How Google made a killing from media companies' toil
The tech giant, Google just made a whopping $4.7 billion from the work of journalists last year via search and Google News, taking a huge cut from the online ad revenue of media houses which lost a crucial source of income. The report has sparked a debate on the companies working under the aggregator business model.
'Journalists work, Google earns'
Google made a whopping $4.7 billion from the work of journalists last year via search and Google News, taking a huge cut from the online ad revenue of media houses which lost a crucial source of income, resulting in many of them getting shrunk or closed.
What makes this interesting is that none of the news content found on this platform is created, reported or published by google, it simply indexes the work done by other media companies.
The tech giant, Google works on the business model of aggregation in which a firm collects the information about a particular good or service providers and makes them partners. It then sells their services under its own brand by signing up a contract with the partners.
The good or service providers never become aggregator’s employees and continue to be the owners of the good or service that they are providing. Aggregator just helps them in marketing in a unique win-win way.
Free news vs traditional media
The data published by the new york times was based on a study carried out by the US-based news media alliance. The news media alliance represents more than two thousand newspapers across the united states.
The study pitted google's earning from so-called free news against the traditional media's earning from online advertisement. The report claimed that the entire US media earned five point one billion dollars from online ads last year.
It is also ironical to note that the study comes at a time when print media is struggling to stay afloat in the united states.
'Billions of dollars spent on advertising'
According to report, a total of five hundred and ninety point four billion dollars was spent on global advertising last year.
Twenty four point five per cent of this went to Google and Facebook.
This means that the Silicon Valley giants earned a wopping forty-nine point six billion dollars.
Just like Google's aggregation work, many recently launched startups have also based their business model on similar lines.
Uber, a multinational taxi-hailing company, also works on the same aggregation model. It collaborates with local car owners and shares the revenue earned by the drivers.
According to reports, Uber enjoys over 60% of the market share in the United States for the passenger transport business.
Uber Eats, a subsidiary of Uber, also offers food delivery service in which as well it controls a significant share of the market.
Other key players like, Zomato and Swiggy also work on the aggregator business model in which they collect information about local restaurants, other eateries and promote their food under its own brand.
US based, Airbnb is an online platform for listing and renting local homes. It connects hosts and travelers and facilitates the process of renting without owning any rooms itself. Moreover it cultivates a sharing-economy by allowing property owners to rent out private flats.