Digital Cartels

Two recent stories regarding the business practices of Google and Amazon have nothing to do with one another, yet absolutely seem 100% related on a macro level.

The first is Amazon and how they are scrubbing Hatchette Books from existence to extract more favorable terms:

Amazon, under fire in much of the literary community for energetically discouraging customers from buying books from the publisher Hachette, has abruptly escalated the battle.

The retailer began refusing orders late Thursday for coming Hachette books, including J.K. Rowling’s new novel. The paperback edition of Brad Stone’s “The Everything Store: Jeff Bezos and the Age of Amazon” — a book Amazon disliked so much it denounced it — is suddenly listed as “unavailable.”

In some cases, even the pages promoting the books have disappeared.

Which, Farhad Manjoo puts into proper perspective as the worst possible outcome for Amazon customers:

f it doesn’t already, Amazon may soon control a monopolistic stake of the e-book market and its tactics are sure to invite not only scorn from the book industry but also increased regulatory oversight.

But the more basic problem here is that Amazon is violating its own code. To win a corporate battle, Amazon is ruining its customer experience. Mr. Bezos has long pointed to customer satisfaction as his North Star; making sure customers are treated well is the guiding principle for how he runs Amazon.

Now Amazon is raising prices, removing ordering buttons, lengthening shipping times and monkeying with recommendation algorithms. Do these sound like the moves of a man who cares about customers above all else?

And then there’s the saga of Matt Haughey attempting to save his influential and popular community aggregating site, MetaFilter (think of it as Reddit for people with taste), from going under.

As Winter 2012 became Spring 2013, traffic remained flat and we all took big pay cuts to make ends meet. Google sunsetted their beta program MetaFilter was in and we went back to the standard Google Adsense ads which did pretty well and revenue improved a bit. Over the course of 2013, a series of messages from the Adsense team hit me with varying degrees of severity. We were temporarily banned from the system due to some text questions talking about sexual health (questions from users that include terms for body parts etc., but Google interprets that as the site being “adult”) and had to greatly beef up our ad display blocking by subject matter. Late last year, I was told that despite the past decade of Google’s Adsense pages suggesting ads should match your site, different background colors were now required to better discern ads from content, resulting in another large decrease.

For the last year and a half, MetaFilter’s revenues have continued to decrease and traffic has slipped a bit as well. Additionally, mobile web traffic has grown substantially (especially at certain times: nights and weekends we see 60-70% of all traffic on mobile/tablet) and ad performance on mobile is much less effective, where mobile pages only make about 1/3 to 1/10th as much as a desktop page. On average, every 3-6 months for the past year and a half we’ve seen additional ~20% drop-offs in traffic and revenue, and that’s been a challenge to deal with.

MetaFilter basically depends on Google search for traffic and Google ad revenues to fund its business and both have mysteriously gone away, which Google won’t share. Or, as Marco Ament points out:

Google owns the ad-driven web: their search brings all of your pageviews, and their ads bring all of your income. You’re just along for the ride, hoping to stay in Google’s good graces — an arbitrary, unreliable, undocumented metric that changes constantly. (Google’s only “open” with the trivial, unprofitable parts of their business. Search and ads are closed, proprietary, and opaque in every possible way.)

Those that produce content on the web have largely been reduced to do so for free to drive the business agendas of large technology companies. It’s increasingly the same way with Facebook brand pages and will probably be that way on Twitter.

Pay to play is one of the oldest business schemes in the world. It worked for the mafia, drug cartels and it also works for technology companies.

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