Yahoo: The Place Everyone Used To Stop At

Last Updated Jun 7, 2010 1:26 PM EDT

Yahoo (YHOO) is in a crisis. Not because financial results disappointed, although they have. Not because of a brain drain, although talent has gone out the door faster than Superman's speeding bullet. Yahoo's crisis is an existential one. The company has found it almost impossible to clearly articulate its identity. Unfortunately, the closest approximation CEO Carol Bartz has offered stands in clear contrast to Yahoo's traffic and user trends.

For a year, Bartz has said that Yahoo wanted to be the center of customers' online lives. It may sound like a user-focused business model, but it's actually only wishful thinking. If you've got an online company that depends on ad revenue, of course you want to be the center of customers online lives. That way they'll stay longer and you'll make more.

At a recent TechCrunch conference, Bartz tried to answer the question, "What is Yahoo?"

[P]eople come to us to find out what is going on with the world in a very nice quick fashion to do their communications, email, messanger, check-in on their teens. We all know about Yahoo finance. It's a places where you can just get it together. It's collated for you, it's all the things as you're moving, you can even get your social information there. Everybody moves through many websites in a day, Yahoo is one they always stop at.
On the surface, Yahoo, of course, plays events as though the company is turning around. There's a new CTO and the company will enable Facebook updates for users that want them.

Again, the same message: Yahoo wants to be the center of people's online lives. And, again, the same problem -- a company must give customers a reason to do something beyond stating that it's possible, especially when people have found other places to plug into their worlds. Look at the following graphs from Alexa.com (AMZN) that compare Yahoo to rivals Google (GOOG), , Facebook, Twitter, and MySpace.com (NWS). The first shows the estimated daily percentage of Internet users who go to the sites and the second shows average time on site in minutes:

Yahoo is on a gradual and yet clear decline. I'd argue that the time on site is more telling than the percentage of Internet users. MySpace, which has cratered, has people stay longer on average than Yahoo, which is a sobering statement. Only Twitter has shorter time, and given the nature of its business and the availability of third-party applications that will download messages, it hardly seems surprising.

You could say that Facebook, which keeps people on longer than a half hour a day, has become the new Yahoo. Users actually go to the site to share photos, videos, links, music, and personal news. They get pointers to other things on the Web. Even Google, which largely has sites where people go to accomplish something specific, has more time on site.

No wonder Yahoo bought content mill Associated Content and is reportedly in talks to buy the Huffington Post. Yahoo is desperate for sites that will attract users for longer than a few minutes because consumers have come to see the company as having little reason to be.

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Image: RGBStock.com user jon3782001, site standard license.
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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.