this is from harvard’s media lab.
in my personal opinion this article is a little bit off the mark.
How Vevo Makes Google More Like Coca-Cola
10:28 AM Friday December 11, 2009
They used to be polar opposites. One was the epitome of 20th century business; the other, the textbook example of a better kind of business. By mass-producing, mass-marketing, and relentlessly hard-selling sugar water to kids and the poor, Coca-Cola rose to global prominence and market dominance: thin, artificial value had little better example. But Google’s rise was powered by exactly the opposite: building a more meaningful media marketplace, that created authentic value for all.
That was yesterday. Today, Google is the new Coke.
Here’s what I mean by that:
Google used to be a “good beats evil” business. It profited by doing good, and creating better sets of economics. That was yesterday. Today, increasingly, Google is an “evil subsidizes good” business. It’s not so different from Coke. The historic, globe-spanning bad stuff Coke does — selling toxic sugar-water to kids and the poor — subsidizes a threadbare patch of good stuff: a handful of spare change for charitable giving and public partnerships. Increasingly, the evil stuff Google does — supporting censorship, selling more and more toxic ads, squeezing suppliers and turning a blind eye — subsidizes a shrinking green patch of good stuff, like investing in the Mozilla Foundation.
Both are less than awesome. And in fact, for my money, it’s Coke who is, today, making bigger, broader steps to doing no evil than Google is.
What happened? How did the world’s most radically good business fall from grace? It wasn’t a case of Icarus, flying too close to the sun. Instead, it was a case of Faust — cutting deals with the devil.
Vevo — Google’s latest JV with record labels — is a perfect mini-case in how, tempted by the booty-shaking devil, Google went from “don’t be evil” to “evil’s OK, if it helps to do a tiny bit of good.”
Here’s why Vevo is Google’s biggest mistake to date — and what you can learn from it.
Unnovation. The fundamental problem with Vevo is simple: it’s just a new “distribution channel” for the same old toxic junk. There’s no innovation of any kind at its heart. It sets no incentives for better stuff to be made. Here’s a simple example: We all know copyright’s deeply broken, but instead of innovating new kinds of property rights, Vevo’s built on copyright. You can’t even access it from outside the US. Just like McDonald’s selling fake “cappuccinos” isn’t exactly innovative, neither is a new channel to distribute the latest Kanye West video.
Thin value. Because it’s unnovative, Vevo fails to address the music industry’s big problem: investing in Kanye Wests is a poor proposition. It requires huge marketing expenditure, only to deliver ever more meager, fleeting returns — usually propped up by gaming the charts. That’s the essence of thin value, and the 21st century demands thicker value. But Vevo actually enhances the incentives to create thin value, by providing yet another marketing “channel.” Vevo props up a dead, decaying business model — instead of seeking paths to one built on radically more awesome music in the first place.
Compromise. Vevo violates Google’s most basic principles. That’s the single biggest misstep any organization can make. Democracy is at the heart of every Google service. Or at least, it used to be. Vevo is democratic only in the same way the Senate is: a bunch of old dudes (in this case, record label execs) decide whose voices get heard. When you compromise your deepest principles, the result is unnovation.
Lock-out. Who cares if Vevo is the next Hulu? Hulu didn’t — and won’t — save broadcast networks from hypercommoditization. And neither will Vevo save record labels. Both are bulwarks of a dying business model. Both are like the last, final fortresses, under desperate siege, of a crumbling empire. Will the holdouts “win”? Perhaps life inside the castle walls will never change. But that victory’s pyrrhic: the world outside is blossoming, transforming, and growing.
Dilution. Google made a Faustian bargain when it invested in life inside the fortress. And now it will always have something to lose if the fortress falls. Uh oh. That’s the next step: a dilution of incentives, or conflict of interest. Now that Google’s invested in a dead business model, it’s got something to gain from propping it up. And that means innovation tomorrow will be ever more costly than today.
In the final analysis, Vevo’s “evil” for a simple reason. The music industry has long hit a trifecta of thin value — crappy music, ripped-off artists, and ethically dubious tactics. Vevo provides new a playing field for this game of value destruction to go on (and on). And in that failure to better yesterday lies the beginning of the end of Google’s greatness.
So the question is this: Can you surpass the lame, obsolete industrial economics of the old Coke? Coke itself is striving — often failing, but sometimes succeeding — to do so. Google’s great failure is that it’s moving backwards, from 21st century economics to 20th. Which way are you going?