3 ms·

I'm willing to pay $5/mo Much of India will pay $1/mo Most people will pay $.1/month What will the price be?

sz4kerto 6y ago
Pricing would be based on value. Someone who's willing to pay X is more valuable than someone who's only willing to pay 0.1X, so naturally the former should pay more.
pdonis 6y ago
> What will the price be? If you allow Google/Alphabet to practice price discrimination, it will charge customers in richer countries more. You and I would pay $5/month, much of India would pay $1/month, and people who can only afford $.1/month would pay that. If you insist that the price be uniform over all users, then it has to be $.1/month, or whatever the lowest common denominator is. Of course in that scenario it's much harder to get to a revenue number that is anywhere close to Alphabet's current revenue.
- jonas21 6y ago
  The problem is that even if every Google user on the planet paid $5/month, it would maybe just barely match their current revenue.
  - pdonis 6y ago
    You'd need something over 3 billion users at that rate to match Google's current revenue (about $16 billion a month). Google currently has about 2 billion. However, Google's current revenue pays for a lot more than just search. It doesn't seem unreasonable to me that search could pay for itself with revenue from users instead of ads.
- lrem 6y ago
  Another subthread here states that ads on search are a majority of Google's revenue. Looking at [1], we see the US being 46% of the revenue. So, assume that search in the US pays for 20% of Google's revenue. Apparently Google's revenue is $160B/year. Do you think the US would have 100M customers willing to pay $320/year for search? Or 10M willing to pay $3200? Or, any mixture of that to reach the balance? Dislaimer: I'm a Googler, but only base the above on this comment thread and the first results in Google search. [1]: https://www.statista.com/statistics/266250/regional-distribution-of-googles-revenue/ https://www.statista.com/statistics/266250/regional-distribu...
  - pdonis 6y ago
    > ads on search are a majority of Google's revenue That's not the same as saying that a majority of Google's revenue pays for making search work. The relevant question is whether search as an application, regardless of what else Google wants to spend revenue on, could bring in enough revenue from users to pay for itself.
    - lrem 6y ago
      Good point. Good question. Confidential answer ;)
      - munk-a 6y ago
        In detail perhaps - but vaguely the answer is that it's not that much money. Microsoft pretty much willed Bing out of thin air and while adoption has been quite an issue it does have pretty reliable results. Microsoft has a ton of money to throw at things but I think - from the ancillary manner in which Bing was launched - that it honestly isn't that expensive on a day-by-day basis to run that sort of large scale search. I do suspect there is a lot of economy to be saved by already having a wide coverage of the globe with computing resources though so I'd guess at the market being hard to enter and easy to sustain costs once you're in. I suspect Google works hard to keep from letting out how severable and independent their search business is in a large part to keep monopoly breakup calls from getting too much momentum.
  - BlackFly 6y ago
    Revenue isn't a good comparison and is more of a distraction than a usable data point. Presumably, if Google is servicing paying customers instead of paying advertisers, then google has much less work to do. Their revenue can decrease without their profit decreasing. They don't need to manage engineering to store cookies and track interests. They don't need infrastructure to store profiles. They don't need cpu cycles to correlate interests. They don't need lawyers to fight off regulators. You can easily imagine other things they would not need for those customers. How much would paying customers need to pay so that google would make the same amount of money? Revenue isn't even an upper bound on that question.

Pricing would be based on value. Someone who's willing to pay X is more valuable than someone who's only willing to pay 0.1X, so naturally the former should pay more.

pdonis 6y ago

> What will the price be? If you allow Google/Alphabet to practice price discrimination, it will charge customers in richer countries more. You and I would pay $5/month, much of India would pay $1/month, and people who can only afford $.1/month would pay that. If you insist that the price be uniform over all users, then it has to be $.1/month, or whatever the lowest common denominator is. Of course in that scenario it's much harder to get to a revenue number that is anywhere close to Alphabet's current revenue.

jonas21 6y ago
The problem is that even if every Google user on the planet paid $5/month, it would maybe just barely match their current revenue.
- pdonis 6y ago
  You'd need something over 3 billion users at that rate to match Google's current revenue (about $16 billion a month). Google currently has about 2 billion. However, Google's current revenue pays for a lot more than just search. It doesn't seem unreasonable to me that search could pay for itself with revenue from users instead of ads.
lrem 6y ago
Another subthread here states that ads on search are a majority of Google's revenue. Looking at [1], we see the US being 46% of the revenue. So, assume that search in the US pays for 20% of Google's revenue. Apparently Google's revenue is $160B/year. Do you think the US would have 100M customers willing to pay $320/year for search? Or 10M willing to pay $3200? Or, any mixture of that to reach the balance? Dislaimer: I'm a Googler, but only base the above on this comment thread and the first results in Google search. [1]: https://www.statista.com/statistics/266250/regional-distribution-of-googles-revenue/ https://www.statista.com/statistics/266250/regional-distribu...
- pdonis 6y ago
  > ads on search are a majority of Google's revenue That's not the same as saying that a majority of Google's revenue pays for making search work. The relevant question is whether search as an application, regardless of what else Google wants to spend revenue on, could bring in enough revenue from users to pay for itself.
  - lrem 6y ago
    Good point. Good question. Confidential answer ;)
    - munk-a 6y ago
      In detail perhaps - but vaguely the answer is that it's not that much money. Microsoft pretty much willed Bing out of thin air and while adoption has been quite an issue it does have pretty reliable results. Microsoft has a ton of money to throw at things but I think - from the ancillary manner in which Bing was launched - that it honestly isn't that expensive on a day-by-day basis to run that sort of large scale search. I do suspect there is a lot of economy to be saved by already having a wide coverage of the globe with computing resources though so I'd guess at the market being hard to enter and easy to sustain costs once you're in. I suspect Google works hard to keep from letting out how severable and independent their search business is in a large part to keep monopoly breakup calls from getting too much momentum.
- BlackFly 6y ago
  Revenue isn't a good comparison and is more of a distraction than a usable data point. Presumably, if Google is servicing paying customers instead of paying advertisers, then google has much less work to do. Their revenue can decrease without their profit decreasing. They don't need to manage engineering to store cookies and track interests. They don't need infrastructure to store profiles. They don't need cpu cycles to correlate interests. They don't need lawyers to fight off regulators. You can easily imagine other things they would not need for those customers. How much would paying customers need to pay so that google would make the same amount of money? Revenue isn't even an upper bound on that question.