Yahoo Chief: ‘We Have Never Been a Search Company’
http://bits.blogs.nytimes.com/2009/08/07/yahoo-ceo-we-have-never-been-a-search-company/?ref=technology

By Ashlee Vance

The dust has settled – for the moment - on the Microsoft and Yahoo search and advertising deal. So, perhaps there’s room for a bit of reflection.

Last week, Brad Stone and I interviewed Carol Bartz, Yahoo’s chief executive, and she -– along with an animated security guard -– provided some insights into the company’s culture that have been arguably under-reported by the press.

For one, Yahoo views search in a different manner than Google and Microsoft. The Bing and Google boys want to have standalone search franchises that function as helpers for our brains. If you’re out hunting for something specific, you hit Google or Bing in the hopes of finding an answer.

Ms. Bartz places Yahoo’s position in a rather different light. “We have never been a search company,” she said. “It is, ‘I am on Yahoo. I am going to do a search.’”

It’s a subtle verbal difference but perhaps an obvious practical one to Internet users. Yahoo, according to Ms. Bartz, simply feeds search results for people who have grown curious while reading one of its news stories or watching a video. It doesn’t generally pop into peoples’ minds as the first place to go look for answers during the course of their day-to-day activities.

As such, Ms. Bartz said she could continue to live with the 20 percent or so share of the search market Yahoo has today. “I am a very viable number,” she said. “It is very profitable, and we would be happy all day long.”

The biggest thing for Yahoo is increasing the number of pages people consume and slapping as many display ads as possible across those pages. “My fortunes are tied to my pages,” Ms. Bartz said.

When it comes to those pages, Yahoo seems to be in a state of confusion. Its Sports section, for example, has reporters producing top-notch original material ranging from scoopy news items and blogs to long-form analysis pieces. The other parts of Yahoo tend to rely far more heavily on stories and other content from outside organizations.

According to Ms. Bartz, the majority of Yahoo’s sites will go the way of Sports. In particular, Yahoo will throw investments behind its entertainment, finance and news operations. Ms. Bartz noted that there are plenty of unemployed journalists out there to pick up.

This is, of course, a delicate dance for Yahoo. The company’s strength has been in collecting information, not producing it. As Yahoo competes more and more with its partners, they may turn their back on Yahoo’s immense page views.

In addition, Ms. Bartz will remember that Terry Semel, a longtime Warner Bros. executive, was brought in before to turn Yahoo into more of a media company. Mr. Semel’s tenure was perhaps characterized more for losing to Google than anything else.

Ms. Bartz has decided to correct past mistakes by getting all of the employees on the same page and presenting a more consistent look across Yahoo’s sites. In addition, she’s trying to boost morale and get the energy of the company up again –- a task hurt by the hit Yahoo’s shares took after the Microsoft deal was announced.

“I felt bad for the employees because they think it’s a report card,” Ms. Bartz said.

That said, Ms. Bartz seems to have made quite the impression on at least one of her employees.

The security guard at Yahoo’s Sunnyvale, Calif., headquarters comes to work with purple fingernails, purple lipstick, purple eyeliner and purple tints to her hair –- championing Yahoo’s corporate color. She’s very thorough when checking in guests, and chock full of enthusiasm.

The guard, um, encouraged Brad Stone and me to treat Ms. Bartz with respect. “She’s my girl.”

Yahoo-MSFT Deal: Details From SEC Filing
http://paidcontent.org/article/419-yahoo-msft-deal-details-from-sec-filing/

Yahoo (NSDQ: YHOO) just filed with SEC with some more details of its search deal with Microsoft (NSDQ: MSFT). Some standouts:

—The deal details have to be hashed out by by October 27, 2009
—The deal can be terminated if not implemented by July 29, 2010
—Microsoft will hire at least 400 Yahoo employees
—No termination fee, apparently
—Microsoft will pay Yahoo $50 million annually during the first three years, and Yahoo “may use these payments to partially cover transition and implementation costs not otherwise covered under the Search Agreement,” the filing says. So costs associated with transition.
—After five years, Microsoft can choose to take over search advertising sales for premium advertisers. If it does so, Yahoo’s share of revenue will go up to 93 percent. However, if Yahoo chooses to continue selling search ads to premium advertisers over Microsoft’s objection, its share of revenue will fall to 83 percent.
—If Microsoft does not exercise its option to take over premium search advertising sales, Yahoo’s share of search revenue will increase to 90 percent, after five years.
—Yahoo has the option to use Microsoft’s mapping and mobile search services (It has already said it will use Bing’s mobile search)

—Very interesting: There are deal termination provisions which are calibrated against Google (NSDQ: GOOG). Yahoo can terminate if the trailing 12-month average of the RPS (revenue per search query) in the U.S. of Yahoo and Microsoft’s combined queries falls below a specified percentage of Google’s estimated RPS measured on a comparable basis, or if the combined Yahoo and Microsoft query market share in the United States falls below a specified percentage (Ed: would love to know that figure); also on the fifth anniversary of the search agreement, and any time thereafter, Yahoo has the right to terminate the agreement if the trailing 12-month average of Yahoo’s U.S. RPS is less than a specified percentage of Google’s estimated RPS

—Other termination provisions, though seem unlikely to happen: either party may terminate upon “repeated material breaches of material provisions of the Search Agreement such that it is unlikely that the breaching party is willing or able to continue to perform its obligations under the Search Agreement without continuing to materially breach it; or Yahoo may terminate if Microsoft attempts to exit the business of algorithmic search or search monetization, either by ceasing to offer the services or by selling or attempting to sell all or substantially all of either its algorithmic search services business or paid search services business to an unaffiliated third party.”
—If a termination event occurs in the United States, the entire agreement may be terminated. If a termination event does not occur in the United States a party’s termination right is limited to the specific country or countries in which the event occurs.
—If Microsoft proposes or attempts to sell all or substantially all of either its algorithmic search services business or paid search services business to an unaffiliated third party, Yahoo will have a right of first refusal and right of last offer to purchase such businesses.
—Microsoft’s search API will be made available to Yahoo “at full parity” to what Microsoft’s teams can access.
—Yahoo will have “full visibility into Microsoft product roadmap and parity with Microsoft’s internal teams in the product update prioritization process.”
—Microsoft cannot treat Yahoo and its syndication partners less favorably than Microsoft’s own partners.
—Microsoft will provide Yahoo with all the data it collects as part of the relationship. Microsoft cannot use the data to enhance Microsoft products and services other than those covered by the agreement (ie search).
—Yahoo will grant Microsoft an exclusive license to “specified Yahoo algorithmic and paid search technology.” Once the agreement ends, the license will remain in effect but it will no longer be exclusive.
—Microsoft also has an option for a non-exclusive license to Yahoo’s search technology which it could use to “provide online services” on Microsoft owned and operated websites and also third parties. But Microsoft has to pay for that license.
—And Yahoo can choose to have Microsoft offer search services through a “white label solution,” instead of the Microsoft API, in certain countries. From the filing: “Yahoo! may substitute Yahoo! applications or services for Microsoft applications or services within the White Label Solution.”