie up eyeballs and ad traffic with its network of online city guides. It looks like they're about to be revamped. This beta site (or test site, for non-nerds) talks a little about what AOL wants to do with these revamped sites, but this page suggests that Cleveland, unlike Columbus, may not be among the cities counted among the new network. Or perhaps it's just not part of the test. It appears the goal is to use much more user-generated content, to drive interactivity (and thus more page views, optimizing online ad revenue), and to link to more local blogs. There's a new section on the home page called "Blogs We're Reading." That's good.

Those changes are part of a larger strategic shift for AOL, which is
gearing up for a major switch in its business model, away from the monthly service fee charges and the billions of annoying installation disks they've mailed as introductory fodder and more toward simple web advertising. If there's any single architect of these changes at AOL, it's Jason Calcanis, who sold his Weblogs, a network of blogs, to AOL for $20 million. But the company asked him to stay around to help with its reinvention. He may have stumbled on Netscape (last week he offered a truce to critics), but some other innovations look more promising. Among them, I think, is Bloggingstocks, which seems targetted at Yahoo Finance. You can read about the thinking behind that interesting new site here.

Everyone is of course trying to play catch-up to Google, which has become the Monster of the Midway. In its recent quarterly earnings reports, Google revealed that it now enjoys an astounding 24% of all revenues earned online, with no end in sight yet for their growth. That number has given pause to everyone, but especially competitors, who are dropping their business models to try to keep up. Microsoft is of course doing its usual thing: instead of pursuing its own innovations, it's trying to copy competitors. It basically copied Mac's elegant user interface for Windows, it's been trying to no avail to beat Google at search, and now it's just announced it will try to catch up to Mac in the iPod market. Good luck.

But the $64,000 question is this: how long can Google continue to innovate at this scorching pace? The answer may be more complicated than it would appear. A couple of weeks ago, the Wall Street Journal published
one of its classics of brilliant enterprise reporting, beating the world to a story about an eye-opening internal controversy Google's two young founders are having over secret plans for a party plane, which will include hammocks strung from the ceiling! Smart investors are always looking for clues to the staying power and attention span of a company's top leadership, and this article surely didn't provide much comfort on that score.


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