Bye-Bye, Yahoo!?

I shudder to think of a world without Yahoo. But thecompany’s recent spate of new revenue tacticsreeks of desperation.

As I pen my last column for this publication, I findmyself entertaining the previously unthinkable notionthat the grandfather of the Internet is mortal andcould pass away.

Hell-bent on patching huge bottom-line gaps created bythe advertising downturn, Yahoo’s newly installed boss,Terry Semel — chief rescue officer, if you will — istrying to squeeze users for cash at every turn.

Yahoo’s ambush-style sales bids may sate itsinvestors in the short term, but they could alienateso many users that the company may not live to see alife-saving advertising upswing.

Phone Bills

As a frequent Yahoo! Mail user, I can recall numerousinstances in which inexplicable lapses in mailbox accesshave tested my patience.

Perhaps a knowledgeable customer servicerepresentative might have calmed my nerves. But wouldI pay US$1.99 per minute for information that probably would not even restore my mailbox access? Not a chance.

The problem, Yahoo! recently announced, is that it istesting fee-based customer service for its e-mailcustomers. And this is just one of many backdoor money-generating schemes unveiled by the company.

Spare Some Change?

Granted, Yahoo! has lost money for five consecutivequarters — forfeiting a total of $92.8 million in2001, thanks to a dismal advertising climate.

In this respect, I do not blame Semel for hunting down new revenue wellsprings.

But does he have to be so abrupt and underhanded aboutit?

Boorish Blitz

Take, for instance, Yahoo’s new “opt-out” marketingstrategy.

Gunning for a 50 to 70 percent boost in use of its premiumservices — which currently bring in an average of 27cents per user — Yahoo! is pushing the privacyenvelope with new guerrilla marketing efforts.

The company’s 219 million users are now subject topromotional phone calls, e-mail and direct mailunless they take time to opt out of the sales hit list.

By giving customers the choice to opt out, Yahoo! hasmanaged to dodge reprimands from privacy policy makerslike TrustE.

I suspect that it will not be so lucky withdisgruntled customers.

Sales Matters

During Semel’s tenure, Yahoo! has tacked on fees forsuch services as classified ad posting, forwardinge-mail to an outside account, online games, e-mailstorage space, and some features of its GeoCitiesWeb page builder.

In December, when the company introduced fees for itsonline payment service, PayDirect, I knew it would notbe Yahoo’s last free-to-fee transition.

PayDirect charges — 2.5 percent of thetransaction amount plus 30 cents — drew fire frommany loyal users, which will intensify with each newfee levied.

A December online forum posting read: “Bye-bye, Yahoo!I refuse to pay a dime for any of these free servicesthat they’ve now decided to charge for! That is agreedy bait-and-switch.”

Missed Opportunity?

If Yahoo! executives could have predicted this momenttwo years ago, when they were holding merger talks witheBay, perhaps they would have worked harder to channel non-advertising-based revenue.

But you know what they say about hindsight.

The company’s feverish attempts to make up for lost time andmoney may be one more indication that the all-for-freeand free-for-all days of the Internet are indeedcoming to an end.

Will Yahoo! go the way of, Webvan Probably not. But it may endure some gravesetbacks before it strikes the best balance betweenaltruistic community building and profitabilitymandates.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.


  • I must be overly optimistic, but I think Yahoo’s e-mail application is better than all the other
    ones out there. I particularly enjoyed Yahoo’s Olympics coverage, which was better than
    their official site(s) that frequently froze or was no more informative than Yahoo and online news
    sources. Invariably there are other news dedicated sites, but for quick summaries and other
    options, Yahoo has better offerings, at least from university students’ perspectives.
    I for one hope that Yahoo’s downturn is temporary as the company retools its operating
    strategies and increases its partnerships to generate new means for revenues.

  • Yahoo isn’t dead yet, but there are a few things that the company can do to prevent total defection. Work on creating an Intelligent Search Engine – right now we have a free-for-all, type in a word and get a zillion hits that have nowhere near what you are looking for.
    Update the News Info – sometimes i migrate to CNN for the latest and greatest. one thing we can always count on is that the weekends at Yahoo are dead, i assume no one is working the content.
    While the Yahoo magazine irked me for having the 10 best sites of blah blah, it might work on the net, if a corner is created that provides a weekly best of content site list (not just a popularity contest where the interface leaves you wanting to slug the monitor).
    Of course Yahoo can try something really down and dirty, do a McDonald’s and offer a million bucks for a certain time period. Everyone is hungry and it would be interesting to see how hungry Yahoo is.

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