Feeling Lucky

Good News for Google

Fresh off the heels that Google's stock dropped following a disappointing earnings report, Barron's writer Mark Veverka claims that all is well with the search giant -- mostly. Veverka points out that revenue is still growing, and the biggest spike in the company's costs were due to short-term legal expenses connected with the Viacom copyright lawsuit. Most critically, he notes that present economic trends indicate that search ads are the last thing companies pull back on when it comes to advertising budgets. So Google's core business is even more sound, and less volatile, than people thought. If that's possible.

And just as if the good murmured their assent, the BBC reports that for the first time, Google has become the top brand in the United Kingdom, according to surveys of both advertising professionals and ordinary consumers. As long as Google is shrugging off last week's hiccup, we might as well point out that it just bought the Russian contextual search advertising service ZAO Begun for $140 million. Now, Google can add another country to the list of authoritarian regimes it will accommodate.

Google Hit with Big Stock Drop; Sign the Economy is Worsening

Bloomberg reports that Google lost almost ten percent of its stock value today, as its latest earnings report fell short of expectations. But don't think this is attributable to any flaw in its business plan; rather, analysts suspect that the tech sector, long a haven for investors seeking refuge from the grim economic climate, is finally feeling everyone else's pain. Although Google posted quarterly growth once again and reported revenue at $3.87 billion, the company experienced higher than expected legal and research costs. CEO Eric Schmidt ha no choice but to own up to the bad news. For the first time, he told Bloomberg, Google faces "a more challenging environment." (Has any Google exec used the c-word before?) In addition, Schmidt told the New York Times, "We don’t believe we are inoculated from global economics." Microsoft faced a similarly paradoxical bloodletting, losing 7.6 percent of its value despite reporting more than $60 billion in annual revenue.

Microsoft Searches Up, Google's Down. What's Up?

Here's something we bet you didn't see coming: Silicon Alley Insider reports that the number of searches on Microsoft's Live Search system rose a remarkable 31.1 percent in May, while searches at Google actually declined, by almost nine percent. Alley Insider writer Dan Frommer thinks it might have something to do with Microsoft's Live Search Cashback program, in which customers who buy goods they found using Microsoft will get a sweet rebate on the deal. Seeing as how Cashback only got running on May 21, that leaves just nine days for customers to get wind of the rebates and go to town. Which sounds like something of a stretch; how many people even know about the Cashback program, much less use it in such overwhelming numbers at a time when consumer confidence is tanking? Still, something happened, and you just know Google execs are swarming all over it, trying to figure out what.

Google, Yahoo Sweat it out Before Congress on New Deal

So Google and Yahoo reps got their first chance to defend their massive ad deal before the Senate Judiciary Committee this morning. According to CNN, Yahoo lawyer Michael Callahan claimed that the deal would give Yahoo the cash it needs to ramp up and seriously challenge Google for dominance in the search ad market: "With all due respect to Google, we have every intention of fighting them and winning - in this and in other areas for years to come." Google suit David Drummond submitted a written statement to the effect that the deal would only streamline online advertising. But Microsoft's representatives showed up as well and did their level best to present the arrangement as illegal and anti-competitive. ""It will lead to an unprecedented level of concentration in search advertising," said Microsoft lawyer Brad Smith. Next up: the House of Representatives this afternoon.

Google, Viacom Reach Agreement on YouTube Viewer Patterns

Back in early July, the judge presiding over Viacom's $1 billion copyright infringement lawsuit against Google ordered the search engine giant to turn over details of who viewed what YouTube videos. The ruling was a substantial victory for Viacom, which wanted the data to buttress its claim that potentially millions of people had illegally watched its copyrighted content, but terrified privacy advocates like the Electronic Frontier Foundation, who worried over what else Viacom might do with the data. Now, Viacom has agreed to a deal in which Google will give them data regarding how many times viewers watched its videos, but will scrub Internet address data which could identify individual users. This feels win-win, but as CNET News noted, Viacom may have really been gunning for data on what Google's own executives were watching on YouTube. Google's defense has always been that it didn't have the capacity to review every video posted on YouTube and delete copyrighted material. But if Viacom could find that people such as YouTube co-founder Chad Hurley watched Viacom content on YouTube and did nothing to scrub it, their case could be airtight. Now, it looks like they won't get chance.

Journal: Google Unexpectedly Inept at Selling YouTube Ads

The Wall Street Journal had a big piece today exploring what's gone wrong with YouTube, and the news is even more troubling than expected. Advertisers, it seems, don't like being paired with amateurish videos of random schoolyard fistfights or dogs acting cute, and the Viacom lawsuit has so spooked Google that it has restricted the videos it can sell ads around to a mere four percent of the total films posted on the site. But Google's internal dysfunction was clearly the most surprising element of the story; billing advertisers had to be accomplished manually in some instances, clients had to fill out far too many legal documents, and a temp worker -- that's right, a temp named "Miriam" -- had to sign off before ad representatives could offer certain discount deals. On the other hand, perhaps we're asking too much of just one company; Kevin Delaney glumly reported that Google's YouTube revenue would be a paltry $200 million, far more than anyone had predicted so far. That's what happens when you set out to conquer the world; people actually expect you to pull it off.

One last interesting element to the story: Google apparently plans to sell "preroll" and "postroll" ads, which would run before or after each film. Search Engine Land's Greg Sterling is intrigued at this development, since YouTube had experimented with preroll ads earlier, only to find that viewers walked away from the films faster than you can spit a rat. "Assuming the story is correct and we will start seeing pre and/or post-roll advertising on YouTube, the question is how widespread will it become?" he asks. "Many YouTube users will be disappointed by the development but most will probably accept it."

Judge: Viacom Gets YouTube Users' Personal Data

In a shocking development in the YouTube-Viacom lawsuit, a New York civil judge ordered Google to give Viacom personal information about potentially millions of people who may have posted or watched Viacom-owned videos on YouTube. According to the LA Times>, Viacom representatives promised not to use this information against those who may have posted its videos on the Google site, but just getting access to this information, to say nothing of how they may use it to market or profile YouTube users, was enough to panic privacy advocates such as the Electronic Frontier Foundation. Speaking of panic, Search Engine Land's Danny Sullivan has got his lizard brain working overtime: "You have no privacy on YouTube. ... I hope this ruling serves as a flashpoint or wake-up call to a variety of people who can make a national privacy standard a reality. We don't need more empty talk. We need actual progress. In the short term, I'm following up with Google to see what it can do to oppose handing over the personal part of viewing records that aren't needed. I want to see the company stand up with full-force and fight against this in every way it can."

Google Earth Fun with Steve McQueen

Most excellent.

Google And "Family Guy" Creator Cut Big Content Deal

As the New York Times points out, Google and "Family Guy" creator Seth MacFarlane have cut a major new deal to create short cartoons, embedding ads in the pieces, and distributing them via AdSense. Intriguingly, the distribution will be automated, with computer software identifying Google partners whose web sites skew toward young, male readers. This is part of Google's trend toward posting original content on the web; as Fortune reported two weeks ago, YouTube representatives were spotted roaming around the Los Angeles Film Festival, courting directors who might want to post long-form features on YouTube. It's also clearly an effort to reorient its advertising policy away from the "click-through" model and back toward the eyeballs model, charging fees for advertisers based on the number of people who see the ad, rather than those who see the ad and then click on the link to get more information.

Information Week has a nice roundup on the range of opinion over whether this strategy will pay off. John Battlelle hates the idea, arguing that the web works virally, and pushing content on people based on demographics, rather than letting users naturally find and pick the most entertaining web content, is sure to "fail utterly." On the other hand, Internet content guru Cythia Brumfield thinks marrying content and distribution in one company has been shown to work historically, although the deal is likely to bleed money for a few years. In additions, she argues, this effort could mount a serious challenge to movie studios and cable television stations.

Googling Porn and Apple Pie in a Florida Trial

The trial of Florida resident Clinton Raymond McCowen, who filmed orgies and sold access to the videos on his web site, CumOneHerFace.com, is scheduled to start next month. And McCowen's got himself an interesting defense. Since the core of the charges against him is creating and distributing obscene material, and obscenity is defined by "community standards," McCowen's lawyer Lawrence Walters plans to show that the Pensacola community is, in fact, just fine with pornography and orgies. How? By demonstrating that more Pensacola Google searches look for the word "orgy" than the word "apple pie." “Time and time again you’ll have jurors sitting on a jury panel who will condemn material that they routinely consume in private,” Walters told the New York Times. “We can show how people really think and feel and act in their own homes, which, parenthetically, is where this material was intended to be viewed." Prosecutors in the case argue that Google searches aren't necessarily an indicator of how a community feels about Internet orgies; in fact, the large number of searches may just prove there are one or two seriously twisted folks living nearby. Salon's Farhad Manjoo finds the defense at least a little persuasive; on the other hand, he says, apple pie recipes are pretty common, but "Google is going to be your first -- and likely your only -- solution when you're struck by that ever-so-frequent taste for an orgy."