Yahoo's New Plan: Why I Don't Buy It

Tired of watching Google get all the press for throwing away money, Yahoo has now decided that it needs to lower the price of its search service from free to we pay you.

That’s right, Yahoo has sent some emails to some Yahoo Mail users asking if they would be willing to use Yahoo’s (free) web search as their default search engine for money. Yahoo’s opening price is some extra email storage or a Netflix discount or maybe some frequent flyer miles. I thought about signing up, but I’m going to wait for a sale so I can get a bicycle or a toaster or something.

Here’s the problem with this war that Yahoo and Google and others are waging for internet eyeballs. It is based almost entirely on ad revenue and/or pushing something (like Google’s bloatware, videos of some old TV shows and DRM infested iPod fodder) on consumers that consumers really don’t need. At the end of the day, this whole business is designed to get money from us. Say it with me now: at the end of the day, this is about getting some of our money. None of these companies are charitable organizations. They are huge companies looking for ways to support huge valuations.

Follow the projected money trail upstream and you will find that the source of the river is our pocketbooks. Of course I think the river is a mirage, but what do I know.

So they can dress the dog up to look like a chicken by proclaiming the benefits of more bloatware in the form of pre-installed free stuff and some frequent flyer miles for some government subsidized soon to be bankrupt airline, but the ultimate plan is for us, the consumers, to part with some money. Not by buying a product from Yahoo, but by clicking on some online ads and buying something from one of Yahoo’s advertisers. It’s like paying us to stare at a billboard.

Yes, by giving away its money Yahoo may increase traffic to its video or music pages, but does anyone really think selling that stuff at such thin margins is worth all this effort? The content producers (record labels, Hollywood) get all the juice on those sales anyway, so a music or video store is really just an alternate form of advertising. It’s an Amazon Affiliate page on steroids.

Expensive corporate wars fought over the right to toss some cyclical and marginally effective online ads in our faces is not the approach I would take to support my lofty valuations. Go build something that people will pay for. That’s the way to make money. Sell something. Buying eyeballs is a losing proposition because eyeballs aren’t loyal.

Yahoo figures, correctly in many respects, that search engines are like gas stations- the best one is the first one you see. So if it can lock up proximity via some frequent searcher plan, it stands to have an advantage over Google (who will have spent zillions by then trying to get Google Toolbars installed on Dells and building a bunch of new internets).

The obvious difference is that once I pull into the nearest gas station, there are things there to buy that I actually need. Gas, food, beer, etc. When I pull up a Yahoo search result there are, at most, only ads that I will never click on for other vendors’ stuff and links to video and music stores I don’t want to visit.

I guess the bottom line is that while I understand what Yahoo is trying to do, I just don’t buy it. Figuratively or literally.

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