Friday, November 24, 2006

Yahoo Directions

The latest edition of Wired has an article by Bob Garfield on YouTube and its acquisition by Google. It contains the following great quote: "success is 1 percent inspiration, 99 percent monetization", and this brought me back to a comment on Yahoo by my colleague Dave McClure. Yahoo has been under siege recently for poor performance and even the inmates are revolting.

Yahoo sites are the number one web portal with by far the most page views of any web media company. Dave diagnoses Yahoo's primary problem as an inability to monetize all those eyeballs, and I wholeheartedly agree with him. As I have reported before Yahoo's business model is quite simple, get all the world to sign up for compelling Yahoo services and then monetize them by selling targeted advertising based on knowing the user.

In practice, Google, who seems to be reaching for a similar business model, is much more effective at monetizing a smaller audience that it knows less about. When Google get their full panalopy of services out of beta they could be unstoppable.

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