The Google News Dilemma 310
(54)T-Dub writes "Wired has an interesting article about the status of news.google.com. It has been 3 years since its release and the major bugs have long since been ironed out, so why is it still in beta? Apparently, it's because Google hasn't been able to figure out how to make money off of it. Slapping up some Google Adwords seems like the obvious solution. The problem is that Google News has multi-million-dollar news publishers scared because of the incredibly low-cost method that Google has employed to bring us 'up the minute news.' Currently they are able to scrape the content of news sites under fair use because they are not using it for commercial purposes. Once they move away from the nonprofit, educational purposes of their system they can expect to be deluged by cease and desist orders. Before you break out the tissue box though, remember that google sent their own cease and desist orders to a Google News RSS feeder a few months back."
Read all about it (Score:1, Informative)
news.google.com:google+news+beta [google.com]
None of that shows up on a balance sheet (Score:5, Informative)
Good Will on a Balance Sheet is the "excess" paid for a company when the acquisition is accounted for using the Purchase Method (the only one now allowed). You take all the acquired company's assets, price them to "fair market value" and make them assets on your book, then whatever premium you paid is "good will." You used to have to amortize Good Will over 40 years (because it isn't real), but now you get to keep it as "brand value" or whatever, and if it ever becomes worth less, you can write it down then.
HOWEVER, developing your own brand value, you can't put that on the balance sheet because how would you value it? Do you think that Google can just say, hmm, Google News is really cool, let's add another $10m this quarter to the good will account. Lookie here, $10m in revenue because we increased this asset?
Before stating that things show up somewhere in financials and give armchair advice, you might want to research what they are.
Good Will on a balance sheet is VERY DIFFERENT from what Good Will is in conventional thought.
Alex
Re:Their return is in the branding (Score:2, Informative)
(I do a little SFAS 141/142 work and know a couple things about this.)
Not exactly. Goodwill only shows up on the balance sheet as the excess over book value you paid for another company in an acquisition. "Brand value" is just a subset of that. Your own company's goodwill is inherently reflected on the *income statement*, to the extent that you are generating earnings.
If another company came along and bought Google, then Google's "brand value" would be reflected in the goodwill account of the acquiring company.
Re:Their return is in the branding (Score:3, Informative)
IMHO I'm *glad* the guys at Google haven't taken it out of beta yet. It shows they've learned from the stupidity of the dotcom bubble, and are unwilling to threaten the rest of their organization until each and every project can stand on its own.
And before you start yelling about how much money Google may or may not have, the sentiment of banking on "brand value" for companies that are largely based on IP with no (or few) physical products is dangerous these days. In fact its always been dangerous. And when it comes down to the SEC, "good will" and "brand value" appear in their reports, but not on the balance sheets, at least none that I've seen.
Google is making a smart move. The R&D they did for Google News is applicable to other products in their core offering, its not a loss. Throwing it out onto the market before it can generate revenue on its own will immediately generate a loss for them on their balance sheets.
[jedi mindtrick]This is not the dotcom you are looking for. Move along.[/jedi mindtrick]
Re:This has been known on Slashdot for some time. (Score:1, Informative)
Re:AdWords may not be good enough (Score:1, Informative)
Re:None of that shows up on a balance sheet (Score:2, Informative)
Do you even know what a balance sheet is? One of the first concepts you learn in an accounting class is assets = owner's equity + liability. Balance sheets show the company's assets, and how they equal up to their liabilities and equity. Marketing is not an asset, not equity, and not liability in the sense that you owe someone something. Marketing is a pure expense, subtracted from revenues. It never is and never will be put on a balance sheet in the US. As I am about to graduate in May with an accounting degree I was worried the world didn't need anymore accountants. Thank you for giving me a reason why they do, to fix problems people like you cause when you somehow mistakenly get into management.