How Will Yahoo "Monetize" Their Social Networks? 74
Thomas Hawk writes "One of the most interesting things to come out of Yahoo's earnings call with analysts yesterday was a statement by Yahoo's COO, Daniel L. Rosenweig on Yahoo's plans to 'monetize' their various social network properties. Flickr was mentioned five times on the conference call and their de.lic.io.us property was as well, after neither were mentioned in last quarter's call. Rosenweig characterized these services as being largely unmonetized and talked about leveraging these "assets" and targeting and profiling a large growing registered audience base. It will be interesting to see how some of Yahoo's popular web properties change through the monetization process."
Yahoo closes the circle (Score:5, Interesting)
I wouldn't worry about Yahoos attempt to make money with flickr and del.icio.us and whether it might ruin those sites or not. The social network idea matches very nicely with what Yahoo has done in the past to make money, so they won't have to force those sites into another concept.
When Yahoo first appeared it was a bookmark list edited by one human. Search engine weren't as good as today and a directory like Yahoo often was much more useful. This changed when the web grew so fast that that no company could hope to keep up, resulting in Yahoo charging for faster integration into their index and the index becoming out of date very fast.
One attempt to improve the situation was to increase the number of contributers with the OpenDirectory, but even these where overwhelmed and today they cannot even handle the spam that is created non stop in dmoz, let alone keep pace with the web.
So we became dependent more on search engines than humans to find what we are looking for, fortunately for all of us Google proved to be very useful. But even Google has it's single point of failure, the one and only ranking algorithm. And although it's not trivial to cheat, the fact that Google reduces the web to basically the first ten entries on the first page leads to the same situation as with Yahoo and dmoz before: The web is not covered properly.
Enter social networks. Del.icio.us is like a dmoz where every user is a contributer. And nobody decides what is on top, it's pure statistics, much harder to cheat when hundreds of thousands of users are involved. With a limited amount of information sources you can easily manipulate an election, but the web provides a much larger base for building you own opinion, and it usually shows.
But what's really great about social networks is that the effort to contribute is so small. Extending dmoz is work, saving an URL at del.icio.us is something you primarily do for yourself, so we don't have to expect that the project will fail once the first movers are burned out. Given the ever increasing amount of information and the lack of progress in AI to sort through all this for us, we will become more and more dependent on others to filter for us. Information has become basically free, but finding the right information has become a challenge simply due to the sheer amount.
And here Yahoo closes the loop. The will never beat Google as a pure search engine, but maybe they can build the third generation of directories with their social network sites and continue to make money the way they always have: If you have the eye balls, enough people will buy something extra. And we will once again see Yahoo as the most efficient way to find information, because it is driven by humans.
Re:I think the blurb summed it up (Score:2, Interesting)
Re:Yahoo closes the circle (Score:3, Interesting)
1. Produce a usable service with limited-to-no advertising.
2. Gain a large audience through any means required, including bundling Yahoo Toolbars in almost malicious, spyware fashions.
3. Slam it full of ads and quickly make a big chunk of change from the advertising.
4. Revoke features when the users abandon the service due to the obscene number of ads.
5. Reintroduce the feature in after a period of time and start at 1.
The only difference with Flickr and Del.icio.us is that they skipped steps 1 and 2.
PHB Speak 2.0 (Score:2, Interesting)
Then again, they could always find some sucker^h^h^h^h^h^hinvestor to buy it off of them for a stupid amount of money and make a small fortune out of a big one.
Re:Yahoo closes the circle (Score:5, Interesting)
Yahoo's social properties give them a huge advantage over Google if they chose to leverage them for something other than advertising. Integrating that social data into search could give them a pretty big edge that Google can't easily match.