With so much going on at Yahoo! ( YHOO), it's easy to miss some of the small items that will play a big role in the long term. Yahoo! announced a
major advertising partnership with newspapers on Monday, after a tumultuous weekend in which a scathing internal memo criticizing the company's performance was released to the press. And in the absence of special events, investors tend to return to the regularly scheduled programming of scrutinizing Yahoo!'s herculean effort to augment the amount of money it makes per search. All of this can distract from the company's low-key acquisitions, which offer a wealth of insight into where the company is aiming to be in the long run. That's because if Yahoo! hopes to be a company that sets the Internet agenda again, it will have to do a lot more than simply be a close second to Google ( GOOG). With the search market now more than a decade old, Yahoo! is banking on the quickly evolving social-media sector (blogs and Web sites such as MySpace, YouTube, Facebook and Wikipedia that allow users to produce as well as consume content) to push it back to the pole position. A couple of acquisitions announced late last week in the social-media and mobile-Internet space will help the company get closer to its vision. Yahoo! said it acquired Bix, a start-up that offers a platform for talent shows. And the tech blog GigaOm confirmed that Yahoo! had bought Kenet Works, which brings an interactive community function to mobile devices.
Both plays are likely to help Yahoo! CEO Terry Semel make good on his attempt to expand the company's huge customer base and rich content to press its advantage in this nascent arena, and Bix is the move with the most pickup. Mike Speiser, Bix founder and CEO, will head up Yahoo!'s overall community efforts as vice president in charge of community-oriented sites, such as Yahoo! Groups and Yahoo! Photos. And Bix's seemingly offbeat technology is likely to assist Yahoo! in making another stride into some of the most cutting-edge aspects of the Internet. Bix enables users to create talent show competitions quickly and easily across a variety of mediums. A user can set up a competition for the best poem or photo of say, the Golden Gate Bridge, with other users then rating the submissions.
Quick LinksLinking up a site that is essentially a popularity contest to the world's most trafficked Web site -- Yahoo! gets 500 million visitors every month -- has obvious benefits. But what Bix has really done is figured out a way to get users to provide the site with more information about the ever-growing sea of user-generated content streaming onto the Net. "We turn passive viewers into active participants," says Speiser. While some user-generated content is brilliant and lot more is absolute garbage, the majority is more ambiguous. And while some great material happens to bubble to the top, a lot of other good material never gets seen.
Yahoo!, with this new insight into the quality and content of material, will likely be able to make much more out of its user-generated content. The next step for Yahoo! is finding cost-effective ways to sort out the impending glut of user-generated online content. With its acquisitions of popular social-media start-ups Flickr and del.icio.us, Yahoo! has been setting the pace. Photo-sharing allows a user to upload a photo, and tagging technology allows the photo to be labeled. This form of metadata, or data that refer to data, enables computer systems to discern that a particular picture is, say, the Golden Gate Bridge. But users looking for recent photos of the Golden Gate Bridge are still avalanched. Having a better understanding of the photo -- or any other type of content -- and user preferences through metadata would give Yahoo! a more effective way of navigating this fast-growing field. If Yahoo! realizes its vision, it may become the go-to place to navigate the next incarnation of the Web -- much like what Google has turned out to be for the current one. Shares of Yahoo! closed the regular session down 19 cents to $26.72.