Recently, I learned that search providers pay for traffic, which makes all sorts of sense in a world where they’re offering approximately equal levels of service. So, where to from here? I can see the opportunity to build a near-perfect market. (Please note for the record that in this piece, I agree with Nicholas Carr).
Here’s one scenario. Suppose I have a popular application, and it has a search window. When someone types in “Britney Spears” or “Mayan Eschatology”, I send the query off three different search engines who pay me a small retainer for the privilege of getting them. Each returns a top-ten page of results, along with a small piece of extra metadata called the “ad bid”; how much they’ll pay for a click-through on the ads on the page.
The simplest thing to do would be to just take the highest ad bid. But in fact, this particular app is smarter; it contains a regularly-updated “correction factor” for each engine; it’s a number based on what percentage of click-throughs each engine gets, and maybe some other factors like how fast they pay their bills. In real-time, I select one of the results pages and show it to the user.
The thing that’s wrong with this scenario is that the search engine ends up doing a lot of useless searches that never get displayed. You could imagine an alternative setup in which you send the search terms to the engines and all they come back with is their per-click bid price, and then you only send the actual search to the winner.
This may be a little fanciful. But when you have a small number of competitors providing a commodity product to millions of customers, and the product is, per-unit, ultra-lightweight, economic theory as I understand it would call for some sort of a radically-open market. It’s just a matter of working out the details.