Watch CBSN Live

HP Partners with Yahoo To Spam Printer Users to Death

HP (HPQ) and Yahoo (YHOO) will work together on a pilot program to deliver ads with content printed on HP's new lines of Web-connected printers. I'm sure executives at both companies are delighted, but it's a strategic disaster.

The printer industry has been under enormous pressure of late. Many consumers and business users leave documents in electronic form to read on screens. That will only continue with the Apple (AAPL) iPad and other tablets, as they finally hit the market. Furthermore, the price of ink, the mainstay of profitability in a razor-and-blades type business, is under pressure both from consumers, who tire of the perceived high price of printing, and competitors that look to attract buyers with lower ink prices.

HP's long time printer and imaging division cash cow has started to dry up. That's not good in an industry that expects constant growth. It's a big reason why HP introduced the Web-connected printer concept in an attempt to make the devices relevant -- and more profitable.

One of the things HP thinks users will do is print online content to read later (as if bookmarks and printing to PDF files didn't exist). So add two and two and get eight. HP decided to go into business with Yahoo to add "localized, targeted advertising" to what people print out. IP addresses give approximate locations (unless you're one of the many people whose ISP covers a large area, making it appear as though you're in another city or town) and monitoring online behavior and the nature of the content suggest what ads to target.

While testing its ePrint Web-connected printers, HP ran two trials where consumers received content from a U.S. national music magazine and major U.S. newspaper along with advertisements, said Stephen Nigro, senior vice president in HP's Imaging and Printing Group."What we discovered is that people were not bothered by it [an advertisement]," Nigro said. "Part of it I think our belief is you're used to it. You're used to seeing things with ads."
Sure, people are used to ads in magazines. But they're not used to ads appearing on materials they print from Web sites, and they're sure as blazes not used to paying for the ink that produces those ads that they didn't ask for.

Furthermore, was either HP or Yahoo planning to provide a cut of the revenue to the sites whose content users print? If not, expect some ugly reactions to large corporations making money off the work of others. And you thought that aggregators could generate ill will. Yup, if you're trying to resurrect a dying product segment, have it potentially irritate users. Spam: it's not just for email any more.