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How Yahoo Got Its Mojo Back

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A handful of blog-evangelists, a couple of key buys and some libertarian friendly moves have turned Yahoo from a dot.has.been to the new darling of the chattering classes. It is only a matter of time when mainstream media rediscovers Yahoo, and a stock market resurgence follows….

For Yahooligans, 2004 was a year of frustration. No one noticed the fact that company’s stock posted a hefty 72% gain, ending the year at about $38 a share. Overlooked was the fact that it had sales of $3.6 billion and net income of $834 million. That’s twice as much money it raked in 2003, and nearly three times the profit. It is no surprise that many Yahoo insiders felt like the Yankee fans – no matter what they did, they were going to be overshadowed by Google.

Google’s spectacular initial public offering (admittedly that lined Yahoo’s coffers nicely and helped with those profits in 2004) and ensuing hubbub where even political columnists were comparing the minimalist search engine to second coming of Jesus. Not a day went by when someone or the other theorized that Google was going to build a Web OS, a new kind of application framework or even a browser. In the other words Google will turn the web into a giant platform. Google was everywhere! Even in the pages of GQ.

That has tweaked the Yahoo insiders no end! Many had expressed their frustration, for rest of the world not seeing the true value of Yahoo, and how well the company was doing. It just seemed so boring, lacking the pizzaz of Google, its celebrity guests, and its wonderful chef. A few months ago, almost suddenly the tide turned.

Many starting to see that many of Google’s forays into anything but search have been like its search results lately – off target. Orkut is a bit of a blah! Blogger is because, blogger was! Google News and Froogle – well I think Jeff Jarvis has some choice words about that. AdWords/AdSense are great, but prone to click fraud. GMail is wonderful, but the ads on my content, no thank-you! An Autolinks brouhaha ensued.

This was precisely the opening Yahoo had been waiting for, to launch some sort of a media assault. Wired assigned Mike Malone, an Internet 1.0 guy to do a story on the company, and its comeback. The UnGoogle was a piece from the dot-com days, fancy wordsmith doing his thing, except it lacked the fire to get a “conversation” started.

The indignity is all the greater when you consider Yahoo!’s numbers: 165 million registered users, 345 million unique visitors a month, $49 billion market cap, and a 62 per­cent increase in revenue last quarter, bringing 2004 total revenue to $3.6 billion. Yahoo! makes more money and has more patents, services, and users than Google; it even has its own yodel.

And what it also has a couple of guys, I like to call them blog evangelists, who knowingly or not, have brought the right kind of attention to the company. Russell Beattie who recently joined Yahoo has been blogging furiously (much to my annoyance) about Yahoo and its wireless efforts. In normal course of events, Yahoo would have issued a press release, and many of us would have paid little or no attention. Jeremy Zawodny is the other and has helped the company focus on some of the newer social media trends. I have never met him, but if his blog is anything to go by, then perhaps he is spreading the open media religion at Yahoo. The blog-evangelists unlike press relations folks, only write when there is something important to say. That is if they want to maintain their credibility.

Russell and Jeremy are small part of the big equation. After sitting on its haunches for so long, and letting google walk away with the AdSense dollars, Yahoo’s Overture division is finally getting its act together and rolling out its small-publisher service. By buying Flickr earlier this month and OddPost last year, Yahoo has bought into the open-standards, web services business model, something which has gotten it much love from the bloggers who apparently care too much about this type of stuff. Adding RSS and blogs to My Yahoo, makes them cooler than the other two – MSN and Google. In an effort to best Google, the company has upped its free email storage to one gigabyte. Yahoo offered desktop search tool, just like Google. It is launching a blogging-meets-social networking tool, Yahoo 360. I have not seen it but count on blogsphere love for it. The company also announced today that it will search creative commons content. What that means is really nothing for many of the mom-and-pops don’t care about license information etc. But it will get boing-boinged and create the right karma for the company. If you look at all these features, it is not clear that if any one of these will bring any major dollars into the company. It will show to the chattering classes that Yahoo is on the right track. And is embracing new technologies etc. That’s until something new comes along.

Just had coffee with Gautam Godhwani, one of the co-founders of SimplyHired and he pointed out that Yahoo was an Internet 1.0 company that adapted to Internet 2.0 very quickly, embracing the open platforms and social computing phenomenon. “Yahoo changed, and changed really fast, reacting to market trends that were not favoring them,” he says. Like some of the more thoughtful in Silicon Valley, he thinks Yahoo is a more solid, a more mature company. Google in comparison is more of a young buck, running rampant. Good points, but I think in many ways what has changed is the perception of Yahoo. And that is the key point here.

These are not moves that will have a material impact on the company’s bottom line. Yahoo’s future, as far as I am concerned is in broadband and mobile. It has partnerships with phone companies where it is their content partner, and is forging many such relationships in the wireless space. How critical all that is to Yahoo, I repost this bit from a previous column by Alex Rowland.

Yawhoo? With Terry Semel at the helm, Yahoo!’s foray into entertainment has been aggressive. By forming tight relationships with distributors such as Comcast and SBC, Yahoo! is attempting to become a super-aggregator of rich media content. Recent deals to simulcast shows like “Fat Acress” with Showtime combined with their strong support for Media RSS standards should telegraph their aspirations. If they manage to tie up enough (potentially exclusive) arrangements with the old media goliaths, while simultaneously aggregating large quantities of niche media assets, they can scale the network quickly enough to make competing with them very expensive.

Could Yahoo become the preferred music store on SBC’s Project LightSpeed? Sure. A preferred distributor of online movies… possible. There is a good piece in Fortune on SBC/Yahoo relationship, but unfortunately its behind the wall, so I am not linking to it for now.

92 Responses to “How Yahoo Got Its Mojo Back”

  1. see, how the players switch sides
    once google was considered as an anti-establishment factor
    now they are considered “nothing better than microsoft”
    some one should come up with ten reasons “why we should not use google”
    gr8 observation Malik!! :)
    ya yet to get your hands on yahoo360
    drop me a line
    I will send u an invite

  2. Don't you just love it?

    How Yahoo Got Its Mojo Back!! Yes indeed, an in depth article (I have nothing against the article or author, I think it was well written and researched actually) followed by Ads by Gooooogle! Not to mention the ad links by google on the right. Also if Yahoo followed the market trends more closely, they would have made Yahoo a bit more Firefox compatible, that’s about 25 million going straight to Google. In fact it was the reason I closed my long standing Yahoo account and moved to Gmail. Not to mention how good it was to get rid of the annoying flashing adverts which had absolutely nothing to do with any of my interests. Since I moved to Gmail, I find myself actually clicking on the text ads, they at least match my interests.

  3. I will believe that Yahoo got its Mojo back when I see Yahoo beat Google with not only awesome search technology but also with cool user experience. Until that happens, I am going to google.

  4. Based on Yahoo’s past, I don’t see them changing for the better even with shiny new tools and evangelists. I am one of the few who feels they’re going to deride the spirit of Flickr based on their history of buying services and making them worse.

  5. I’d like to also point out another are where Yahoo “gets it” – they have joined the Calendar & Scheduling Consortium ( and are trying to help bring good calendaring to all of us. So far (as of my last check Friday 3/25) neither Microsoft nor Google has joined.

  6. Yahoo set the bar really low. Google raised it considerably. Now Yahoo want to meet that bar. Unless Google drops the bar, I’ll stick with them. I question the sincerity of Yahoo’s actions. Consider their history.
    pop up ads … x10 spy camera pop up ads
    flash ads, moving ads.
    Twice reset consumer specified marketing preferences and in doing so assumed that consumers wanted to about all marketing offers
    Consistently offering free functionality and then later premiumtizing it.
    reducing mail quota to some ridiculously low quota (something like 4 mb)

    Any doubt that Yahoo will mix in paid search advertisements with their search results in such a way that you can’t identify which is which?

    Sorry, I’ll stick with Google…

  7. Marino Pascal

    I wouldn’t trust Yahoo with my business or my money. I may use them for free services for hobbies and such. They’ve deleted my community oriented Yahoogroups twice with no explanation and no chance to talk to a human being. They are totally clueless about customer service. They are followers not innovators. They are fast food.

  8. The very fact that Yahoo has a more open PR process now with in-house bloggers letting everyone know what is cool and hip and what to look for…puts them miles ahead of Google and esp. Microsoft. I expect some more battles between the new internet trifecta (Google, Yahoo, MS) but think Yahoo has set the stage for others to follow if they want to keep up.

  9. I’ve got a theory. Google is going to get into the Router business. It’s funny. My parents love Yahoo but the tech elite are now just figuring out how great their products are.

  10. I use both Yahoo and Google. I like gmail but Yahoo has a calender I find useful. Google has been dropping the ball with Picasa. I downloaded it, thought it was kind of neat, then watched as the support seemed to vanish. I hope both stay around as it’s nice to be able to check them both out and use whichever is better…

    One thing about Yahoo Mail, though, that really bugs me… it does not use encrypted connections, so my Yahoo Mail sessions are available to my company IT department. Gmail, on the other hand, uses a secure connection. Even if you use the secure sign in on Yahoo, it reverts to an open connection for your mail session.

  11. There’s a big difference between yahoo and google, yahoo is not a big brand in the world outside of the US while ‘to google’ something is starting to become a common expression in for example continental Europe as well. That’s a huge difference.

    The name google works better as well, yahoo simply is a bit of a weird, none too serious name.

  12. They gave away their pop3 freely for years, then took it away instead of just offering better services to the $-customers. Geocities offered free FTP to their websites, then Yahoo bought them and took FTP away from the free accounts.

    Yahoo groups was a fiasco of server errors for almost two years, sometimes affecting the majority of users while other times it seemed to affect only certain server ‘locations’. Once the certain ‘location’ had been resolved, then it was another ‘location’s turn.

    And now they have a new service in beta; is that ALL it takes for you to think they have Mojo? Not me!

    -IF- they keep the free stuff free without renigging later down the road. If they think something is going to be expensive further down the road, then don’t give it away freely just to take it away once you’ve snagged a bunch of people into starting accounts. Look what happened to Movable Type if you need a more recent event to jog your memory.

    -IF- Yahoo can keep 360 running without ‘musical shortages’ like Yahoo groups had for 1-2 years, then I’d say they might be *working towards getting some of their Mojo back*.

    My eyes don’t glaze over with shiny beta announcements.

  13. Yahoo! blogs? I gotta check that out. G needs alternatives.

    Going around and coming around. Yahoo won internet 1.0 and has done well, but the battle for 2.0 seemingly went to Google, with no legacy to migrate from, working from a clean sheet of paper.

    I’m pulling for Yahoo to make it a 2 horse race.

    and then of course there is Microsoft…

  14. Samuels

    Yahoo regaining its mojo in the blogger community will have an even more important long-term impact on their business, since the top class of hackers and information visioneers will once again consider Yahoo a worthy employer, and bring their skills and ideas along with them.

    In the same vein, you didn’t mention the new Yahoo Web Services, which give the Google Web APIs more than a run for their money. Public APIs have to be the best way to get hackers buzzed and energized about your technology. We’ll soon see mass-market 3rd party services like Google Alert and the Google Browser coming out for Yahoo.

  15. Google index about 8 billion
    Yahoo! Image Search 1.5 billion images in the index.
    Is the size matter? Yes, if it knows how to use it then it will be a good use of data mining

  16. Yahoo’s relevancy algorithm is pretty decent. I think they just need to increase their crawling and indexing abilities and they’ll be able to be as good or better than Google in normal web search results. Google’s biggest advantage right now is still index size, if Yahoo! or MSN can overtake that, the relevancy algorithm doesn’t take too much tweaking to get good results 90%+ of the time.

  17. You wrote: “Russell Beattie who recently joined Yahoo has been blogging furiously (much to my annoyance) about Yahoo and its wireless efforts”. Just out of curiosity because I don’t quite understand it: why it annoys you that he gives free publicity to Yahoo products? He is working there after all. Could you explain?

  18. Actually, only fools who like to get loaded with spycookies, and other privacy invasions use Yahoo.
    Sure if you like dedicating big amounts of hard drive space to .swf ads, and cookies that can later rat on where you’ve been, Yahoo is fine.
    Google on the other hand just pushes text ads (low bandwidth and hardware considerations), and loads only it’s own cookies, to keep you logged into services.
    Choice is clear to me.
    Yahoo=Artsy-fartsy cute.
    Google=Hard-Core Tool for information handling.


  19. Yahoo also neglects to reveal how its numbers are distributed. Japan is around 60% of its total traffic whereas Google is only 22% of the same country’s search numbers. The “google competition” is in most of the English speaking world. Yahoo would be best to cite the scores from the ballpark where the game is before declaring itself as world champion.

  20. OK, so this is totally partisan of me, both because I work at Y!, and because within that I work at Y! Search. But I have to ask … could the Google-beating mojo have anything to do with the fact that Y! has its own web search technology now (launched a little over a year go), and the fact that it rocks? If so, the posting didn’t really say so.

  21. Yahoo was always cool for me, just not as much fun as the Googlers. But Y! just got a lot more cool & fun again in my book now that they bought Flickr… and promoting/hiring folks like Jeremy and Russell were great move and certainly didn’t hurt either.