I have been doing research on how a successful AGLOCO might affect the Internet.
I think it will be in various different ways… major ways. But one simple way of looking at AGLOCO’s impact is how it will move money around on the Internet search alone. I think Google could be one company that is greatly affected by the invention of the Internet Economic Network (which is what AGLOCO is).
To make this simple – Let’s say that AGLOCO is highly successful and gets 150 million members (and that other economic networks also start and together they get another 150 million members (and that further that these 300 million members represent 50% of the active volume on the Internet.)
How will this affect Google profits?
Google’s financial statements release significant data on how Google makes a profit.
First — Google gets 60% of its revenue from selling ads on its own sites and 40% from sites of others (like AOL).
Second — In regard to the AOL etc. 40% part, Google states that it has an 80% cost of revenue on that part of its business (this means that $100 of the revenue that is generated by this part of the business costs Google $80 to get – like the fact that on average Google pays AOL 10 cents a search. – that is about 90% of Google’s average gross revenue (obviously Google pays other suppliers less than 80% or otherwise the average cost would be higher 80%).
Third — The Google direct site revenue (the 60% part), is highly profitable – with an 90% gross profit margin.
Simple math – if Google does $10 billion in total revenue, then $6 billion is direct and $4 billion is indirect (from other sites). The $6 billion has a $5.4 billion gross profit (90%) and the $4 billion has a $0.8 billion gross profit (20%). Total $6.2 billion in gross profit. Google has about 25% in operating costs ($2.5 billion) leaving $3.7 billion in net profits.
IF AGLOCO (and other economic networks) have half of the total Internet users then Google will have only half as many direct customers. – New split would be 50% AGLOCO etc. 30% direct and 20% AOL etc.
Simple math #2 - if Google does $10 billion in total revenue then $5 billion is AGLOCO etc, $3 billion is direct and $2 billion is indirect (from other sites). The AGLOCO $5 billion has a $1 billion gross profit for Google (20%). the direct $3 billion has a $2.7 billion gross profit (90%) and the AOL etc $2 billion has a $0.4 billion gross profit (20%). Total $4.1 billion in gross profit. (Google still would have about 25% in operating costs ($2.5 billion) leaving $1.6 billion in net profits.)
A net profit of $1.6 billion is less than half of $3.7 billion. So Google’s net profit would be less than half of what it is now if AGLOCO succeeds and becomes huge. And where did that $2.1 billion go that Google lost – to AGLOCO and other economic networks.
And this would be AGLOCO‘s income from just search (and not including money from Yahoo, MSN etc.) – A very nice start…..
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