Offering prizes for technological achievements is an old trick. It has been used to encourage everything from measuring longitude to flying non-stop across the Atlantic. Now Google has offered up to $30 million (Rs121.8 crore) to the first team that can send an unmanned vehicle to the moon. Like the company itself, the offer is quirky and inspirational. It’s also cheap way for Google to burnish its image.
Prizes are better incentives than, say, patents when there is no obvious end market. And winners don’t have to wring the economic value out of their achievement—they get it upfront. Such awards aren’t perfect—the winner of a contest to produce sodium carbonate in the late 1700s killed himself after the French Revolutionary government declined to pay up. But they can be effective.
How does this help Google? Well, the prize won’t really cost the company $30 million. Google will only shell the money out if a team gets a rover to the moon by 2012, survives the night and discovers ice, among other tasks. It may pay out less—or nothing.
If there’s a 25% chance of success, takes the full five years, the winner claims $25 million and Google achieves a 10% return on its money in the meantime, the cost to Google today is only about $4 million. It could be even less—the financiers of a $10 million prize awarded three years ago for private sector space flight covered their risk exposure with an insurance policy.
In return Google gets great publicity. If nobody claims the prize, this comes for free, but its value rises sharply if there’s a winner. There’s always the unfortunate prospect of a slew of dead robots lost in space, but that’s a minor downside. There are worse places for Google to burn a tiny fraction of its excess cash than in the tail of a rocket.