The hullabaloo, hoopla, hearsay and hand-wringing over the
Microsoft-Yahoo deal has me more than mildly amused, and
not just because it would fill the H-stanza in King Crimson's (entirely
appropriate) Elephant Talk
. Somehow, Google
thinks that the deal will damage the internet
some way that having opaque code that colors our search
glasses doesn't. Having one overwhelming path to an
answer, whether it's search, email, personal productivity
apps (there's a misnomer), or advertising, is bad for the
internet. I'm regularly reminded of Larry
comments about the ornate and duplicative nature
it's is about having many ways to accomplish the same
thing, it's about having paper and crayons and not just
an Etch-a-Sketch with which to express your crudely
drawn ideas. That's what makes the internet good,
frightening, disruptive, harsh and useful, all at the
same time: there are many paths, some of which seem
wrong but all equally transparent.
Personally, I think the Microsoft-Yahoo mash-up is a Truly
Bad Idea, but not because of competitive or market forces.
It's something that "can only end in tears" to quote
one of my favorite staff peers. I'm neither a financial
analyst nor do I play one in my blog, but on the surface, the
deal seems to have interesting, material impacts like
the premium paid, and the minor bump in net income to
cover other Microsoft experiments in media. And finally, I
don't see how owning an advertising platform makes
Microsoft into a media company, if that's where their
joint strategic vector is aimed. It's difficult to discern
sources of other operational leverage,
unless Microsoft wants to re-engineer Yahoo's
platforms (pure cost always has a bad return on
investment unless the future cost savings are measured
in orders of magnitude, not percentages).
The New York Times summarized
the situation quite neatly by comparing the deal to
building a spaceship out of spare parts.
So what bugs me about the whole deal, and makes me
smile to see Google grating? It's a long prolegomena
to any future meat-physics, built on three premises: (1) The
difference between advertising platforms and media companies;
(2) Yahoo's creed of "connecting people" and (3) the
decreased utility of thinking in hierarchies.
Yahoo is an advertising
platform, not a media company. True media companies
make their money from end users paying for content, and in
a world of long-tail economics, they grow those markets through
other types of content -- blogs, linked references, word of mouth, email,
tagged content, or just about anything else that expresses opinion
or organizes ontologically related thoughts. The "head of the tail"
will still be advertising driven, but the long tail doesn't rely on
ad displays, click throughs, or content analysis to drive volume.
Part of the itchiness here is that Microsoft only makes
those "head of the tail" products, and monetizes essentially
nothing in the long tail. So buying an advertising platform
aimed at other heads seems reasonable -- and is a reflection
of the media company == advertising platform structure that
brought us the writer's strike.
Yahoo's creed is to connect people to their passions.
I love ice
hockey, eBay, baseball, the New Jersey Devils, Princeton, and my family, and
aside from some very infrequently used Yahoo group-based mailing
zero net interaction with Yahoo there. I used flickr but switched
to SmugMug; anything I want to tag I put on
Facebook. I'm not sure where the connections are supposed to come
from, and I certainly don't find clumps of targeted ads useful in these narrow,
single-topic facets of my life. So Yahoo hasn't helped me find any other parts
of my interest taxonomy, nor have its ads stimulated me to buy things based
on intersections of those interests. Some might claim that I'm not taking full
advantage of the Yahoo experience, but that's because I find the experience
too much like using the Yellow Pages (the alphabetical, printed kind, not the
maiden name of NIS). I don't want more content, I want more organization. Which leads me to...
The "H" in Yahoo means "hierarchy". Perhaps the
root cause of Yahoo's consumption stems from holding on to the "H" in
the likely ex post facto Yang and Filo acronym for too long.
Hierarchies imply that you start at the general and work your
way to the more specific; in the advertising platform of the
future (or better yet, the media company growth platform
of the future), you'll go from specific to specific. When I do my
annual Locus magazine sci-fi shopping run, I'm
not starting with "Books" or even "Space Opera" but rather looking
for additional input from writers and editors whose output I
trust, and in three years of picking my beach reading this way
I've discovered half a dozen authors and consumed all of
their works. No click-throughs, no banner ads, and no in-store
That, in a nutshell, is the issue: connecting people to concepts
(things, communities, ideas, markets) is a graph problem, and
if you want to focus on the graph problem, you need to think
about the edges of the graph, not the nodes in the graph. Let
the nodes (the content sites, the media companies) flourish,
and build a better, richer, more wonderful graph traversal
experience, and you have succeeded. It's why I
read BoingBoing and
why getting slashdotted
is so powerful. It's why FaceBook has promise, once it
figures out how to get around the walls of its content
But unless Microsoft dramatically changes its designs on
media company status, I believe the focus will be on
the nodes in the graph, and advertisements for those
nodes, rather than the edges connecting the nodes. And
at some point, the "Yet Another" part of the acronym
expansion dominates the end result, while the "Officious"
and "Oracle" potentials - to create node-to-node links that
nobody suspected were interesting until they discovered
passion in their targets - are forever encapsulated
in the cells of an M&A spreadsheet. And that's something
to cry over.