AI is Nothing But Stolen Clicks, Google's War Against Publishers, Google's Revenue Playbook & more

0:00So this is a question I know you've already answered at nauseam. Forgive me because we are the paid guys. So this is asking the organic guys the novice question when it comes to AI. but AI is nothing but stolen clicks, right? AI, it's, it's, it's chat GPT, taking your content, it's search generative experience, taking your content, dude, Google's SGE, if you play with it is amazing, but it's content that Neil or Eric wrote being delivered by an AI bot in context that really never exposes you to me. So how much, how much of that do you think ends up siphoning off the high value traffic you would have gotten otherwise.

0:44I think a lot of those questions, the SGE type of stuff, if you're a big corporation and you're looking to hire someone, you're not going to take an SGE response and hire someone on a million dollar contract. You're going to dig deeper and talk to someone on the phone. But do you get to that person on the phone through the SGE search? or is the iterative process by which you identify that consultant, does it go a different route? Or do you think it still goes to them searching for the citation? I think it goes from them searching. They may see the SGE response and they're like, who's this by? Let me just go talk to the company.

1:24Okay. And by the way, we've talked about this a little bit where we were just saying, at the end of the day, Google has that publisher relationship. That's still going to be there. there's like this tense relationship right now, right? They still need to give some like bread to the publishers themselves. So I think the citations will be probably clear and they'll say, hey, like we got this from over here. You should click on this website. But I think, Kostum, your question is more around like, what are people going to do about the stolen clicks? That's the real question, right? Well, actually, why would I create content if the AI is just going to steal my content and then provide answers based?

1:56And I know they're trying to play the citation game, but even the way the citations are provided inside of SGE, it's here are my answers and here are the five sites I stole this from. And what's interesting about that is it's usually like one of you guys and you provided 80 % of the answers and then four Yahoo's that just lucked out and got put in the bundle with you. And so now the four Yahoo's look like they provided way more value than they did. And the majority of the value came from you, but Google's not going to say that or show that. And I say that because there's actually a separate frame in the SGE if you've seen it.

2:29There's, here's all the citations we used. And if you swap over to the separate frame, here's on a almost per sentence basis, the citation responsible for the response. So they're trying desperately to cite the original source in app in context, but I have to seek that citation out to get it. And I don't know that the unsophisticated buyer does that. And Neil, your response is, well, the sophisticated buyer does it. And that's all I care about is what I'm hearing. I'll actually give you two examples. This will answer it. Okay. So the first one is SGE isn't perfect and it's iterations of what is already there.

3:07You type in the weather in Las Vegas, Nevada or Los Angeles. It shows you what the weather is now. Years ago, 10 years ago, I don't know the exact time, but let's say 15 years ago, you would say type in Los Angeles weather and then you'd click on weather.com and then you would see the weather. Right. Now you're showing the weather. You type in 2 plus 2 or what's USD to British pounds, it shows you the currency exchange or shows you the answer right then and there. But overall, if you look at what Danny Sullivan from Google said, Google has continually driven more clicks each and every single year to websites.

3:44Because as they improved the experience, they're getting more people using the search engine and a smaller percentage clicked through the website, but the total number is still greater. and what you're also seeing is they're you know schema marka or not schemas when they're putting the knowledge graph there when they're giving you some of the answers in many cases it's actually not that great yes sometimes sg is great sometimes it's not because a lot of the places where they're pulling the answers from the content's crap which is creating crap responses right so that's one but do i think it'll affect websites traffic yes i don't know by how much though the second one and this is answering more of the question, but this is a second point.

4:24You guys are paid ad guys. Did you know that Google makes a bit more than$30 billion a year from their partner network? 30 plus billion dollars a year. How do you think those sites get their traffic? They're not spending money on paid ads to get traffic to then send it back to Google. That's a losing battle. I know some businesses have done well building that, but it's far and few in between and they never last, right? That's a really terrible model. It's hard because buying traffic from Google and sending it back or buying it from Yahoo and then sending it to Google, it's a tough business, right?

4:59It's not something left anymore. Yeah. Very little to none for most industries. Google's not just, so they're getting their traffic, not from social media because social media doesn't keep giving evergreen traffic. They're getting it from SEO. I'm not saying Google isn't going to play with SEO and mess around with it. They definitely are. They always have been for a long time. But you think they can report to the public? Yeah, we just killed all the SEO results. And oh, by the way, it affected that$30 billion that we generated in revenue. And we're going to make it up, but we don't know how much yet and how that's going to work.

5:30It's not that simple for them. My counter to that is I think that Google is smart enough to play the long... Here's what I mean. Google will sacrifice near term earnings in order to make sure that they're not replaced. So if Google tomorrow has to roll out an app that kills all of Google search, which is its most important ecosystem and infrastructure period, to make sure that it stays the primary utility with which you ask, with the assumption that it will learn how to monetize it later, I think it would flatten all of its revenue to do that as opposed to watch the slow death and atrophy. They won't.

6:05Companies owned by hedge funds and institutions, they'll fire the executives and CEOs for crushing their earnings. What I think will more realistically happen, and this has been Google's playbook, they'll try tons of changes and they'll implement them for like 0.1 % of the users searching. And then make us their beta testers. Yes. And then they keep doing that until they got a winning formula to make them more revenue than what they're going to end up losing. That's typically been their playbook. And I see them continually doing that. But what feeds Google is content creators. If they just cut off all the traffic and they just answer everything for users, everyone's just going to block Google.

6:47And then their search engine is screwed either way. They can't just cut the traffic off. You can't break that money printer. Yeah. They're too disincentivized to break it. So they're going to be the slowest to change things while everyone else is like perplexity and all these other people are starting to run laps around them.