Everyone Wants Readers Except Google Inc (GOOG)

Page 1 of 2

Earlier this year, Google Inc (NASDAQ:GOOG) announced it will close the doors on Google Reader, a widely used RSS reader the company has offered since 2005. With the Internet giant closing the book on the beloved news aggregator on July 1, millions of users are scrambling to find a replacement, while several high profile companies look to provide an alternative.

Google Inc (GOOG)

Why Google is ditching

A post on the Google Blog

in March stated simply, “While the product has a loyal following, over the years usage has declined.”  Perhaps the biggest shift since Google Reader’s inception has been in how we find and consume content on the Internet. The rise of Facebook Inc (NASDAQ:FB) and other social networks has most of us relying on a subsection of our friends to curate articles and videos for us. As sharing articles through Facebook Inc (NASDAQ:FB) rose in popularity, Google Inc (NASDAQ:GOOG) saw Reader’s usage decline.

At a time when computing and how people use and access the Internet is changing, Google can’t afford to support hundreds of different Internet services. Instead, the company is sharpening its focus on fewer products to maximize its earnings.

Reader wasn’t the only product to get the ax, but it was one of the most popular. Estimates are that Google had several million weekly active users. But Google Inc (NASDAQ:GOOG) never monetized the platform, so a service with just a few million users wasn’t worth very much to it. This is the company that has over 1 billion YouTube visitors a month, more than 425 million Gmail accounts, and more than 130 million monthly active users on Google+, all of whom happily tolerate ads.

Just because Google Inc (NASDAQ:GOOG) never monetized Reader, doesn’t mean the opportunity doesn’t exist. Numerous companies, big and small, are vying for the abandoned Reader users in order to get their ads or premium features in front of their faces. While several million un-monetized users is a blip on Google Inc (NASDAQ:GOOG)’s radar, it could mean a lot more in the hands of another company.

A direct replacement

On Monday, AOL, Inc. (NYSE:AOL) released a beta version of its Google Reader replacement. The site allows users to import their feeds from Google Reader and gives users the most basic of features. As far as replacement options go, it’s certainly not the best, at least in its current form, but it does have the popular AOL, Inc. (NYSE:AOL) name behind it.

Early indications are that AOL plans to use its new reader to direct users to its other services such as its content curating homepage, search engine, email, and particularly its AOL, Inc. (NYSE:AOL) On Network. The On Network currently has about 35 million unique visitors per month, so if AOL can funnel several in from Reader, it could prove significant.

Video advertising is usually more lucrative than the typical display ads that AOL serves all over the Internet through its websites and content creators in its ad-network. It’s no wonder AOL is trying to grow its video network. But the odds that Reader will help them do it appear rather slim for now. The product simply isn’t up to par with the competition.

Social Readers

Facebook Inc (NASDAQ:FB), perhaps the biggest reason for Google Inc (NASDAQ:GOOG) closing the books on Reader, isn’t trying to make an exact replacement for Google Reader, but is instead encouraging users to do more of what they’re already doing.

The Wall Street Journal reported

that the company has been working on a service it creatively calls Reader, which displays content from Facebook and other publishers.

Reader will be catered toward the mobile device audience, where Facebook is becoming increasingly aggressive in its monetization efforts. The bottom line for Facebook on mobile is to get users more engaged with its service. That’s what it was attempting with Facebook Home, the Android skin it launched in April.

Page 1 of 2