Wednesday, July 29, 2009

Yahoo did the right thing

I was just reading that Yahoo's recent partnership with Bing would be its demise. I was once a big Yahoo fan; but have made the migration to Google. Let me tell you why Calacanis is wrong. First, there is no comparison between Google and Yahoo. When Yahoo started off, they were simply a directory. For ages, you had to request to be in their directory rather than they just crawl your site. That's where they went wrong.

Their next misstep was to let Google power their search, and let things ride. 
Once Google moved on, they had no search capability. That is their problem. Yahoo sucks at search. They always have because they only indexed "submitted sites" they though were worthy. 
Given this shortsightedness, it was no wonder they were left behind. Given their inattention to search, I think partnering up with Bing is a good idea for now. During this 10 year deal, they can figure out what to do stay alive.

What Calacanis fails to realize is that Google's revenues come from their Adwords/Adsense combo. Yahoo has a weak version of that. Most people think that Youtube is losing money; and they are as a divison; but, it makes money for Google. The Google has also invested in other free services like Picasa, Blogger, and even Google Voice. How do they expect to make money? Advertising silly.

The more sites out there owned by Google, the wider their reach. The can insert Google ads in every nook and cranny of their empire. Yahoo, on the other hand, has been pulling back. Rather than expand their market reach and make advertising through them appealing; they have been cutting back on their web real estate. Newspapers have the same problem; with declining circulations, they are crazy to think they can charge the same or higher rates.

For now, Bing will keep Yahoo alive. This should give them time to figure out a decent game plan. Calacanis is off; because search is not where the money is. Search is what gets people in the door. The money is where people see your ads. Unless Yahoo works to expand their ad base, they are doomed to be second or third best.
Posted by Shaine Mata
Posted via email from Shaine's posterous postings


UPDATE:
Yahoo CEO says they were never a search company: http://mashable.com/2009/08/07/yahoo-search/
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