Despite earning $14.6 billion in the last quarter from advertising revenues, Google has launched a new product, Contributor, which helps the company become less reliant on advertising.
Google earns 89% of revenue from advertising. Some question whether this advertising model, let alone its 20% year on year growth, is sustainable. Advertising looks stable in today’s world, but the Internet can quickly change business models.
Google’s Contributor is similar to a model that I proposed over four years ago where a user funded, centralised wallet could be distributed to content publishers.
“…we will have some sort of e-wallet, and each web page that you navigate to, and each search will take fractions of a penny out of your wallet…”
Contributor is a little clunkier than my proposal. Google offers Contributor (paying) users a nice textured image where ads used to appear, next to a Thank You message.
In May 2013 I touched on this subject again in Real Money. In that post, I said the advertising market has grown beyond its usefulness and more importantly, its own effectiveness (too many adverts everywhere leads to advertising ‘blindness’). In Asia the largest Internet companies sell real stuff and don’t rely on advertising revenues as much as Western websites.
Removing advertising altogether and replacing it with subscriptions doesn’t work either. I only buy paper magazines and newspapers occasionally. If I want to buy the electronic versions of those publications, I need to take out monthly or even six-monthly subscriptions, probably to overcome the credit card transaction fee of buying a single copy.
Contributor takes us in the right direction. And it will need someone the size of Google to produce these types of alternative business models.