Quality editorial is not a growth position for a media company. It may be a competitive advantage. And it will surely be a brand differentiator. But it won’t by nature expand audience or increase revenues. It’s not necessarily even a loyalty control.

Of the many great things the Internet has done for media, it has failed to value trustworthiness enough. Instead, it values speed, plasticity, and access. Information is rewarded when it is first to appear, maleable and distributable in numerous ways, and available through multiple channels — links, feeds, indeces — and through other people.

How is a niche publisher to compete? First, catalyze relationships with and amongst people. Second, leverage the value chain as it is to your advantage. Paying more per word for content that is slow, static and hard to get to is a recipe for failure online.

This is the strategic play that makes the MySpace acquisition seem even smarter than I think Fox was aware of at the time. YouTube has adopted a few of the social aspects that make MySpace successful, but I wonder if it will be able to catalyze those relationships into something more meaningful than a one-upsmanship JackAss competition.

What publishers do understand well is the role a media brand can play in facilitating meaningful activity in a community. The nature of the relationships with and amongst the community members have clearly changed. And high quality editorial is a piece of that relationship, one that reinforces trust and understanding, particularly in niche publishing where it’s harder to find good information.

The easy mistake to make is believing that because you have good information people will come. They might, and they’ll just as quickly leave if you don’t give them a reason to create a relationship with you or other members of your community.

Any successful business model is going to have imitators.  Google knows this as well as anybody.   But now the stranglehold on the distributed ad model is feeling weaker than ever with new competitors every day.

The magic formula = isolate revenue collection system into a platform + make it available to other web sites - share earnings back to transaction/click source.

Yahoo! rolled out a similar offering about a year ago with YPN.  eBay launched their own version recently.  Amazon has had their affiliate program for years.  Kanoodle, IndustryBrains, Feedburner and a host of others all know this solution with their own twist on it.  Media networks such as IDG smartened up to the opportunity, as well.

The magic formula is showing cracks, though.  Click fraud is not being measured effectively by independent audits nor is payment being adjusted to compensate for it.  And Google has no short term incentive to solve the problem just as Microsoft once had no incentive to fix Windows security threats.

Linux gave Microsoft reason to change.  I wonder who will push Google into panic mode.  They may just sleepwalk into the death trap as long as their search market share remains strong.

Though have no doubt that Google can change.  At some point Schmidt’s insistence that Google is a technology company may actually trickle down and create some revenue opportunities that are more service based.  If they can scale their office products for mass adoption and perhaps create a browser optimized for those products, then they will finally have a potential revenue model to match the rhetoric.

The question is whether the market share losses surely in AdSense’s near future will fracture Wall Street’s love affair with the company before they can not only diversify but also stabilize on a mix of technology service revenue streams.

I can’t even imagine the complexity of the cultural war that will wage internally when/if the “technology” part of the business actually becomes a real slice of Google’s revenue pie.  Manufacturing consent will probably work while Google continues to grow.  I’d still hate to be on a “technology” product team at a company where 99% of the revenue comes from media products…wait…from one media product.

The Google Phd’s are probably predicting the copycats, the corporate positioning conflicts and internal competitive challenges as I write this, but are they smart enough to get their Product Managers and Biz Dev guys to help them actually figure out how to solve the problems, or do they just write papers and send long emails with subject lines in all caps?

“CORPORATE STRATEGY RESEARCH STUDY: IMPACT OF ‘TECHNOLOGY’ MARKET POSITION IN THE FACE OF MULTI-FRONT WAR ON ONLY REVENUE STREAM MAY CAUSE INTERNAL STRIFE”

Maybe Microsoft’s MSN team has some advice for Google’s technology product teams about operating in the shadow of the cash cow.