Tuesday, 10 January 2006

Google Video: Is that all there is?

Google's new video store seems to be up and running. I say "seems to be" because when I looked at it my first reaction was, "Is that it? You guys used a CES keynote to announce that?" The interface is simple, as you'd expect from Google, but in this case simple means simplistic and primitive. The home page features three types of video – for sale, most popular, and random. To examine for-sale videos by category, you use a drop-down menu that lists each series available: classics like MacGyver, Star Trek Deep Space Nine, and Survivor Guatemala. This interface isn't going to scale to handle more than 20 or 30 series, and even now it does almost nothing to invite browsing or easy exploration.

The press has been saying that Google Video sets up a direct confrontation between Google and Apple's iTunes. If this is the best Google can do, iTunes is going to win in a walkover.

I have to assume Google is working on a better interface, but the fact that they made such a prominent launch event for something so disappointing implies to me that their marketing judgment isn't very good these days.

Despite all of that, I think Google Video is incredibly important. Not because it puts Google in the video business (I don't think all that many people will pay to watch videos on their PCs), but because of the infrastructure behind it. Google now has a billing engine.

I haven't been able to find all the details on how Google's billing works, but so far it looks fairly well thought-through. You can read a couple of articles here and here. The owner gets 70% of the revenue, and Google keeps 30%. That's a bit high; I think the right cut is 20%. The minimum price for a video is five cents, which really impressed me. The credit card companies don't like to process charges that small, so I don't know how Google's doing it, but it's a very good thing because it encourages impulse buying. It looks like we're finally going to get an Internet micropayment system with critical mass!

Google also reserves the right to take a bigger cut of your revenue if you consume an unusual amount of resources (I presume that means if your video is so popular that Google has to buy a new server to host it). The exact circumstances in which Google will take more are not spelled out, which makes me deeply uncomfortable.

Questions aside, the terms are a lot better than what mobile software companies get from online stores like PalmGear and Handango, which can keep 50% or more of your revenue. And that's my point. Now that Google has a billing mechanism, it can apply it to any form of electronic content – software, photos, e-books, music, articles, analyst reports, and so on. I think you could eventually see purchasing built right into search results – along with the option to translate a web page, you could have the option to buy a piece of content.

The next logical step is for Google to tie the billing engine to Google Base, so people can sell any electronic file through Google. This is potentially very powerful. Think of a small software developer looking to sell an application. Today they need to either sell through an online store (which takes a huge cut) or set up their own e-commerce site (which is a big pain in the neck). It's going to be enormously tempting to just offer your stuff through Google instead.

The Google vs. Apple video competition will be interesting, but ultimately I think video's a sideshow. Google's gradually setting itself up to be the middleman for anything that can be shipped electronically. I think that's the real importance of the Google Video announcement.

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