Google Searches for Ways to Keep Big Ideas at Home

Google Inc. is revamping how it develops and prioritizes new products, giving employees a pipeline to the company's top brass amid worries about losing its best people and promising ideas to start-ups.

The Mountain View, Calif., company famously lets its engineers spend one day a week on projects that aren't part of their jobs. But Google has lacked a formal process for senior executives to review those efforts, and some ideas have languished. Others have slipped away when employees left the company.

"We were concerned that some of the biggest ideas were getting squashed," said Google Chief Executive Eric Schmidt in an interview.

Google can no longer afford to let promising ideas fall by the wayside. The Internet search giant's once-torrid growth has slowed. At the same time, it faces fresh competition from Microsoft Corp.'s new search engine, Bing, and start-ups such as Twitter Inc., which was founded by former Google employees.

In response, Google has recently started internal "innovation reviews," formal meetings where executives present product ideas bubbling up through their divisions to Mr. Schmidt, Google founders Larry Page and Sergey Brin, and other top executives.

Employees at their desks inside Google's headquarters in Mountain View, Calif., shown in March 2008.

The meetings are designed to "force management to focus" on promising ideas at an early stage, Mr. Schmidt said.

The efforts have been behind several services that Google has recently unveiled, including software that allows companies to use Microsoft's Outlook email and calendar software while storing their data with Google. Microsoft said Wednesday the Google software interferes with an Outlook search function; Google disputed the severity of the problem, but said it is working to improve its software.

Another project, an imaging product that is based on facial-recognition software developed inside Google, is expected to be released this summer.

Google has also begun to give a few engineers broad leeway to start big projects of their choosing, Mr. Schmidt said. One result of this effort: Google Wave, a collaboration tool that the company previewed last month.

The moves are a shift for Google. Previously, its early-stage projects weren't systematically vetted by top executives. Employees with a new idea would lobby their bosses for resources and time. Once approved, a project could linger or die without getting much attention from senior management.

Google needs new products to jumpstart its growth. While it remains a juggernaut with one-third of all U.S. advertising dollars spent online, its year-over-year revenue growth has slowed from 56% in 2007 to 31% in 2008 and was just 6% in the first quarter of this year.

What's more, employees continue to leave Google as it evolves into a mature company with 20,000 workers. "Most product managers evaluate [whether to stay] every six months," said Chris Vander Mey, a senior Google product manager who worked on the Microsoft Office integration.

While praising how Google has supported small projects like his own, he said he still expects to leave the company over time to explore other interests.

Google has taken cracks in the past at the retention problem. In March, it repriced millions of employee stock options whose value had been wiped out as Google's share price has fallen over the past two years. The company has also begun testing a mathematical formula to try to predict which employees are most likely to leave, based on factors like employee reviews.

David Yoffie, a Harvard Business School professor who studies technology and e-commerce companies, said prioritizing is important for Google. While Google has launched hordes of new experiments, "in the absence of focus and promotion" few have turned into blockbusters, he said.

In the case of Google Wave, the company singled out Lars Rasmussen and Jens Rasmussen to test its approach to developing ideas.

The brothers, who are based in Australia, had been working on Google Maps. On the side, they were also thinking about creating a new communication system to replace email.

Messrs. Schmidt, Page and Brin were intrigued and gave the engineers a long leash. "We said go do something really interesting and take as many resources as you need," Mr. Schmidt said. They gave the Rasmussens dozens of employees, he added, substantially more people than most early-stage projects.

To allow the duo to stick to their vision for the product, the top executives kept Wave secret from the rest of the company. Wave wasn't opened up to broader employee feedback until later in the development cycle.

Lars Rasmussen said the conditions freed his team from concerns such as fighting for engineers and removed pressure to integrate with other Google products. "We knew we had to do something different," he said.

While Google has high hopes for Wave, which combines communications like email and messaging through a new service that updates in real-time, some are skeptical. Search analyst Danny Sullivan said he was "underwhelmed" by Wave and sees the service as a feature rather than a whole new way to share information. The service is scheduled to be released to the public later this year.

Other current and former Google employees see Wave as an exception. Sean Knapp, a former Google engineer, left the company in 2007 and started Ooyala Inc., a start-up that distributes and manages advertising around online video.

Mr. Knapp said Google managers offered him the chance to start the project within the company, but he declined. He worried he wouldn't feel the same pressure to succeed. "If you're really aggressive, you want that sink or swim environment," he said.

Mr. Schmidt said it is "a fact of life" that some Google employees will ultimately choose the risk and reward of a start-up. But he added the company tries to make it possible to be "part of a start-up within Google."

[the article was originally published at http://online.wsj.com/article/SB124528387214225641.html]

Universal Music, YouTube forge partnership

U2 lead singer Bono, well known for his ONE campaign against poverty, has turned his focus to a charity case closer to home: the ailing music industry.

The rocker is credited with bringing together Universal Music Group, the world's biggest music company, and YouTube, Google Inc.'s online video site, for talks that on Thursday resulted in a partnership to launch a music video service featuring professionally produced content from the label's big-name acts.

YouTube will create a dedicated channel on its site, to be called Vevo, where users can watch music videos from Taylor Swift, Kanye West, Weezer and other Universal artists. Later this year, Universal and YouTube will debut a separate online music video site, Vevo.com, where viewers can watch music videos from Universal's library. YouTube will provide the underlying technology, Universal will furnish the content, and the partners will split the advertising revenue.

"We have been searching for a way to work with the rights holders, which really does drive more -- let's be blunt -- more revenue," said Google Chief Executive Eric Schmidt.

Music videos have posed a vexing dilemma for YouTube. These short-form videos are among the most watched clips on the site, with a hot new track from an artist like Soulja Boy attracting millions of views. But the advertising revenue has not been enough to make YouTube's partnerships with the labels profitable, even though it monetizes hundreds of millions of views a day. Indeed, Warner Music Group said it pulled its music videos off YouTube in December in a licensing dispute over the value of its content.

Universal Music Chairman and CEO Doug Morris proposed an approach modeled on the success of the Hulu video site, a joint venture of News Corp. and NBC Universal that, after a little more than a year, is attracting 34 million monthly viewers with the lure of Hollywood movies and episodes of popular TV shows.

Morris outlined a similar concept for music videos, in which YouTube and Universal would bring together all the professionally produced content into the online equivalent of MTV. The venture would redistribute the music videos online in a bid to grab an audience large enough to attract advertisers. Morris said he was speaking with other major labels about participating in Vevo.

Bono played the role of digital ambassador, prodding his label, Universal, and YouTube to explore a partnership.

Morris recounted how, over dinner in Paris, Bono suggested he meet with Google's chief executive. Schmidt, meanwhile, said he received an e-mail from Bono urging him to meet Morris. That spurred a trip to New York, where Schmidt said he was struck by the Universal executive's ideas for new advertising and sponsorship models.

"I came back here in California [thinking]: Why don't we think about a new approach?" Schmidt said. "That then kicked off Doug's vision."

Record labels are eager to explore new revenue sources to help offset free-falling CD sales. Album sales this year are down 45% from 2000, according to Nielsen SoundScan. A recent Forrester Research report projects that disc sales will continue to decline at an annual rate of about 9% over the next five years as retailers reduce the shelf space allotted to CDs and music fans shift their purchases online.

"The options for record labels, in terms of business models, have really dwindled," said Paul Verna, an entertainment industry analyst with researcher EMarketer. "When you look at the steep decline of physical [sales], look at the digital formats that seemed to show promise to make up for the losses in physical. Most of these are really falling short of expectations."

Universal Music has long espoused the commercial potential of music videos, which as recently as three or four years ago were deemed largely promotional in nature and written off as a loss. In 2008,Morrissaid, the music company generated tens of millions in revenue from its music videos.

"This is the next step in taking the video, which is more important than just an audio stream, to the next level of monetizing it," Morris said.

Analyst Verna isn't sure music videos will bring the financial windfall Morris and YouTube hope.

"Clearly, there's some monetization potential," Verna said. "I'm not sure how much it is, or how significant a focus it is for the labels. Clearly, they're trying to make it work."

[read more : http://www.latimes.com/entertainment/news/la-fi-ct-youtube10-2009apr10,0,7026280.story]

Yahoo Google search advertising deal

This, i guess was always in the offing. Just read an article in NYtimes.com on a proposed Google Yahoo deal for search advertising. It may be a way to fend of Microsoft bids for Yahoo, but it sure does raise many questions pertaining to Anti Trust issues and also an apprehension over the Yahoo - Live.com search sponsored results ie. yahoo's ads on Live.com.

Google Inc.'s top executives expressed hope Thursday that the Internet search leader will be able to form a potentially lucrative advertising partnership with Yahoo Inc.

"We have been talking to Yahoo and we are very excited to be working with them," said Google co-founder, Sergey Brin. ''We share a lot of values with them.''

Neither Brin nor Google Chairman Eric Schmidt mentioned how far along the two sides are in their negotiations after a two-week test which was completed last month. During the trial run, Google supplied a small portion of the text-based ads that appeared alongside the search results on Yahoo's Web site.

Because Google's technology proved it, the alliance could help Yahoo snap out of a prolonged slump that made it vulnerable to Microsoft's buyout bid. Microsoft also cited Yahoo's willingness to subordinate its own ad system to Google's as a reason for dropping its bid.

"We really believe in companies having choices about their destinies," Brin said. "It's not about scuttling (the deal). They were under a hostile attack and we wanted to make sure they had as many options as possible."

Schmidt left little doubt that Google was pleased to ruin the deal. However, he said he wanted to keep Yahoo out of Microsoft's hands largely because he was concerned the world's largest software maker would abuse the added power.

Schmidt described Google's current relationship with Yahoo as "very, very friendly."

If Yahoo were to sign a long-term ad deal with Google, some analysts believe that would repel Microsoft for good. Although Microsoft executives have publicly indicated they are looking for other ways to bolster the software maker's unprofitable Internet operations.

This partnership almost certainly would face intense antitrust scrutiny as the two companies together control more than 80 % of the U.S. market for online search advertising.

"If there were a deal (with Yahoo), we would anticipate structuring the deal to address the antitrust concerns that have been widely discussed," Schmidt said.

Although Schmidt wouldn't specify how Google will address the antitrust issues, analysts speculate, that it could be done by running the partnership as an auction-style system that would allow other rivals, to show ads on Yahoo.

Google shareholders attending Thursday's meeting didn't seem to care about the implications of a potential Yahoo partnership.

Now i wonder what is brewing in the the Silicon valley.