Google Kills an Industry
Wow.
Google threw a new product called Goog-411 into Google Labs today – a free telephone based information service that could replace toll 411 calls. About 2.6 billion 411 calls are made in the U.S. each year, and it is a $7 billion/year market.
Goog-411 can be accessed by dialing 1-800-GOOG-411. The product is completely automated and there is no way to talk to a human for additional or clarifying information. You tell it your city and state, and then ask for a specific business or business category. In my tests the product was excellent. Although the voice recognition was only working at about 70% efficiency, I just said “back” and retried when it didn’t understand what I said. Results are spoken back or text messaged back to you, and you are automatically put through to the phone number requested.
Well, that’s it for 411. $7B of annual revenue simply . . . vanished. Of course, this doesn’t include residential listings, apparently because Google’s already got the business data from its other applications, and can keep it updated the same way – so maybe the whole industry won’t go . . . yet. But even so, it’s a huge hit to an industry whose business model was based on keeping information secret and charging for it.
I don’t know if you can make more money by secreting information or by broadcasting it; I would guess probably the former. But this project is in keeping with Google’s model and ethos – first, by becoming an all-things information provider, Google can produce revenue in ways that don’t necessarily require blocking access to the information they control; second, the idea of going to lengths to share the information they have seems in keeping with the “don’t be evil” mindset of the company. It isn’t evil to charge money for providing telephone listings – nobody requires a company to do so at all, so it can’t be evil to charge for it; but it’s a positive good to do so for free. And between an organization that makes great benefits available as widely as possible for free, and ones that do nothing unless you pay them literally for answering a simple question, the former deserve support and the latter deserve to die.
It’s easy to make too much of “the new economy” (the dot-com bubble proved that), but to at least some degree I see things like Google and the open-source movement as introducing a new kind of capitalism – one that sees profit as a welcome by-product of doing good things for people, and not as an entitlement to be screwed out of customers by any strategem, to their detriment. This form of capitalism often takes profit to be a secondary motivation – the point is to do something valuable in itself, and take what you can get for it, rather than to do whatever will bring the most revenue no matter the consequences to others. As such, it’s naive, and perhaps at an inherent competitive disadvantage against rapacious companies who will use the greater profit margins of a profit-above-all mentality to squeeze less aggressive competitors out of the market. It’s the kind of capitalism practiced by artisans and small landowners or specialty tradespeople – people who do what they do because they choose to, and take the doing of it to be their motivation in and of itself. I don’t know how well that translates to global-level enterprises like Google. (Earlier examples, like the Whole Earth Catalogue, food co-ops, and the like, tended to retain a small-business model, usually within a regional or local market.)
But the examples of Google, the commercial Linux community, even to a minor degree Apple Computer (in its ethos, not its business model), suggest there is a viable alternative, and one that can compete in large-scale markets, capture market share in large industries, and provide employment for people who want fulfilling jobs but aren’t cut out to be organic prune herders or handmade ceramic bong artisans. Sticking it to the Man is a welcome side-benefit. Good luck to them.
Well, it might be a bit premature to call the 411 industry dead. Actually, it’s a bit inaccurate to call it an industry – it is a service provided by telcos. To my knowledge there are no stand-alone 411 companies. Of course if the “industry” is killed, I will expect a piece on how evil the companies are that let go all the 411 operators. Google is, in many ways, like WalMart. The company’s success comes at the expense of other companies. I have no problem with that, it is the nature of competition. But I find it surprising that you embrace it. I also find it interesting that you find a way to equate a company with a market cap approaching $150 billion to an artisan. As for the commercial Linux market, I had personal business dealings with the boys at Red Hat back in the early days, and I can assure you that they were no different from any other business people. Just so happens their business involved taking advantage of software developed by others and available at negligible licensing cost. Also keep in mind that 411 was a free service for over a half century, so Google has a few decades to go without attaching a fee to the service before they equal the record of the telcos.
Anyway, back to the prematurity of your death sentence. First off, the simplicity of dialing 411 as opposed to the longer sequence of 1800GOOG411 is not to be overlooked. Secondly, as of now, Google only has a mechanism in place (Google Maps) to capture business numbers, so the service is only available for business numbers, not personal numbers. Given the above, I’m thinking 411 will be around for some time to come.
Those are reasonable objections – which is why I made almost all of them in my post, myself. And you’re right that dialing the extra digits is a surprisingly real barrier – unless you program it into your cellphone, which most people will do. (At home, I just . . . Google . . . unknown numbers anyway.)
But as for 411 being dead – at 25 or 50 cents a pop, they’re dead to me, that’s for sure.
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Ted:
Of course if the “industry” is killed, I will expect a piece on how evil the companies are that let go all the 411 operators.
With that, you’ve essentially proven that you haven’t called 411 in about three years.
That, or you have a rare phone carrier. Those services are already 90% or more automated, and have been for quite some time.
I also find it interesting that you find a way to equate a company with a market cap approaching $150 billion to an artisan.
If he equated any such thing, I certainly missed it. He made a broad comparison, sure, but to call that “equating” them is the sort of huge stretch you would have been all over us for, had one of us done it.
Also keep in mind that 411 was a free service for over a half century
Was it? I’m thought that back when 411 was “free,” you paid by the call, so it was a phone call like any other. Back then, it also wasn’t ‘411′ — it was ‘0′
the service is only available for business numbers, not personal numbers
See below on text. But you’re right on this count. It’s not going away any time REAL soon, but it’s likely to take a big hit within the next couple of years if they don’t adapt.
KTK:
But as for 411 being dead – at 25 or 50 cents a pop, they’re dead to me, that’s for sure.
With that, you’ve just essentially proven that you haven’t called 411 in about three years. That, or you have a rare phone carrier. I’ve been getting charged 75¢ or $1 for 411 for a long time. Which is why I almost never use it, except in a pinch.
Of course, if you have a cell phone, you can always just text the name (person or business) and city to 46645 (GOOGL) and within a few seconds get back all the listings that match. This has been the case for about two years or more. And you pay nothing other than any texting fees your phone provider might charge. (My wife and I have a lot of included text, so for us it’s essentially free…)
Tgirsch, was another insomniatic comment, so my language was a bit loose, but my point about market cap was in reference to this: “It’s the kind of capitalism practiced by artisans”. I should have used the word “compare” as opposed to “equate”.
As for 411, or “0″ historically being a pay call, no, it was not. At least not in my experience. For most of the history of the telephone biz, local calls have been free, and “0″ was classified as a local call. Later on, there was local 411 and another varient (which I can’t believe I have forgotten) where you dialed the area code and some exchange, to get long distance information, again for free.
It is true that I had not dialed 411 in quite some time, but I just did as a test, and after mumbling my info, I was put through to an operator. I believe this is the standard for most telco-provided service. Which explains why the lack of operator assistance is mentioned as a limitation to the google service.
As for the cost of the service, it is only $0.40 per call with my provider, but that is much below the national average. If the numbers in the report are correct, and this is a $7 billion market with 2.6 billion calls, simple math puts the average charge much above $0.40.
Later on, there was local 411 and another varient (which I can’t believe I have forgotten) where you dialed the area code and some exchange
If area code is ###, then:
1-###-555-1212
I had forgotten all about this myself until you just mentioned it.
And I’m still not so sure about the free calling thing. I seem to remember that “unlimited” local calling is a fairly recent development.
It is true that I had not dialed 411 in quite some time, but I just did as a test, and after mumbling my info, I was put through to an operator.
Right, but MOST calls are still handled with the automated system, meaning they need only a fraction of the operators they used to. Ergo, most of those jobs are already gone. And you’re probably getting someone in Bangalore, anyway.
Trust me, unlimited free local calls was the norm back when AT&T ruled the earth. On the other hand, long distance calls were very expensive. And of course you had to “rent” your telephone(s) – it was “illegal” to own one.
As for 411 operators mostly being gone, you have not provided sufficient evidence to prove that. Yes it is true that most calls are now handled by automated systems. However, we would need to know that percentage and then factor in the growth of 411 calls to determine if there are more or fewer 411 operators working today. I think you are correct when you state there are fewer, but I am not sure. I would suspect that cell phone usage has resulted in a huge increase in 411 calls (most people don’t have phone books clipped to their belts).