I've been following Umair Haque's fascinating articles on new media economics and 'edge competencies' - and I've noticed he prefers Google's media strategy to Yahoo's. I've been curious to understand why, because the common wisdom over the past year or so is that Yahoo has been making all the right moves in this new world of Internet-powered media. Whereas Google often seems to be more experimental and lacking in a grand strategy for their products. Which is not to say that Google isn't effective in this new landscape - far from it. Just that Yahoo has seemed to me to be leading the charge into 21st century media.

Well Umair has now posted about Yahoo's recent earnings call and on first reading, I have to say his dismissal of Yahoo came across as general and lacking in specifics. So I left a comment, which Umair replied to and IMHO it's more useful than his original post. Umair commented:

"I'm not trying to bust on Yahoo, nor do I have a bee in my bonnet - I'm just pointing out the obvious.

Let me try and simplify.

1) There's a new value chain emerging. Think reconstructors.

2) Industry boundaries are blurring. Think Google + radio.

3) The value equation is being rewritten. Think Pay-per-x.

In all these cases, Yahoo is an imitator. Why? They don't have a real competence - they don't know how to create value at the edge.

This is an economic trap. They acquire companies to learn how to do better, but can't touch them for fear of messing them up. No learning is built. More acquisitions are made...

Back to the 3 points above, this translates into a strategic trap. They're forced to try and dominate the old value chain (this is what aggregation, licensing, etc really mean), and can't build the new one.

Of course, YMMV."

I don't claim to be as smart as Umair on this topic - clearly he's put a lot of thought into this and his new media economic theories (which btw I wish he'd stop calling Media 2.0). And I see where he's coming from... Google is creating new markets at 'the edge' with products like Adsense and perhaps with this new radio play they're doing now. Yahoo is putting a lot of effort into social software and user-generated content, but are they actually creating new 'value chains' like Google? Or are they, as I think Umair is saying, using new methods to dominate old markets?

I'm unsure of the answer at this point, but I wanted to a) throw the question out there and see what others think (please leave a comment), and b) recognize the thought-provoking work that Umair is doing at the Bubblegen lab.