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Yahoo's plan: create community from isolated sites

Tuesday, Apr 07, 2009 8:25PM UTC

By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Like nearly 200 million other people around the world, Yahoo Inc co-founder David Filo has a Facebook account.

But if Filo and new CEO Carol Bartz have their way, the kinds of social networking features available on Facebook will become part of many Yahoo websites and allow their users to network with each other without using Facebook. The company hopes the strategy will help link its disparate properties, bringing more advertising dollars and growth.

Yahoo is turning up the volume on many of its communications and community features and building bridges between the collection of Yahoo sites that have at times operated like virtual islands.

"You start to introduce Yahoo users to other parts of Yahoo," said Filo.

Whether users warm to Yahoo's vision of the social Internet with the same zeal they have for social stalwarts like Facebook and News Corp's MySpace remains to be seen. But if Yahoo's social networking features catch on, advertisers will take note.

"People are spending time on Twitter and Facebook, but advertisers don't want to be there right now. That's the big issue," said JMP Securities analyst Sameet Sinha. "But Yahoo advertisers are already there."

LOTS OF PLACES TO GO

While Yahoo has scores of online properties ranging from fantasy sports services to celebrity gossip and financial sites, more than half of Yahoo users only use a handful of Yahoo's sites, the company says.

In the next several months Yahoo will begin rolling out new versions of its most popular products, from Yahoo Mail to the Yahoo home page. A thread of social media features, including a common user profile, list of friends and regular updates about friends, will tie the family of Yahoo properties together.

When an individual recommends a news story from the Yahoo homepage, uploads a photograph on Flickr or makes a trade on a fantasy baseball team from Yahoo sports, Yahoo will send an alert to a network of friends or contacts.

Yahoo is developing technology to broadcast roughly 100 types of such posts and actions.

Many of Yahoo's properties rank among the most popular on the Internet. Yahoo's homepage had 329 million unique visitors in February, according to research company comScore; Yahoo Mail had 282 million unique visitors in February, second to Microsoft HotMail.

And with Yahoo a distant No. 2 to Google Inc in Internet search and its revenue growth stalled, infusing its online content assets with social elements could provide a new path to growth.

Online content is more compelling with social media elements, says Allen Weiner, an analyst at industry research firm Gartner. Such content is better suited for advertising than traditional social networking sites, he says, where communications between users are the main event.

YAHOO -- SEARCH OR SOCIAL?

Yahoo has a lot of balls in the air -- and hungry rivals.

Its efforts come as social networking is increasingly getting noticed by established Internet and media companies. Last week, media reports whipped up speculation that Google was in talks to acquire microblogging service Twitter, though neither company has confirmed the reports.

While Yahoo's plan to become more social predates Bartz' arrival in January, people at the company say she has fast-tracked the initiative.

"She really instilled a sense of urgency that this is critical to our success going forward," said Neal Sample, Yahoo's Vice President of Social Platforms.

The scope of products to be included in the project has been broadened by Bartz, and Sample's team has been given extra resources as Bartz has shuttered underperforming Yahoo properties.

Yahoo expects the stream of news updates will also increasingly feature events that occur at outside Web sites that partner with Yahoo. And a forthcoming version of Yahoo mail, currently in beta testing, will be opened to outside software applications that use a contact list to create social capabilities beyond simple news updates.

Developing the social transformation on a large scale won't be easy, particularly given Yahoo's spotty product development track record in recent years, analysts say, though Bartz's recent internal management reorganization should help.

Yahoo still needs to figure out how to turn on the new social features without triggering an avalanche of information onto its users, many of whom already receive frequent updates about their friends' activities on services like Facebook and Twitter and may not necessarily want another such feed.

The company is taking a deliberate approach, said Filo.

Now Yahoo needs to prove to its users and investors that it has found the right approach.

(Editing by Brian Moss)