Over the weekend, I read John Battelle’s new book, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture (Portfolio, 2005). Battelle was a cofounding editor of Wired magazine—culture, life and technology for the digerati—and founder of The Industry Standard, an Internet-focused magazine that rose and fell with the bubble. Battelle also blogs on search.
The Search details the rise of Google from Larry Page and Sergey Brin’s days as Stanford graduate students and their research on search algorithms to the start-up—yes, there was a garage—through the Google IPO (do look at Google’s unique S-1 if you haven’t). Google is sufficiently important that that story alone would make the book a worthwhile read, but Battelle does substantially more.
If plastics was the one word for Benjamin Braddock, then today’s word is clickstream.
We create a clickstream as we surf the web. The all-knowing observer—not quite Google yet, but close—knows quickly whether our search on “arsenal” means that we are interested in guns or the English Premier League soccer team (the latter in the Picker household, or at least for that part that doesn’t root for Man U). Google’s patented PageRank algorithm sorts through the assembled clickstreams created by your searchs and mine to figure out which sites are the ones that we want to visit.
There is gold in them thar clickstreams, and the key for Google and others such as Amazon is figuring out how to monetize clickstreams. Amazon does this through its recommendation program. Search Amazon for “The Search” and see what you get. Amazon lists other books viewed by customers who viewed The Search, and I can piggyback on their efforts in deciding whether to buy The Search or something else.
Google monetizes clickstreams through AdWords and AdSense, Google’s approach to selling advertising conditioned on search results. Google presents the “organic” results of the search, and then frames them with related, simple paid ads. This ad personalization—where the ad is tied to the information revealed in the clickstream—means that the ad is much more likely to reach a person actually interested in the ad.
I made this point a few years ago in a paper that I published in our Law Review. The paper, entitled The Digital Video Recorder: Unbundling Advertising and Content (a version here), noted that most advertising was tied to crude demographic information (male, age 30-35, high school education). Far better to know direct information about the viewer and target ads precisely to that person. The DVR should make this possible, where personalized ads can be folded into the program. I also noted the way in which personalization would change content itself. Battelle marries a couple of trends and spins out a broader scenario in which TV watching and computer surfing merge together, where the information embedded in the clickstream in turn makes it possible to shape ads for viewers.
Part of what Google wants to do is to increase the sheer number of clickstreams that it sees. Google Print is the most controversial piece of this. Google was sued again this week over Google Print (see info about the suit here, Google CEO Eric Schmidt’s WSJ commentary (subscription required), Tim Wu’s piece on Slate and Doug Lichtman’s prior post on this blog). All knowledge at our fingertips? That might be our quest and even Google’s, but think about the clickstreams that Google will get.
Battelle also notes the broader transformation that is taking place with the Internet. Microsoft was the king of the personal computer, and the Windows Desktop represented the most valuable real estate available. The rise of search has changed that. Search is now the front-door to the Internet, and the documents located there are often more important than those that sit on your computer. Google, not Microsoft, is defining the new interface to the Internet.
This looks like classic Schumpeterian competition. Battelle’s book is the right place to start understanding how that competition will play out.