One good bit of press about Yahoo that came a few days ago is that Yahoo is the King of Fantasy Football among the big 3 (Yahoo, ESPN, Sportsline). From personal experience, I can say that Yahoo Fantasy Sports is very easy to use, especially compared to its competitors. It is semi-social in nature and has few usability flaws compared to the other sites.
But what is Yahoo!? What are their strengths? How can they survive? Do they face imminent layoffs or are they a long-term contender? Will Yahoo become the "new AOL"? Before I proceed, let's look at some things that Yahoo is hurting from:
- Yahoo tried to buy Google in 2001, but always offered about half or less of what Google thought they were worth. Apparently they could have bought Google for $3b. Whoops!
- Yahoo bought GoTo.com/Overture for $1.6b in 2003. GoTo had been a favorite of webmasters since it was the first to provide a revenue stream for millions of webmasters. But somewhere along the line, someone at GoTo.com/Overture/Yahoo thought it would be a good idea to cut the umbilical chord with affiliates, basically creating a HUGE opportunity for Google. Now, most webmasters like me rely on Adsense as a revenue source. It's the hand that feeds us and one additional reason why we prefer Google to Yahoo.
- Yahoo could have bought Facebook for $2b in late 2006, but offered only $1b.
- Yahoo didn't buy YouTube. While Google bought YouTube for $1.65b and I'm not really sure if Yahoo was in the running, it seems reasonable that YouTube could perhaps be worth $2b or more to Yahoo. After all, Yahoo paid $5b for Broadcast.com back in 1999, buying it from Mark Cuban (making us all suffer from the apparent newsworthiness of the Mark Cuban blog).
Thus, Yahoo can be seen as being rather complacent. They've sat still while other like Google and Facebook have kept open minds and have adapted to the constantly changing environment.
Let's first look at what people do on Yahoo. From QuantCast, here is the popularity of Yahoo's subdomains (% who visit subdomain out of those who visit Yahoo in a given month):
- Yahoo mail (49%)
- Yahoo search (42%)
- Yahoo shopping (23%)
- Yahoo mail address book (16%)
- Yahoo maps (13%)
- Yahoo news (11%)
- My Yahoo (11%)
- Yahoo help (8%)
- Yahoo toolbar (7%)
- Yahoo music (7%)
- Yahoo local (7%)
- Yahoo sports (7%)
Yahoo gets a thumbs-us for Yahoo Mail, mainly since so many people continue to use it. They also get a number of people doing Yahoo Search (23% of Yahoo users and has a 22% share of US search market per comScore). So I think this meas that most Yahoo users prefer Google, right? Yahoo Shopping is surprisingly strong. Putting this data together, we can conjecture the following:
- Lots of people use Yahoo, but there is no single majority Yahoo product. Remember, Yahoo Mail is at 49% of Yahoo users.
- The sum of the percentages above is 201%, suggesting the average Yahoo user uses about 2.01 Yahoo products. Of course, we're missing the long-tail of Yahoo, so let's just say the average Yahoo user uses 2-3 Yahoo products. Some common ones might be mail-search-shopping, mail-search-sports, search-news-music.
- Yahoo is not very social, at least according to the QuantCast data.
Before I continue, In the spirit of Festivus, I must state an Airing of Grievances regarding Yahoo. When GoTo.com/Overture/Yahoo forfeited small affiliates (like me), they were basically handing over these millions of affiliates to Google. While the revenue for this is now perhaps about $2 billion per year, the impact is even greater because these webmasters control 95% of the buzz on the internet. As a webmaster, I loved GoTo.com. It was a place I could buy cheap traffic for one cent and then resell for much more by sending people back to GoTo.com. I liked GoTo.com a bit less when they became Overture.com and got a bit more stingy. However, I began to dislike them when they raised their minimum bid to 10 cents. I began to dislike them more when they disbanded their affiliate partnership with little people like me (99% of my revenue stream vanished). Then Yahoo bought Overture. I was a bit jaded by all of this, but Yahoo never let me down.
OK, now that that's over, it's time for Yahoo's Festivus Miracles (aka "How to fix Yahoo!?")
- Yahoo needs to create social networking features for its users, but needs to do so in such a way that it doesn't look like social networking. Otherwise, Yahoo users might be afraid of the change. After all, Yahoo hasn't changed much over the past 5 years - most changes have been rather superficial.
- I've heard rumors that Yahoo is working on making Yahoo Mail more social. This makes sense, but contacts are already connected via email (Yahoo Mail), so what kind of new content will people be able to share? The easiest might be something like a "share this button" perhaps on the Yahoo Toolbar.
- So many people use Yahoo that adopting OpenSocial might be a good idea. It can't hurt, right?
For others thoughts and a more eloquent answer, I refer you to the following two articles on Read/WriteWeb: