Remember, it’s cheap and easy to mock old business articles from the safe confines of the present, when we can look back with 20/20 hindsight.
Let’s get at it, shall we?
Here’s a BusinessWeek article from 2000 — back when Google only owned 25% of the search market and claimed just $80 million a year in search ad revenues. The article asks: “How will Google ever make money?”
The relevant bit:
LIMITED BUSINESS. But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.
Northern Light (www.northernlight.com), which matches Google in many search-engine competitions, sells archived articles from hundreds of publications and builds intranet portals for companies. AltaVista (www.altavista.com), another competitor, has integrated its search engine into a broader portal strategy. “There isn’t really good evidence, frankly, that companies focused purely on search, as Google has been, can support themselves with that model,” says Northern Light Chief Technology Officer Marc Krellenstein. [ed. Who?]
While Page admits Google doesn’t yet make a penny per search in revenue, he’s upbeat. “We do more than 20 million searches a day, so it works out to $80 million dollars a year,” he claims.
Competitors question the accuracy of such high revenue numbers. Furthermore, Google’s pure-search strategy has thus far garnered fewer unique visitors than more developed portal competitors. AltaVista, for example, ranked eighth among portals in September, with 20 million visitors to its site, according to Media Metrix, which measures Web traffic. Google ranked 48th, with 5.7 million unique visitors. Says AltaVista President Greg Memo: “Our model is much more diversified.” As evidence, he points to AltaVista’s recent launching of sites for 10 different European countries and the sale of the AltaVista engine as a piece of enterprise software to more than a thousand businesses.
The old article is funny because we all know now that Google’s model makes billions of dollars each quarter. But it’s also instructive: We need to be patient with extremely popular startups like Facebook and Twitter as they sort their revenue out.