Say It Again: Buy Internet Companies When They Empower, Sell 'Em When They Defend Themselves

"Those who empower, win. Those who protect, lose."

Yes, as I've explained before, that simple principle is all you need to know when it comes to investing in the trend to distribute the world’s information and entertainment content on the internet.  It was that very logic that propelled me to buy Google for me and my partners the day it came public and to sometimes short Yahoo and Time Warner against that long Google position.

Being long the empowering Google and short the "get people to use our own content" Yahoo and AOL was a license to print money while Google had been all about empowering the end user.

But as I've been warning since the beginning with Google, you'll want to sell this company when it starts to work on defending its own properties rather than just making sure those who use its search engine always get the most relevant results.

Wanna watch a music video?  I often wonder why Google wants me to watch those videos at its OWN property YouTube rather than on a Yahoo or even better an independent website?

Knol is another content creation that Google now has clear economic reason to push me towards.  The more content google puts on its properties, the less trusted it becomes.

The NYTimes is, of course, very late with this rehash of the Google conduit logic.  But better late than never.

I've asked Google about this on Happy Hour before.  They didn't have anything close to an answer for it.  Something along the lines of, "Uh, no, we'll still be objective even though we have incentive to make billions by guiding you to YouTube when you search on Google.com"

As I explained in that FT article last year, Netscape, AOL, Yahoo, Myspace have all ridden the "empowerment curve" to great value. But they all crashed and burned as they became ever more incentivized to defend their properties rather than empowering their end users.

Google's still the only company that even gets the content-creation agnosticism logic at all, and that means it's still a buy both long and short term when it's below $500 in 2008.

PS.  Cuil.com might very well be the next empowering property to watch.