Yahoo Sells Out Login Page -- Plus Its Heritage, Users, and Business

Last Updated Jun 14, 2010 4:52 PM EDT

Yahoo (YHOO) has decided to go big time -- big time cashing in, that is. The company will now make its login page available to advertisers. Granted that the revenue will be good, maybe even great, but it's a desperate act that highlights how wrong the company has gone under turnaround CEO Carol Bartz. The company is trying so hard to bring in the green that it's willing to do anything to get it, including bargaining away long-standing relationships with customers.

According to Yahoo's PR firm, each ad will stay up for three days. Here's an example of what the page would look like with an ad from Chevrolet:

As Peter Kafka wrote in All Things Digital, the revenue possibilities are strong:
How much is that worth? Yahoo won't say. But note that the company is selling takeover spots for its OMG property for $80,000 a day. And OMG gets about 20 million uniques a month, a tiny slice of the login page's reach.
According to metrics company comScore (SCOR), Yahoo's login page gets daily traffic of 26 million unique U.S. users, so well over 30 times as much, and that doesn't count international visitors. Even if the price is only ten times as high, that would be $24 million a month in revenue. A nice chunk of change, but at what price?

All companies need to make money, particularly as they get large and maintaining revenue, let along growing it, becomes difficult. But when you focus so strongly on what you can get from customers and not necessarily on the value you deliver, you're eventually going to eat your seed corn -- and bodes ill in the long run.

I spoke earlier today with a Yahoo insider who offered some impressions of what was happening at the company:
  • There is considerable conflicting agendas -- not unusual in large companies. But because there isn't enough central direction, factions fight over limited screen real estate.
  • Revenue concerns largely trump those who want to improve the experience for users.
  • Even with the "brain drain," there are many talented people still at the company, and they want to do something great, but monetization trumps all.
  • There is little sense of urgency for change.
As I've said before, all the talk about becoming the center of users' online lives sounds like it's about the customer, but it's not. Yahoo is primarily interested in what customers can do for the company.

The problem is that years have passed since Yahoo was unique. The company has nothing that one site or another doesn't have. Traffic is down and people spend decreasing amounts of time there. If you can't do something that no one else does, then you have to do things far better to attract business. That requires a customer focus that Yahoo simply doesn't seem to have, at least as far as how it acts.

Yahoo doesn't focus on customers because upper management has shown indicated it's unnecessary. The answer to problems is to cut costs and increase ad revenue. You have to be at least somewhat sympathetic, because investors and competition have put a lot of pressure on the company. Nevertheless, the danger of the situation isn't sinking through enough to get people to do something different. Everything is more of the same. Without a good dose of creative desperation, Yahoo will stay stuck until it either no longer matters or is purchased ... for a whole lot less than Microsoft (MSFT) offered.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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