What's kinda weird - I read Emre Sokullu's post in Read/Write Web (who also works for Hakia, which is based here in NYC - or partly in NYC) and tried following the logic.  It's not unlike the kind of estimations I've done lead value at my clients sites -and lacking anything better, it's a valid way of assessing the value of page or service.

Took a look at the original source - Don Dodge's post on why 1% of search market share is worth over $1 Billion - which sorta justifies the idea that smaller search engines (one's with less market share, like AOL and ASK) are still worth running - because each 1% of search market share is still worth at least 1 billion dollars (a month?  a year?  Note: I think Don Dodge means "year" below).

"…Each 1% of market share is worth at least $1 Billion in market cap. Google has 50 points of market share and a stock market cap of $150B, or $3 Billion for each 1% of search market share. Other competitors don't win the same revenues and market multiples, but even at the low end, 1% of market share is worth over $1 Billion."

"…Revenue of $0.12 per search query - Now we can compare total US search revenue of $1.23B to total the 10.1 billion US searches, which yields $0.12 for every search performed. You could argue that all of Google's revenues derive from search. If they didn't have search they wouldn't have ANY of the other revenues. Taking that approach and comparing US revenues of $1.95B and dividing by total US searches yields $0.19 in revenue per search."

Ok, now we're getting somewhere -  on average, every time a person uses a search engine (at least, it's the case for Google) and does a query - it's worth 12 cents!

I'm not a financial analyst so much of the "financial" part of Don's analysis is above my head and even my interest to follow - but it's worth quoting here:

"…Each 1% of search market share is worth over $100M in revenues - Here is the math. There were 7.3 billion searches performed in March of 2007. One percent of that is 73 million searches times $0.12 revenue per search or $8.76M per month. That translates to $105.1M in annualized revenue. "

I'm confused - earlier Dodge said that each 1% of Search share is worth a Billion Dollars and now … I think he's saying it's worth $100 Million dollars - or 1/10th.  OK, Got it.  Sure …. the search engine, itself, may only make 100 Million off of 1% of the search market share (as defined by ComScore, BTW) but the Stock Market values 1% of search market share as 1 Billion dollars - or time times the actual revenue:

"…The stock market values 1% market share at over $1 Billion - Google (NASDAQ: GOOG) stock sells for more than 10 times revenues. There have been several acquisitions over the past few months that have also been valued at in excess of 10 times revenues. Using this multiple, that 1% of market share that generates $105M in revenues is worth over $1 Billion in market cap. Google gets a higher market multiple, so their 1% of market share is worth $3 Billion."

Ok, so now we know why we have the Yahoo's, MSN's, AOL's, ASK and the rest of the bazzar of search engines - even a small share of search share traffic can be worth billions of dollars to the market value of the companies that own those search engines - meaning it's not about the people, or the searchers, it's about the financials of companies that own each of the search engines.

"…So now we all understand why Yahoo, Microsoft, AOL, Ask, and a host of others are fighting hard for every 1% of search market share. The search business generates huge revenues and profits…even for competitors with just a small market share.

VCs are investing big bucks trying to find the next Google. New comers like Powerset and Hakia would be quite happy with 2 or 3 percent market share although they have aspirations of much bigger things. Do the math…it is staggering."

It was pointed out in one of the comments that it's unfair for a search engine with a smaller search engine market share to be worth the same amount per 1% that Google is worth - and Don Dodge has answer - it's not.  1% of Search Share for Google is worth 3 times more (3 Billion dollars) while for everone else it's worth 1 Billion:

"…That is precisely why 1% of search market share for Google is worth $3B, while 1% for the smaller competitors is worth *only* $1 Billion.

I did the math several different ways; bottoms up to show how you get to $1 Billion, and tops down with Google market cap divided by market share to show how they get to $3 Billion for each point of market share.

So, your strategy is to fold up the tent and go home because you only have 5% market share? Typical management thinking. That is exactly why I wrote this post…to open people's eyes to the huge revenues and profits available even for smaller competitors in search." 

So the real battle, for a small company, say…. a new search engine, like many I have reviewed of late such as Knover.com, Hakia.com, Spock.com and Collarity.com is not to beat Google - everyone knows that's not possible - but to just get enough of a sliver of search share (say half a percent) to value their companies up and then, sell it.  

I guess that also explains why Bloggers are becoming more and more important to the startups as they try to generate Buzz about their new offerings - so they can increase their market share (and either Build or Sell their companies).   In fact, endorsements of new search service, by influentials, if and when it catches on, can be one of the most effective ways to increase search market share.

But…. if your product is not ready and you put it out, like Intelliverb review in Techcrunch and here, the blogger PR strategy is going to backfire.

The worst thing you can do is put a product out for review before it's ready to be looked at as a mature product or service - because bloggers will kick the tires mercilessly … I know I would, and do.