Yahoo! Puts Price Tag on Searches

Yahoo! (Nasdaq: YHOO) has announced the launch of a fee-based document search service in cooperation with Divine (Nasdaq: DVIN). While still offering a free search feature, Yahoo! apparently recognizes the earnings potential of at least one of its specialized services.

"It's definitely a step in the right direction for Yahoo! as they diversify their revenue stream," Gartner analyst Denise Garcia told the E-Commerce Times.

The new pay-for-play service, dubbed Premium Document Search, is based on a search engine called Special Collection, which was developed by Northern Light. Divine acquired the search engine through its purchase of Northern Light Technology on Tuesday.

Nominal Charge

Special Collection is an online research library with more than 70 million text pages from 7,100 sources, including The New York Times, Business Week, Forbes, and hundreds of trade and academic publications.

Using the new Premium Document search, consumers will be able to conduct searches and view free summaries of documents prior to purchase. Articles are priced either individually or on a subscription basis, which will give a user access to up to 50 documents for US$4.95 per month.

Declining Revenue

The new engine is the latest in a series of efforts by Yahoo! to make up for the loss of online advertising revenue, which has hit the company hard.

Despite reporting better-than-expected results in the fourth quarter, the company's net revenue dropped $122 million to $188.9 million. For the full year, Yahoo's revenue was $717.4 million, down $392.6 million from the previous year.

Ads still accounted for 75 percent of Yahoo's revenue in 2001, but that reflects an improvement over 2000, during which the company depended on advertising for 87 percent of its income.

Looking for Revenue

To lessen its reliance on marketing revenue, Yahoo! has focused on paid services over the last few months. In November, it cut a deal with Overture (Nasdaq: OVER) to place paid listings within Yahoo! search results.

In December, Yahoo! snatched HotJobs (Nasdaq: HOTJ) from under the nose of Monster.com for $436 million. According to Media Metrix, HotJobs was the most-visited job board in December, with 7.5 million unique visitors.

On January 9th, the company agreed to build a custom portal for healthcare giant Cigna (NYSE: CI). And by the middle of this year, Yahoo! plans to launch a high-speed Internet access service with SBC Communications (NYSE: SBC).

Premium Services

Garcia said Yahoo! should and will continue to focus on new revenue streams, though she does not expect Yahoo! to begin charging for its free services because "they still want to keep the number of unique users high."

Instead, Garcia expects Yahoo! to incorporate new features and services into its existing free products and add a charge for the extended capabilities.