Google drew the largest global search audience last month with 46% of web users, according to OneStat.com, the net analysis company. Pushed back into second place, with just 20%, was the classic web company Yahoo. Although Yahoo denies these figures reflect the true state of play, is this a sign of the beginning of the end for one of the net's earliest success stories?
Yahoo, say the whisperers, is losing the plot. What self-respecting internet user would go to the advert-laden, massively extended web portal, when Google is so much faster and easier on the eye? The majority of internet users are no longer beginners and, the theory goes, as they grow more sophisticated, they are throwing off their training wheels.
The brand created back in 1994 (ancient in web terms) is losing its traditional place as a great directory and, by extending into auctions, email, travel agencies and car sales and finance, has lost its concentration in the process. For old school web users, watching Yahoo fall from purity is painful.
It may have been svelte, yet comely, back in 1995, but today, Yahoo is looking as tired and bedraggled as the faded actress you once fancied. The diehards find it all just a little sad. They are also wrong. But first, some background: Yahoo started in 1994. Its two founders, David Filo and Jerry Yang, were graduate students at Stanford University. They started a site, Jerry's Guide to the World Wide Web, in February 1994. It quickly grew, PhDs were put aside, and the site became Yahoo (or more accurately, Yahoo!).
By the autumn of 1994, almost 100,000 visitors hit the site a day, at a time when the internet was still a mystery to everyone but academics and the military. It was the place you went first. In the era before Google, HotBot, even Alta Vista (whose arrival blew the minds of netizens everywhere), Yahoo was our friend, guide and comfort. It was our home. "We're first and foremost a media company, selling audiences," says James Bilefield, business development director at Yahoo UK, echoing the words of his one-time boss, Tim Koogle. Speaking at the World Economic Forum in Davos, a few months before his resignation in March last year as Yahoo's chief executive, Koogle complained that internet companies, Yahoo included, had given away too much content to consumers as they tried to gain market share.
Since then, consumers have been loathe to pay for any internet content, either by handing over cash, or by enduring intrusive advertising. Nevertheless, he said, "advertising does work. It depends if you can get the scale to break even".
But Yahoo's supposed ratings drop might be seen as indicative of a problem facing every large website. Their growing expertise is being mirrored, if not exceeded by, the average web user. The newbie, it seems, is dying. Mindy Mount, executive vice president and co-managing director of AOL UK, says it is a challenge to sites:
"As consumers become more experienced on the web, they don't just wander around." Marc Rigby, a director at the marketing agency Interfocus, says: "The Yahoo brand has become confused over time. It was originally a facility that allowed you to easily find what you want. Now its status as a portal means a wealth of features but a lack of focus. Compare it to Google, which ultimately works best as a search engine. It's quick and it does exactly what it says on the tin."
Sadly for Yahoo, and many of the other heavily funded portal sites, it seems the scale needed to break even is greater than the scale accepted by many users. Says Rigby: "The more experienced will go direct to the site they want; they no longer require the middle man and its increasingly irritating advertising.
The unquenchable thirst for information needs speed of response to satisfy it. Banners and the like are simply unwelcome diversions, whose targeting is often awry." Awry advertising certainly causes trouble. Yahoo found this out the hard way last month when, after an overhaul of its Yahoo Groups mailing-list service, it switched all of their members' preferences to allow marketing information to be sent to them. Many people saw this as spamming, although members could, and did, go to their user preferences and change the setting back.
It created much bad faith. This is not to say that advertising is losing Yahoo money: Yahoo executives are projecting revenues of between $205 and $225m for the second quarter of this year and between $870 and $910m for the whole year. But the need to match growth expectations with the growing expectations of the user hasn't passed by the advertising business. They are working on new ways to balance their needs to advertise, and consumers' demands to be left alone. "We are doing a lot of experimentation as a company," says Bilefield.
Andrew Burgess, the managing director of EquiMedia, which plans and buys advertising space online, talks of the new generation of non-intrusive advertising. "The development of mutually profitable relationships, which match the needs of a business or consumer to a supplier, is the way forward. For example, if you are researching authors and are offered an opportunity to purchase a selection of their books on Amazon, this will not be seen as intrusive and non-personal but a tailored offer in response to a search."
And it doesn't stop there, says Burgess: "A new force in the advertising world is also pay-per keyword requests from the likes of Overture and e-spotting. These offer advertisers preferential search listing placements on MSN and Yahoo. This is being viewed by many as offering successful business models. The most successful are those based on consumer/business need."
But there's the problem: in 1995, when the web was small, new sites could be inspected and indexed quickly. A company of Yahoo's size could keep up. But today's web is too big. Manually built indexes rapidly lose either their value, or their integrity: Yahoo now charges US$299 for a site to be included within seven days. Sites offering "adult services" pay $699. Pay-for-inclusion, and pay-for-placement have proved popular among some of the search engines: Lycos, Ask Jeeves, Fast, Inktomi, Alta Vista and LookSmart all accept payment for either faster inclusion, or higher rankings, but for the customer, the additional advertising is taking away any reason to go to the site in the first place. Compare this with Dmoz.org, the Open Directory Project.
Already the largest directory of sites in the world, Dmoz lists more than 3m sites in nearly 400,000 categories free of charge, with no advertising. The editing is done by more than 40,000 volunteers, and the database is available for download, at no cost, for developers. There is no facility to skew the results by paying for either placement or inclusion. Nevertheless, Yahoo isn't that bothered: "Search and directory is an increasingly small part of what we do, [though it] remains the entry point for new users on to our network," says Bilefield.
"We're starting to compete with daily newspapers for our slice of the media pie." So, as much as the vocal old school of the net bemoan Yahoo's transformation, perhaps it's not us who are rejecting Yahoo, but Yahoo that is rejecting us. For a company that makes its money in a pact that swaps services, such as email and mailing lists, for the promise to look at the adverts it presents, the presence of hundreds of thousands of users who filter, ignore, insult and deny all forms of advertising is a burden.
While many may feel it is like being kicked in the teeth by the family nanny, it only goes to show how far we've come on the net since 1994. That a site we once relied on to guide us through the web can now do without us, and go for a larger demographic, is both heartening and sad. We may be nostalgic for the old days of the web, but now is the time for Yahoo, and others, to run free and leave us.