The companies said they will share the revenue generated from fees charged to list real estate on Yahoo, but did not disclose the percentage that each would receive. Posting of lease properties costs $59 per listing, while sales property postings cost $99.
For Yahoo, the agreement underscores a drive to diversify revenue sources away from its heavy dependence on advertising. The company is trying to increase its pool of paid users, which at the end of June totaled 1 million people. Yahoo CEO Terry Semel has set a goal of reaching 10 million paid users, but did not set a deadline for achieving that mark.
The deal also highlights a change in the way deals are being struck with large Web media companies such as Yahoo. During the boom years, Web portals could charge start-ups millions of dollars for setting up links to their sites. The fledgling companies, flush with venture capital, were willing to pay the price for the marketing exposure.
Times have changed. In this case, CityFeet is not paying Yahoo, but basing the deal on shared revenue.
"It used to be people paying Yahoo or AOL X-million dollars to get a PR pop," said CityFeet CEO Guy Shanon, adding that the current deal is what he calls a "post-bubble (business development) deal."
On paper, Yahoo appears to be making progress in achieving its diversification goals. The company said its "fees and listings" revenue$74.1 million in the second quarter of 2002, a 109 percent jump largely attributed to folding its HotJobs acquisition into the mix. Other premium services such as personals and heightened e-mail features have shown growth as well.
However, advertising remains the company's primary source of revenue. Last quarter, the company reported a decrease in "marketing services" revenue, largely consisting of online advertising. Factoring out a revenue sharing deal with Overture, the company's core online advertising business declined 19 percent from the previous year.