Sometimes the current model in the hotel industry is
Consumer —>SE—>Affiliate—->Aggregator—-> Merchant

Google’s New Model
Consumer —>SE/SE Local—->Aggregator/Merchant—-> Merchant

In both cases, Google was receiving the advertising, not a direct cut.

In this particular case, the result is actually closer to the merchant… that being said, in some markets like restaurants Open Table is a new intermediary with it likely that Bing is receiving a cut.

That is what demonstrates the failing of the model. It isn’t disintermediation at all but reintermediation… adding a new, costly layer to the process.

No doubt, floral wire services (FTD, Teleflora, 1-800Flowers) would love a link to book flowers from a local florist like that – and harvest about 40% of the total price paid by the consumer (based on their current commissions and fees).

Disintermediation, indeed. The web should help consumers make direct connections with providers.

But this new move takes: Consumer —–> Merchant… to

Consumer —–> Search Engine (who now gets a cut???) —–> Marketing Firm (who also takes a big cut) —–> Merchant.

This is affiliate marketing gone mad.

@David
I have often wondered whether Google’s current approach to customer service will bite them in the end… things are just getting going, they have a chance to fix it but if they take their current path the will be burning a number of bridges

It’s apparently the space that everyone wants to occupy whether you are search engine or a social network.

Having dealt with several sales reps over at Google with the Boost and Tags products I see the biggest issue being a huge conflict of interest.

What made Google the winner early on in the search wars was the implied fairness and quality of their search results. Recent changes and pushes to monetize the local results has, in my mind, blurred the quality of said results. If this trend continues Google will be opening the door to competitors who can take over the quality and unbiased nature of early Google.

For any of us who have been in the LSEO space as long as I have will agree that Google pretty much stinks for customer service. Until recently it has really only been us who have experienced it. More and more I am hearing from general consumers that Google seems a bit big and powerful. It will be interesting to see how this all plays out especially with new products that will further call on customer service expertise from big rainbow.

It is true that no one has envisioned the scale that Google is contemplating…. an ad, an order, a booking, a piece of inventory from every local business every where in the world…. it is breathtaking and scary at all once.

Monopoly, though, is the nature of capitalism. What ends up happening in the regulatory worlds is monopoly wannabees gang up on monopoly success stories…in the end, the user, customer and SMB do not make out all that well there either…

It sure portends interesting times.

http://dealbook.nytimes.com/2010/12/15/is-google-too-big-to-shop/index.html

Mr. Reback contends that Google is increasingly taking control of the local search market and, by extension, the local economies. “It’s breathtaking to contemplate what Google is building,” he said. “No one has ever contemplated this kind of control over local markets.”