I also understand why people might think that this launch is a competitor to Yahoo!'s own Del.icio.us, but I think that notion is a little mistaken. While socially driven news is ultimately an evolution of social bookmarking, the latter has evolved to the point where the two concepts can live largely independent of each other. For example, I use multiple social news sites, but use them predominantly to submit for and share with large groups of people (whom I don't even know in most cases, hence socially driven news). At the same time, I use Del.icio.us (and Instapaper more recently) to specifically bookmark a piece of information that I will have to recall later (or want to save for the long run), or that I want to share with a small, relatively defined circle of people. As long as Yahoo! can make the distinction between bookmarking information (long-term, more intimate) and driving news (more current, for the mass audience), I think both products can peacefully coexist.

Yahoo! is moving in the right direction, and a very exciting one for all parties involved, and here's why.

Why Yahoo! Has Me Buzzing

1. Integrating Search

Anyone who has ever used Google Zeitgeist knows how interesting and useful search statistics can be for determining what's hot and capturing people's imagination right now (i.e. Hot Trends that update throughout the day) as well as what people are interested in over the long-term and depending on the season (i.e. Trends). Now imagine the same principle being applied to social news. If people are searching for what is important and relevant to them (and often looking for more information on breaking news or other events that are happening at the moment) using that as one of the many 'popularity factors' ensures that the content is always generally popular and relatively current. Of course, that is just one of the many factors they take into account, but for now, this is a factor that is unique to Yahoo! Buzz.

2. It's Still Social

Too many people have unfairly characterized Yahoo! Buzz as not being social. A more fair characterization would be to argue that Yahoo! Buzz is not as democratic as some of its competitors, but it's still very social. First, the fact that user search patterns is one of the 'popularity factors' means that Yahoo! Buzz content is being dictated by its audience, not to mention that people can still buzz (vote for) stories they like, from the pool that has been preselected for them. Additionally, people can still share stories directly with their friends/contacts and further socialize the content by posting it to other social sites (which are all factors taken into account when measuring an article's popularity). While users aren't allowed to submit content and some advanced features, such as user groups, don't exist in the current build, the site is a solid half-way point between traditional media and new media. The sources are limited and largely mainstream, but what's popular is in the hands of the people.

3. Only Publishers Need Apply

There have been two major problems that people have had with Yahoo! Buzz. The first, as discussed above, is the users' inability to submit stories, and the second is the limited sources from which the information is taken. Yahoo! Buzz only allows sites that are a part of the Yahoo! Publisher Network (i.e. sites that run Yahoo! text ads alongside their content) to be included in the index of content users can vote on. Honestly, I think this is the smartest move Yahoo! could have made for itself. However, does this mean that we won't get all the niche content that we have learned to love? Let me put it this way, in case you didn't read the fine print:

"Every day, a few of the top Buzz articles will be bumped onto the Yahoo.com main page, giving the story potentially the widest audience possible on the internet. Reports suggest that, in tests, links to Wired.com received over 2 million unique hits in 2 hours."*

* Note: Yahoo! says that they are able to rotate coverage on the main page for smaller sites unable to keep up with the traffic.

Now let me ask you, have you gotten your Digg fix today?

I agree that the limited selection is off-putting, but being realistic, I don't see this as a problem at all. With the prospect of being featured on the Yahoo! main page, or even being featured among the top stories on Yahoo! Buzz (which I think will have no trouble building traffic) is an incredibly lucrative proposition that no one in my mind would decline just because it requires you to be a part of YPN. As soon as the site is taking applications (I'm not sure how the inclusion process will end up working), you can bet that every site out there will want a piece of the Buzz and niche content wont be hard to find at all.

More generally, with social news, it's always a chicken and egg game. You need a community to get good content, you need good content to build a community, but that community won't come if there is no good content, content that they are supposed to provide. Well here's where Yahoo! gets lucky. Yahoo! already has millions of registered users and millions of people visiting the site daily that can actively be converted to Buzz participants by either driving traffic or integrating the new site with search and news features on the portal. Just as important, Yahoo! doesn't immediately need a large user base (for submissions) because the content (from pre-approved publishers) is automatically indexed on the site and users can browse and vote it up.

Why Yahoo! Should Be All Abuzz

Yahoo! Buzz is a great proposition for everyone but the most active and most passionate participants of socially driven news sites (all 1,000 of us). Without making this too long, Yahoo! is giving you, as a publisher, the opportunity to reach fairly good circulation directly through the Buzz site, and a chance at fulfilling your yearly traffic and exposure quota and all you have to do is three things. First, make sure that you are a member of the Yahoo Publisher Network, second, join Yahoo! Buzz, third, create relevant and quality content that people want to read. And as a reader or member of the social news community, Buzz gives you the quality and breadth of Yahoo! News and, as of now, 100 other high quality publishers from across the web (likely to increase massively), while at the same time letting you have some say in what gets exposure and experiment with social news elements.

This is an excellent move for Yahoo! in many ways. This is the easiest way to explain what Yahoo! is about to create: Imagine if Digg had 10 times the incoming traffic, and got a percentage of ad-revenue from each of the sites that were promoted to the front page. Yahoo! Buzz does essentially that. The site, combined with the possibility of being featured on the Yahoo! main page, comprises of tens of millions of potential page views and because you have to be a member of the Yahoo Publishing Network, whenever content is promoted and trafficked by the Yahoo! audience, Yahoo! gets a piece of the advertising revenue pie. Not only does this increase the conversions for Yahoo! Publisher Network, but it also increases the revenue per conversion for Yahoo!. In essence, they're getting their ads on the sites and then creating traffic for the same sites.

Ultimately, Buzz is very much a beta product - but it has massive potential. The site should certainly allow user submissions (though I think it's okay to require sites to be a part of YPN), and is missing a host of other features. But even in its current state, I think everyone wins - Yahoo!, the content producers/publishers, and even most of the readers.

There has been a lot of coverage about the potential Yahoo! acquisition by Microsoft over the last week. This coverage has looked at issues such as deal mechanics, antitrust implications, and the impact on advertisers. One aspect of the possible blockbuster deal that has not been adequately examined is the impact on web publishers, in particular the medium and long tail publishers who are almost wholly reliant on ad networks to monetize their ad inventory.

Short term: the acquisition will be bad for publishers

In the short term, the potential acquisition will be bad for medium and long tail publishers.

Yahoo! Publisher Network, Yahoo!’s competitive offering to Google AdSense, is an also-ran in the marketplace. It has been in beta for two years now. Most publishers that we work with wait a month after sending an application to YPN, only to have it rejected. YPN won’t serve ads outside of the US despite Yahoo!’s presence in the brand/display market internationally. Unconfirmed sources inside Yahoo! indicate that they will be re-launching YPN in the summer of 2008, but it’s entirely possible this timeline will slip as the acquisition process plays out. At the same time, Microsoft Content Ads, Microsoft’s competitive offering to Google AdSense, is in a private beta running on less than a few hundred web sites. It is hard to imagine that the merger process will accelerate delivery of either solution.

From a strategic focus perspective, it’s clear that Yahoo! and Microsoft are focused on the advertiser side of the online ad market. One of Yahoo!’s biggest development projects, Apex, is intended to integrate search and display advertising into one system for advertisers and ad agencies. Microsoft’s largest acquisition to date is aQuantive, an ad agency and digital solutions provider which is largely focused on advertisers.

Yahoo! and Microsoft can afford to focus on advertisers at the expense of publishers because they have so much ad inventory on their owned and operated web sites, which Google does not. The majority of Yahoo!’s and Microsoft’s properties are designed to keep users on their web sites, whereas Google’s main product (search) is intended to send users away, with the notable exceptions of Gmail and YouTube. comScore and UBS estimate that Yahoo! and Microsoft have more than twice as many monthly page views as Google as of December 2007. As a result, a combined Yahoo! and Microsoft would likely focus on how best to monetize their own ad inventory, and those of strategic partners such as Facebook and eBay, rather than inventory from an open publisher network.

Long term: good potential upside for publishers, but don’t hold your breath

In the long term, there is upside potential for publishers. However, it’s just that -- potential -- and has remained that way for several years now.

As a combined force, Yahoo! and Microsoft might see a big enough opportunity in the market to pursue industry solutions outside of their owned and operated portfolio of web sites. Yahoo! has started down this path with the Right Media, Blue Lithium, and Maven Networks acquisitions. Other media companies such as Fox Interactive Media and niche players such as Martha Stewart Living Omnimedia have started down the path of selling ads for external publishers as a way to grow their businesses. As the trend towards user level targeting increases, as opposed to web site level targeting, Yahoo! and Microsoft will need to find ways to target advertising off of their owned and operated site network.

Yahoo! and Microsoft can combine research and development budgets in a number of different areas to free up money for investing elsewhere. Within a combined entity, spending on search, email, infrastructure, etc. can all be reduced to free up money to invest in solutions that benefit publishers. In addition, Microsoft has a significant cash advantage over Google with respect to available money for investment. In 2007, Microsoft’s quarterly net income was roughly equivalent to Google’s annual net income.

Conclusion

In the short term, the Microsoft-Yahoo! acquisition process is likely to be bad for publishers. The lack of focus and investment that Microsoft and Yahoo! will have on the medium and long tail market will result in a slower pace of innovation and poorer monetization opportunities for publishers. In the long term, there is potential upside for publishers but the acquisition process, integration, and renewed product development will take a long time to sort out. The time frame involved reminds me of the old economics adage: "In the long run, we are all dead." How long might we wait until Microsoft and Yahoo! deliver?

This is a guest post by Rajeev Goel, the Co-Founder and General Manager of PubMatic, a publisher service that automates and optimizes ad serving decisions. You can follow Rajeev at the PubMatic blog.

]]> Discuss]]> http://www.readwriteweb.com/archives/how_will_publishers_fare_under_microhoo.php http://www.readwriteweb.com/archives/how_will_publishers_fare_under_microhoo.php Trends Thu, 14 Feb 2008 10:34:33 -0800 Guest Author Kevin Kelly may be best known as the founding executive editor of Wired magazine, but he's also a long-time blogger and the author of numerous books. One of those books, True Films, has just been updated for a third edition. The book collects Kelly's 200 favorite documentaries reviewed on his site of the same name. "I only review films I love and believe others will enjoy. Merely good films are left unmentioned," says Kelly. Previous editions of the book have been sold via Amazon, Lulu, or as a paid download via Kelly's own site. That the book was updated a second time is unremarkable. What is noteworthy, is that Kelly is giving the book away for free as a PDF and monetizing it with contextual text advertising.

Kelly is using the PDF Ads for True Films 3.0. Kelly calls the use of the ads an experiment. "If it works with you readers to the same degree that ad-supported blogs have, it is not hard to imagine thousands of books being released for free with ads on the side," writes Kelly on his blog. "To some in publishing this prospect is the end of the world. The final stake in the heart of good old books. Ads-in-books specifically have been a bogeyman too horrible for them to even think about. [...] I am more pragmatic. I actually like the Google contextual ads on Cool Tools. They bring up choices I would have never encountered, yet they are fairly unobtrusive until you are looking. Why not do the same for books?"

But there are a couple of major obstacles to PDF Ads that I see in this initial iteration. The first is that the ads are opt-in. Because Acrobat Reader needs to connect to Adobe to download the ad content, it first asks for permission (the PDF files are scanned by Yahoo!'s content matching system before you download them, so the Yahoo! robot isn't actually scanning a file on your computer, but it will try to connect to Adobe each time you open to the file to attempt to download the most up-to-date ads). Will people really opt-in to view ads? Hardcore supporters of the author might, but since they're paid on a per click basis, if the people clicking on the ads are only doing so out of support for the author, isn't the advertiser losing out? That's not going to likely be high quality traffic.

The other major hurdle is that the content matching sucks. While reading True Film 3.0, I didn't see one ad that had anything to do with film or documentaries or even the subjects that any of the documentaries being reviewed were about. Instead, the ads were about unrelated things like travel and real estate -- they looks more like broadly purchased defaults (low paying inventory filling ads) than actual contextually matched advertisements. In order for PDF ads to warrant any notice from readers, they'll have to get a lot more relevant.