The Digital Skeptic: Why This Sci-Fi Writer Hates Google

NEW YORK ( TheStreet) -- If anybody is unimpressed that investors now find Google ( GOOG) more valuable than Microsoft ( MSFT), it has to be Ursula Le Guin. This sci-fi legend -- beloved not only by me, but by zillions of geeks who memorized her Earthsea fantasy novels -- clearly has little patience for such digital media wizards.

"The more piracies, abridgments, mash-ups, etc., are tolerated," she wrote in her blog, "the less people will understand that textual integrity matters."

Now keep in mind that Le Guin, who will turn 83 in late October, is no tech grandma. She's a sophisticated online player who blogs regularly and sells on Amazon ( AMZN). Kickstarter even crowdfunded an approved stage version of her work, The Lathe of Heaven.

But her sense that all is not right in the digital domain has gained Le Guin newfound fame. Time.com labled her one of 5 Famous Writers Who Loathe E-Books. This moniker spun out of her high-profile criticism of a long-standing suit between the Authors Guild, the Association of American Publishers and Google -- a stance that royally ticked off digital hipsters.

"Google is doing nothing wrong legally or morally in scanning books without the permission of the authors or publishers of those books," wrote GigaOM's Mathew Ingram back May 2011.

But with Google finally settling at least part of its ebooks legal hassles -- publishers accepted a deal in the first week of October, while authors did not -- danged if this digital contrarian has never been more relevant. Le Guin continues to define the contradictions lurking inside digital media giants such as Google.

And for investors struggling for a worldview of the wraiths this operations faces, she is a powerful wizard of skepticism.

Google's spell begins to fade
Le Guin points out that even decades into the digital content economy, much of how operations such as Google expect to get paid still makes little or no sense.

Take even simple things such as libraries. She points out that most are subject to some sort of digital content management scheme that limits downloads of ebooks. The idea is to protect sales of physical and virtual books, which makes some sense. But Google still struggles to find a means for valuing said print content. And she doubts a workable model is anywhere close.

"To solve it will take a complete and painful rethinking and re-organisation of the whole publishing industry," she wrote.

That's a reworking that is nowhere near complete. In fact, Google seems to be wandering off into bizarre new publishing lands. The operation has started testing -- get ready for this -- charging for published material. I kid you not, beginning in October, the Mountain View, Calif., software firm started quietly tinkering with a micropayments tool that enables transactions for premium digital content. The tool works as part of its Google Wallet technology.

"Google Wallet for content is an experiment to see if users will be prepared to pay for individual Web pages if the buying process is sufficiently easy," the company says.

That from the same operation that openly gobbles up vast amounts of books, news and printed material and tosses it all up digitally for nada.

What's forcing Google to reinvent itself? A quick look at its recent financials explains why. Revenue may have jumped about 15% or so from the first to second quarter of 2012. But during the same period, operating expenses jumped by about 25%. With business performance like that, it won't take long for this business to lose its spell over markets.

Which is exactly Le Guin's point.

"Why are people so defensive about electronic technology? Do they really think the Luddite hordes are coming after them with burning torches?" she wrote earlier this year. "Love me, love my iPad? Oh, come on. Grow up!"

Amen, sister. Amen.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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