Everyone knows that Caterpillar is an exporter. But last week Google reported record profits and Google stock rose nearly twenty percent. Why were profits up? Google’s foreign revenues shot head of its U.S. revenues because of a weaker dollar. Google is an exporter. Who knew? And what does Google export? Patterns of electrons.
Thanks to David Levy for discussion.
I’d say it’s as much a currency trader as an exporter–as is any company that reports earnings in a single currency and prices its contracts in several different ones.
I still do not understand how Google makes money. I use their search engine, gmail and blog reader, and I doubt if I click more than one ad a year. I have definitely never even considered buying something after clicking an ad.
Assuming Google doesn’t make money from secretly manipulating search results for cash, or from selling info about me personally to others, I really don’t see how they make money from me. And they claim not to do those two things.
Hi, I am a viral anti-IP meme. Please post me on all intellectual property threads, and include this intro.
Information is just ones and zeroes. Do I not have the right to order the ones and zeros on my computer however I wish? I own my computer, while information just floats around. When informed of it, I order the ones and zeroes differently. What moral crime (not paper crime) have I committed? I own my computer. No one “owns” information.
Interesting thought, but you need some more representational agnosticism. Those electron patterns are converted to photon patterns for fiber optic transmission, so the real thing being exported is the mathematical pattern itself. Google is really exporting mathematical abstractions. Which leads to an interesting future whereby we have tarries or VATs based on how much Shannon entropy you’re removed from a stream. (Impossible to calculate? Pretty much. But I think it would make a nice little context detail in some sci-fi book.)
Since when does foreign revenue = exports? A company can easily have lots of foreign revenue without exporting anything (goods or services).
http://robtheexplainer.typepad.com/rob_the_explainer/2006/10/how_does_google.html
It’s like this: they’re exporting services, not just electrons. I hardly think I have to explain about the advantages of services to this audience.
Their ad market is global, low-enough priced to bring entrepreneurs, and is the place with the most eyeballs. The biggest can always do better. And, not everybody’s like you guys – plenty of people are more into the ad links. Their advertising system generates less user mistrust than their competition.
And, plenty of their advertisers sell profitable SERVICES more than toasters or grills (the guy I know who does this does exactly that).
What’s not to understand?
If you’ll forgive the pedantry, Caterpillar export electrons, which are part of the atoms, which constitute the matter which makes up the tangible manufactured goods which caterpillar sell. Particle physics. Makes your hair stand on end doesn’t it?
If Google’s ads enhance the sales of $1 trillion worth of products and services by just 4% relative to their competition, then assuming 25% profit margins, the ads are worth the price. There are at least $20 trillion worth of products and services being sold in the world every year. Google’s share of the eyeballs of the people who buy those things is very large, probably already much more than the 5% share which justifies its revenues. And this share is growing, which hopefully justifies its stock price.
“Clicks” are just an imperfect proxy measure, a way to estimate how many extra dollars are spent relative to competitive products and services because of those ads. It’s a better proxy measure than those available in traditional media.
Jared: Assuming arbitarily good compression algorithms, we could measure this by bandwidth consumption.
Have you ever used the Google browser home page to look up a vendor from which you wish to buy something? When you get the web search result and click on that, Google gets paid. That is the whole point of the page ranking system and why there are consultants out there that telll you how to set up your web page to end up higher in the search results from Google, Yahoo, MSN and others.
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Everything is decided by the market instead of any single human being’s personal feeling.
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If u love somebody, send him work for Google, if u hate somebody, send him work for Google.
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