Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

Stow, what do you want to bet that insiders blow out option positions aggressively with this SB-driven pump??

Is Yahoo Selling Out for Short-Term Gain? CIO Magazine
http://comment.cio.com/soundoff/030404.html

The good news, for websites that live or die by the graces of advertisers, is that online ads are back in fashion. The Wall Street Journal reports that online ad spending grew 20 percent last year, and Forrester Research predicts that it will grow another 23 percent this year. Naturally, some of the greatest beneficiaries of that phenomenon are search engines like Google and Yahoo and Ask Jeeves. Yahoo, for example, saw its ad revenues balloon 84 percent in 2003. Consequently, most business students would argue that this is not the best time for Yahoo to throw a new business strategy into its play book, especially if that new strategy could damage an existing business model that is paying off handsomely. Of course, that argument is purely academic. In the real world, business tends to go, as they say, for broke.

On Tuesday, Yahoo announced that it would aggressively expand its program of “paid inclusion,” a practice that lets websites pay to guarantee that they will be listed in search results. The details of Yahoo’s paid inclusion program can be confusing, but the benefits are clear. For instance, Yahoo will continue to index a vast number of websites that do not pay for inclusion (because if it didn’t, search results would be worthless) but its index of paying sites will be updated far more frequently than its index of non-paying sites. Paying sites, which pay an annual fee of either $49 or $29 plus a small commission each time a user clicks on the listing, will be intermingled with non-paying sites, with no indication as to which search results are paying customers and which are not. Yahoo makes it clear that membership in the paid inclusion program will not influence the order in which search results appear. That order, says Yahoo, will be determined solely by the mathematical relevance of the site—payment simply guarantees that the site will be included in the index of sites searched for relevance.

The paid inclusion effort will no doubt boost Yahoo’s revenues, at least in the short term. One analyst told The New York Times that the program could generate as much as $100 million a year. But there is also evidence suggesting that it could wound the search engine’s credibility, and consequently reduce its traffic in the long term. On Wednesday, the day after Yahoo announced the expansion of its paid inclusion program, Ask Jeeves Inc., another search engine, said it was discontinuing its own paid inclusion effort. Jim Lanzone, Ask Jeeves vice president of product management, told The Wall Street Journal that paid inclusion “impacts the relevance of the results,” and that consequently it was “not in the best interests of our users.” Additional criticism of the paid inclusion practice comes, not surprisingly, from Google, which does not accept money for inclusion in general search results. Google co-founder Larry Page told The New York Times that search results should be as objective as news articles, and should be free of any financial influence.

What do you think? If search results appear in order of relevance, does it really matter if some sites pay for inclusion and others don’t? Or is Yahoo selling its reputation as an objective search engine for short-term gain?