June 16, 2010 6:59 pm

Google shadow over new media groups

Google is developing technology that could position it to compete with a new breed of digital media companies that are generating story ideas for the internet by mining online search data for under-covered topics.

These new digital companies hope to produce content more cheaply than traditional media operations by using statistical analysis to identify topics of interest to consumers and then hiring freelancers to produce relevant stories or videos.

However, Google obtained a patent this year for a system that would help it identify “inadequate content” on the internet, based on comparisons of what people search for and what they find, executives who have reviewed the filing, said.

The filing said data from the Google system could be sold to online publishers or given away for free, which could complicate the plans of companies such as Demand Media, Associated Content and AOL that are developing systems to generate ideas for internet content using software algorithms.

“Prospective product announcements should not necessarily be inferred from our patent applications,” a Google spokesman said. “We file patent applications on a variety of ideas that our employees come up with. Some of those ideas later mature into real products or services; some don’t.”

Investor interest in automated content systems has spurred Demand Media, founded by Richard Rosenblatt, former chairman of MySpace, to hire Goldman Sachs to explore a potential initial public offering in which the company could be valued at up to $1.5bn, say people familiar with the matter.

Bill Slawski, search engine marketing consultant at SEO by the Sea, who spotted the Google patent filing this month, said the Google technology could undercut offerings by the new digital media companies.

“Google would provide information on topics or queries for everybody who performs search as opposed to [companies that] hire people to mill out videos for $20 per video,” he said.

But executives in the sector said knowing what people on the internet want was just one part of these new content systems. Knowing what to do with the information is equally important.

Quincy Smith, a one-time advisor to Google and a partner at Code Advisors, an investment bank, said Google’s data “could drive a bigger gap between smart networks (such as Demand Media) and lesser types.”

Google’s patent application was filed in 2007. Google filed a revised application in February this year.

Additional reporting by Richard Waters in San Francisco

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