Search Engines as Leeches on the Web
Search engines pay a big percentage of their revenues to other sites that use their services. (So-called traffic acquisition costs, or TAC.) A future trend is for search engines to compensate their own users as well.
The first way this is likely to happen is for large enterprise users. Say, Boeing. They go to the top-3 search engines and say:
"how much will you pay us back of the advertising revenues you are making off the searches issued by our 153,000 employees?"
Whatever search engine pays Boeing the most gets placed as the default search on the browsers installed by the company's IT department. (The IT department can also intercept browser requests to other search engines and redirect them to the search engine that's paying to get Boeing's searches.)
Of course, this scenario only makes sense if multiple search engines provide basically equivalent
, so that employees will have the same productivity, no matter what search engine they use. This seems to be a realistic assumption for the future, since the days are long gone when search engines stupidly ignored search quality and purely pursued a branding strategy without delivering the underlying goods.
Big companies can likely negotiate very favorable cash-back deals, getting maybe 80% of the search engines' advertising revenues paid out. After all, B2B users are the most profitable, because they often search for items that cost in tens or hundred of thousands of dollars. (We are currently doing a study of
B2B users' behavior on the Web
, and some of the things they are researching are seriously big-ticket items.)
Later, smaller businesses and individual users will get similar, but less favorable, deals. For example, somebody who uses Yahoo for search might get a percentage as a rebate that will give him or her downloads from Yahoo's music store or other content from Yahoo without the usual fee.
Yahoo is particularly well positioned to do this, because there's no cost to them in allowing more people access to value-added content, at least if it's produced by themselves and not bought from Hollywood. Maybe that's why Yahoo is currently investing so heavily in otherwise low-profit content creation.
Another good opportunity is private-label search, such as Amazon's
, which is currently mainly a rebranded Google search (though they offer some additional features that sometimes come in handy). A9 users get a 1.5% rebate on their purchases on Amazon.com. Let's say somebody shops for $1,000 per year at Amazon, then they would get $15 back -- not a fortune but probably enough to enhance their loyalty to both Amazon and A9. And for a heavy-duty e-commerce users like that, A9 would be making many times more in search advertising fees, so everybody comes out happy.
Let's say that cash-back to users turns out to be 50% of search revenues on average, though I think it will be much more, at least for enterprise customers. Since search advertising is expected to grow, and since all major search engines will have to implement this scheme once one of them does, we are likely talking about $5B/year to be given back to users. Let's continue with Boeing as the example: they could probably score about $3M/year, which is not too shabby for a day or two of negotiating and maybe a week of work in the IT department to implement the redirect on all the proxy servers.
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