econman - 2:10 pm on Oct 23, 2011 (gmt 0)

I'm beginning to understand that many people are confused by the use of my term "free money".

I suppose you could use the same terminology in the opposite direction: Google get's to crawl, store, analyze, summarize and "use" the content of millions of websites for "free" (they don't pay for the content, merely for the infrastructure and software used to acquire this free content).

I don't think people are confused so much as troubled by this terminology, since it implies that we should all be grateful for whatever traffic crumbs the Google God is kind enough to throw us from time to time.

I suspect one reason why this sort of terminology and reasoning bothers some webmasters (and the term "gift traffic" has the same problem) is that it implies that we should all be very grateful to Google giving us this wonderful free gift of traffic, without which our websites could not exist, or at least not survive economically.

But the truth is more complex, and the "gift" analogy isn't a good one. We are participating in a symbiotic economic relationship with Google -- one in which we can't exist without them, and they can't exist without us (collectively).

The key to understanding what's so frustrating and risky about this symbiotic relationship is that Google has enormous market power, and we don't have any.

To repeat: the core problem is not that it's a symbiotic relationship, it's that the relationship is so lopsided -- all of the market power resides with Google, because there are millions of websites on the internet, and yet there are just a handful of entry points.

In any given niche there are typically tens or hundreds of competing websites, no one of which has a large share of the market.

On the other side of the symbiotic relationship, there are very small number of participants (Google, MSN/Yahoo, and perhaps Facebook depending on your niche) that effectively determine which websites thrive and which ones die. Of course, this is generalizing, and the specifics depend on your niche; in some cases bookmarking and repeat visitors are a huge factor, which changes the balance of power significantly.

Economics tells us that this sort of extreme disparity and concentration of market power is not a good thing for society, and certainly not for the businesses that are powerless to do anything about it.

Depending on your business plan, and the niche/market in which you are operating, Google may the pinch point through which 80-90% of all the traffic flows. (Yahoo, Bing, Facebook, bookmarking, etc. account for he remaining 10-20%).

If you are in that situation, and especially if "buying traffic" through Adwords or the like isn't a viable economic possibility (e.g. you aren't selling anything, or the amount you can charge for advertising is less than you would need to pay for the traffic), the situation can be rather frustrating, but there isn't much we can do about it, except try to hang in there in hopes of being one of the survivors.