Release 0.9: What Should Yahoo! Do?

Many people think Yahoo! is as good as dead: The stock is off around 15 percent since its recent deal with Microsoft, and by more than half from when the Microsoft talks started. But in reality the company is now in a better position to stake out new ground, rather than fight with Google over stale turf.

Now that Yahoo! has freed itself from its fight with Google, it can return to its roots as a directory company that helped users make sense of the world around them. Indeed, back in 1994, Yahoo! started with a team of editors who combed through the small amount of information that was then online and generated lists of only the best content, complete with links. Google showed up with an automated tool to search for content -- any content -- and Yahoo! used Google's service before developing its own search capability.

But the world has changed. The problem now is not finding information; it's filtering it and structuring it. TMI -- too much information -- has become a recognized acronym.

You can't rely on human editors to structure information anymore; you need automated tools, augmented by human expertise and specific domain knowledge. But search alone doesn't work, either: Search is like a flashlight in a dark room; it pinpoints one or two things but leaves the surrounding space murky. What people really want is a lighted room, with things organized and displayed neatly on labeled shelves.

That's what Microsoft has done with Bing, in a few commercially oriented domains. But the opportunity goes beyond the world of shopping, to all the stuff out there that Google helps you find.

But more important, Yahoo!'s biggest opportunity is all the stuff inside -- inside its half-billion registered users' own possessions and habits, their photos and friendships and all their electronic data that has now become sufficiently extensive and complex to need management.

Yahoo! is well-positioned to make sense of their own lives to individuals. Several interesting start-ups are leading the way , but they are not as trusted as Yahoo!; nor do they have the large user base or social graph of e-mail that will enable Yahoo! to extend saving and managing to sharing, so that users can see their own data in the context of their friends' data. (Yes, Facebook is in there too, but it's busy right now ... Yahoo! could lose its edge if it tarries.)

People spend a fair amount of time searching for new stuff, but in many cases they would like to relate it to old stuff -- specifically, to their own information. There's a diffuse but gradually sharpening trend for people to manage their own information online -- not just their finances at Mint or Wesabe, but also their book preferences at Amazon, cellphone records (Skydeck), physical activities (Nike, Garmin, and the like), friendships and friends' activities (Facebook/Friendfeed and others), travel (Dopplr and TripIt), health (Polka.com, Microsoft Health Vault), music (iTunes and all the wannabes) and so forth. iLike was another such company, but it's no longer available (good move, MySpace!).

Searching the Internet gets you to places where you can book travel, buy music, find walking paths and trade stocks, but these sites, generally, do not yet let users aggregate, manage and analyze all their own content and data -- especially about the things or data they got from competing vendors. Yahoo! can offer that service.

What does this mean from a business point of view? Freed from the distraction of chasing Google, the company can focus on making the entire Yahoo! experience more consistent and integrated. Internally, it needs to combine its services more closely. It has already provided a single log-on for (almost?) all its services, including Yahoo! Mail and acquisitions such as Upcoming (events) and Flickr (photos and video). Its new home page makes it easy for a user to assemble a variety of services in one place.

Yahoo! is open enough to feature such third-party sources as the New York Times and the Wall Street Journal, but currently even its own offerings typically comprise generic content about, say, health care or stocks, rather than the ability to manage one's own health data or stock portfolio. Imagine what it could do with the users' own data.

Of course, that raises another issue: Call it transparency or call it privacy.

Yahoo! and a number of other companies -- including Google -- are already working on a standard for displaying information about the advertisements a user sees and the data advertisers collect: Yahoo!'s edge is that it can show this information without embarrassment. It shows ads from third parties to its users, but it does not sell user data to outsiders.

In a world where users worry about -- and regulators legislate against -- the tracking of users, Yahoo! doesn't have to follow its users across the Web; it knows enough about them, openly, from what they do on Yahoo!

So, if Yahoo! followed the strategy I have outlined, users could specify how much of their travel plans, for example, they want to share -- all the details with family and colleagues, or all the places they've been to with everyone -- after the fact. I'd be happy to share my travel plans with, say, British Airways if I thought they would give me a good deal.

Its users know what Yahoo! knows about them: not a record of all the sites they visited, but their behavior on Yahoo! and, potentially, their data. But it's the user, not Yahoo!, who can make the decision about what to share with British Airways. For those who care, this is a big deal; for those who don't, they will know only that Yahoo! has a good record for two-way disclosure.

To fulfill this broad promise, Yahoo! could now either buy or build a variety of services that help users manage their own data. The services described above would be a good start, but there are many more, and Yahoo! has the tools and the audience to build some of its own.

None of this will be easy. It could almost be as complex as designing a search engine...but Yahoo! could be a leader rather than a follower in this endeavor.

But it would be worth it. After all, for many people, the most fascinating thing in the world is a mirror.

Disclosure: Of the specific companies mentioned above, Esther Dyson is an investor in Wesabe (indirectly), Dopplr, TripIt (indirectly) and Flickr (formerly) -- as well as a variety of user-generated health data companies not specifically mentioned. An earlier version of this essay appeared in a variety of newspapers outside the US through Project Syndicate.

Comments

[privacychoice]

Interesting post, but I'm not sure it is correct to say that Yahoo! is unique in protecting user information. In fact, Yahoo! enables many other ad networks and companies to serve content and code on Yahoo! pages, thereby allowing the collection of data under all sorts of policies different policies. See this summary of who collects data on popular Yahoo! pages that we sampled:

http://www.privacychoice.net/yahoo.com

You can also see from the summary of privacy policy terms that Yahoo!'s advertising subsidiaries reserve the right to share (or sell for that matter) individual anonymous profile information of users. In fact, Yahoo! is unique in that data they collect from their own ad network (across third party sites) may, by the terms of Yahoo!'s policy, be connected with personally identifiable information. That's not something that Google's DoubleClick network allows, by contrast.

[TheWanderer]

I stopped using yahoo as my search engine (after years of use) when they did nothing to protect users from the clickover viruses of late.

[lastams]

"Now that Yahoo! has freed itself from its fight with Google, it can return to its roots as a directory company that helped users make sense of the world around them"

.Direct cut-and paste quote from Yahoo news yesterday:

"Some are outraged by the president's planned address to the nation's kids next week.» 'Excuse to brainwash'"

Making sense of the world around us?
Right.

[editorjuno]

At this point Yahoo has no significant raison d'etre imo -- they host some narrow-interest mailing lists (aka "Yahoo Groups" -- don't you love it when a commercial entity brands a long extant idea as if they invented it?) to which I subscribe, but I don't have any use for anything else they provide.

[Mikel Moore]

Yahoo is reminding me more and more of Alta Vista...

[ThinkCreeps]

That's not fair to Alta Vista - for the best part of a year Alta Vista was the most effective search engine

[martinchill]

"Many people think Yahoo! is as good as dead: The stock is off around 15 percent since its recent deal with Microsoft, and by more than half from when the Microsoft talks started. But in reality the company is now in a better position to stake out new ground, rather than fight with Google over stale turf."

~~

i like this... yahoo is just about down and out - which means they've got google and bing right where they want them, hey?

[martinchill]

yahoo blows. simple as that.

[ThinkCreeps]

What should Yahoo do?

Is there a way for an organization to declare itself completely irrelevant and useless, short of declaring bankruptcy? If they find one, they should pass the news on to their ad agency

[DomainDiva]

Yahoo needs to find its' identity without Google and Microsoft. I for one do not believe that Carol Bartz is the CEO to accomplish this. Ms. Dyson has in this article, hit the proverbial nail on the head.

[lastpost]

If you try and analyse us. So that companies can attempt to tempt us with things we don’t actually need. You might actually succeed in desensitising us. So we evolve a state that filters out any and all distractions. Advertisers would then be inflating the cost of their products, by a factor related to the ineffectiveness of those marketing efforts.
Why not instead, provide us with the power to design the system we as individuals require?
For example: I personally don’t want to trawl the net. Repeatedly searching for the cheapest current deal on electricity. Or, be approached by countless agents touting for trade. What I want is to sign with someone who will use the accumulated power of their clients. To perpetually maintain the best deal, with whoever is prepared to provide it. Or else, a provider that guarantees to provide/match the best deal available.

[cam]

You are just regurgitating the obvious.

If Yahoo wants to survive it either needs to do something no one else is doing or do better at what everyone else is doing. Doing both would be good - it certainly seems to work for Google.

[NoSillyName]

I don't "google", but I guess if using a search engine is now a verb, I "dogpile".

[NoSillyName]

Without delving further into this idea, I'll say that I don't like it.

if I want to keep track of sites I like or need, I bookmark them.

I don't want to "share" anything with anybody unless I do it intentionally.

I don't even like the ads, supposedly targeted to me, when they don't even know that I'm not in the same city they're pimping anymore.

Leave me alone and keep me anonymous.

[jrjones529]

Yahoo should take a lesson from Netscape. Wait. No don't do that.

[SeanOcali]

The new Yahoo home page is a big thumbs down for me. There are no direct links to Yahoo Sports, Yahoo Movies, stocks, etc. It lets you put in any site you want on the list now, but I might as well just put in ESPN, Flixter, and Bloomberg. I simply used Yahoo's services for convenience. Now that it's not convenient, I have no use for it.