With Yahoo search gone, content becomes king

What kind of company will Yahoo be when the Microsoft search deal takes shape? A content company that will need to make hard decisions about how to attract eyeballs.

Yahoo's long nightmare is over, having finally offloaded its search business to Microsoft after years of rumors, negotiations and reversals. Now all it has to do is figure out what comes next.

A new era at Yahoo began the minute CEO Carol Bartz signed the paperwork turning over the right to conduct searches on Yahoo's huge network of Web sites to Microsoft in exchange for 88 percent of the revenue generated by Microsoft's Bing. Now Yahoo is first and foremost a media company , in the business of attracting as many people to its properties as possible in hopes of selling lucrative ad deals on those pages.

This strategy has not always worked on the Internet. Search advertising has been far and away the most effective way for advertisers to reach their audiences, and they have responded by pouring money into the coffers of the company that has best combined relevant search results and efficient advertising: Google.

But Bartz seems to have decided that Yahoo doesn't have the ability or the will to take on Google directly, arguing that the company should focus on what it does best and leave the technology to others. While that probably came as a bit of a surprise to the many engineers working on search technology inside Yahoo , Bartz hasn't exactly been hiding her intentions for Yahoo over the past eight months.

"We're not a search company," Bartz said flat-out in June , discussing how Yahoo is a different company than Google or Microsoft. Now that she's made that distinction official, what is Yahoo?

"It's where people find relevant and contextual information," Bartz said in May at the D: All Things Digital conference, clearly having envisioned a post-search Yahoo. "It's news, it's sports...home page, mail. It's a fabulous place."

That's a content company, turning the focus to how Yahoo should produce the kind of content and services that will keep existing users coming back for more and attract new ones to the site. Some began to wonder on Wednesday if Yahoo just turned itself into a bigger, purpler AOL .

On the services side, some areas, like Yahoo Mail, Flickr, and Messenger, are clearly where Yahoo is unlikely to take its foot off the gas pedal. Same for Yahoo's mobile strategy, a part of the Internet that is very much up for grabs, unlike the more mature PC-oriented Internet experience.

As Yahoo's new home page shows, the new challenge for a post-search Yahoo is a blend of content and services. Where will they come from? Yahoo

So Yahoo isn't getting out of the technology business entirely. Yahoo will continue to need ways to keep its new home page hooked into the wider world of social networking, real-time communication, and things we haven't even thought of yet, and that will require smart, savvy engineering.

But on the content side, Yahoo will have to figure out whether it needs to expand its current offerings, pare down some of the less frequently used products, or tap the outsourcing strategy in this area as well. There's been quite a lot of turnover in recent years at Yahoo, but there are probably enough people left who remember that the last time Yahoo tried to play a prominent role in designing its own content, it didn't end well.

Is Yahoo on a path to becoming the world's biggest content aggregation site? If so, there are obviously far more costs that can be wrung out of its various products: how many people are required to produce OMG!? Does Yahoo Sports need all those writers? Couldn't the company just hire a few people to keep the site filled with content from partners and save a boatload without sacrificing traffic?

Yahoo declined to make anyone available Wednesday to share the company's broad vision beyond its determination to make its exit from the search arena official. Shareholders, who clearly now understand that they'll never see anything close to the $33-a-share offer that Microsoft originally dangled in front of co-founder Jerry Yang, will soon be impatient to see the long-term plan, now that a search deal has been worked out.

There's enough guaranteed revenue in the deal to keep things quiet for a while, but it's going to take two years--at minimum--for it to substantially shape the company. What will Yahoo look like then?

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About the author

    Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.

     

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