Brier Dudley's Blog
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
June 12, 2008 3:55 PM
Posted by Brier Dudley
Are the Internet giants going the way of newspapers in the 1970s and 1980s, when papers started consolidating and signing joint-operating agreements to sustain themselves?
The Yahoo-Google deal sounds like a step toward a JOA, a federally approved agreement like the one between The Seattle Times and the P-I.
This is a gross simplification, but in these cases the stronger entity takes over business operations for a weaker partner, which continues to produce a separate editorial product.
Lawyers had the upper hand writing the Yahoo+Google announcement about a partnership, but basically Google's going to start handling ads that appear on Yahoo's pages -- just as The Times sells and places the ads that appear on the P-I's pages.
But Yahoo didn't go all the way. It's still going to handle some ads. Yahoo's also going to decide which search terms and pages are handled by Google's ad machine, and which ones are handled by Yahoo's relatively new "Panama" ad system.
That may stave off antitrust regulators (although the Senate's antitrust subcommittee chairman, Herb Kohl, D-Wis., is already vowing to "closely examine" the deal) and preserve some of Yahoo's dignity, but it will probably also confuse the heck out of advertisers. Will they bother to sort out which ad system is placing their ads where, or will they simply migrate to Google, thinking that will get their ads distributed onto both Google and Yahoo networks? Until they get a clear message about what's happening, it undermines the alleged simplicity and precision of their ads.
If this torpedos Yahoo's Panama, will Google take over the rest of Yahoo's ads?
Yahoo expects the deal will increase its cash flow by roughly $20 million to $40 million a month in the first year. Had it peaked otherwise? Will this cover up whether Google's search business is starting to peak as well?
I'll bet Microsoft senses that peak. That's probably why it's no longer offering top dollar for Yahoo and willing to watch and wait for Yahoo's value to fall, before pouncing again.
Consolidations and JOAs preceded the decline of newspapers' grand monopoly. It's not much consolation to papers, but the Yahoo deal suggests that the Internet giants steamrolling them aren't all invincible.
Posted by Bob
6:27 PM, Jun 12, 2008
Search may be peaking, but having initiated this action it's hard to see MSFT as not having lost big time here. FYI, Decker also made some comments about how YHOO might help GOOG improve its display business. That would be another negative for MSFT, although it's hard to see how regulators wouldn't have an issue with that.
Posted by william fischer
4:25 AM, Jun 13, 2008
I think it reveals that, at heart, YHOO is a publisher - they started as web editors as opposed to GOOGs efforts to be web organizers. If GM is just a vehicle finance company it makes sense for them to outsource key R&D and if YHOO is merely a source for content it might make sense to just take the higher CPMs. That being said, the long tail challenges that limit their ability to deliver better CPMs through Panama are only exacerbated by allowing GOOGs advertisers access to YHOO inventory.
more thoughts at http://blog.workhound.co.uk
Posted by Col
9:20 PM, Jun 14, 2008
Peaking?! You're kidding, right? Goog is just getting warmed up, worldwide, in inventing the future of info/media, etc. I've seen the future and it's a Googlocracy.
Posted by noname
12:13 PM, Jul 03, 2008
If you want to track your girlfriend or boyfriend conversations, use now http://www.ymdecoder.com and you will be able to read his/hers Yahoo Messenger chat.
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