MicroYahooNews

Hi, I’m back taking a look at the Microsoft-Yahoo-Anybody else but Microsoft deal. I gotta admit, I’m having fun looking at this from all the crazy angles that are being thrown out there but as I’ve said before, the only deal that makes sense is Microsoft and Yahoo.

The only way to answer the question over which is the best suitor for Yahoo is to answer the Yahoo existential question… is it a technology company or a media company.

Apparently News Corp is looking at Yahoo as well. Not sure what I see is the gain here but who am I to quibble with the genius of Rupert Murdoch?

Yahoo would gain the social networking site MySpace, while Rupert Murdoch’s News Corp would take a 20 per cent stake in Yahoo, according to those close to the situation.

So where does that leave us on the quest for Yahoo existential meaning? Yahoo: I’m a media company… no I’m a search company… no wait, with MySpace I’m now a social networking company!

MySpace is a formidable property but for a company that couldn’t fend off one innovative competitor, it seems hard to imagine how Yahoo will fend off two; Google on one side and Facebook on the other. And where’s the (sorry readers) synergy? Yahoo search on MySpace pages? They could displace Google’s ads so I guess that is worth something. Taking down all the Google ads will distract Google for about a nano-second until they find other outlets, Yahoo and MySpace will be distracted for years trying to find interesting ways to integrate the two services.

Shahid Khan, an analyst at IBB Consulting, pointed to the massive internet audience that a Fox Interactive-Yahoo merger would create, and its power in particular content verticals. The two groups could combine Yahoo Sports, for example, with Fox Sports, and Yahoo Finance with the Wall Street Journal and MarketWatch websites.
“If you take a step back, it could make a lot of sense for them,” Mr Khan said.

Huh? Why? A lot of these sites recycle the same content anyway, so where’s the benefit? Firing a couple of writers? Besides FoxSports is on MSN and it doesn’t seem to be doing them a world of good. I get the feeling I’m missing something.

YahooFinance already links to WSJ online content so again, I don’t see the benefit. Firing some of YahooFinance’s writers I suppose? Big savings there! The average cost of running the two sites may be a bit lower, so there are some cost savings there. I bet the two sits share a lot of the same users so the marginal increase in traffic by merging the two sites would probably be low.

At least this part of the deal answers the existential Yahoo question… it is a media site.

YahooNews would just further fragment the market. Yahoo would be on life-support, News Corp has a search engine that it can merge with MySpace for some as yet unimagined benefit, and MSN…well… who knows what happens to MSN.

Google for its part maintains its customer captivity because there is no compelling reason for customers to leave. And as there are no existential mysteries to Google’s technology-being, it is free to continue its assault on MSFT and the rest of the IT industry while MicroYahooNews all try to figure out what it really means to be a “portal.”