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I guess the upside is that a stock can’t fall below zero, so there’s an end in sight to the ongoing destruction of jobs and shareholder wealth at Yahoo. The stock closed at $13.76 today, down another 5.6%. And this isn’t just part of the market’s overall meltdown - the Nasdaq fell just 0.8% today, and Google, Yahoo’s main direct competitor, was down just 2.3%.

At this point I’ve moved beyond wondering how Yahoo’s senior management manages to keep themselves in power. The private equity funds who agreed to let Yang and Decker stay in power after the shareholder vote last summer have some real explaining to do to their investors, too.

Yahoo has no game plan, and the markets tend to notice these things. It’s time for an intervention.

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It’s literally been ten years since Yahoo updated its online calendar. And it’s been more than two years since Google launched its Web-based calendar. But tonight it will start rolling out a new drag-and-drop, Ajax calendar in a closed beta to Yahoo Mail users in the U.S., UK, India, Taiwan, and Brazil. You can sign up for it here.

The new Yahoo Calendar doesn’t do much that you cannot already do with Google’s or other online calendars. It is based on underlying technology from its Zimbra enterprise e-mail unit, and supports both iCal and CalDAV standards for the easy import and export of events. The new features compared to Yahoo’s Web 1.0 calendar are:

1. Drag & drop interface.
2. Layering (view multiple calendars in different colors or subscribe to someone else’s calendar)
3. Zoom in when adding an event or appointment
4. Integration with Flickr
5. Can set email, IM or SMS reminders.
6. To-Do list.

Compared to other onlne calendar’s such as Google’s. there is nothing novel here other than the zoom-in function and the Flickr integration. The Flickr feature adds some nice eye candy by randomly selecting highly rated Creative Commons photos as background thumbnails for up to eight days each month. In the future, Yahoo will let you upload photos from your own Flickr stream. It is also planning on letting users add events from Upcoming.org, or subscribe to calendars from Yahoo Sports (game dates), Yahoo Finance (earnings schedules), Yahoo TV (programming schedules for your favorite TV shows), and other properties including from partner sites.

Despite being a me-too offering, this should help Yahoo grow its market share in online calendars. It is already the market leader, even with its 1.0 product (consumer inertia is on its side). According to comScore, Yahoo Mail has 285 million users worldwide (88 million in the U.S.), and of those 8.1 million use the calendar (3.7 million in the U.S.). Google Calendar has 5 million users worldwide, and 2.4 million in the U.S. The Web 2.0 makeover should help Yahoo maintain its lead for at least a little while longer.

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Congress is finally understanding the reality of the Yahoo-Google search deal, and what it means for the state of search competition in general. It’s not about price fixing advertising rates, it’s about neutering the second place market participant.

As I wrote on September 27, the current deal between Yahoo and Google will inevitably lead to the decline of Yahoo’s core search advertising business. They will insert Google ads to push revenue. But as they do so, they’ll give advertisers an increasing incentive to just go to Google for their ad management. The disparity between Yahoo and Google’s revenue-per-ad models will grow, which will further encourage Yahoo’s reliance on Google. The result will be a Google monopoly in search advertising. And instead of competing for that monopoly, they get paid for the privilege:

But the test results showed just how dramatically Yahoo can increase cash flow with Google ads. The more Google ads are shown, the more money Yahoo makes. And in a world where all that really matters is the financial results in your next fiscal quarter, the incentive to use more rather than fewer Google ads will be too large of a temptation.

Yahoo will be able to fine tune their financial results simply by turning up the volume on Google ads v. their own. Every time they do that they mortgage their future because they give more network power to Google’s ad system (advertisers want volume and will pay a premium for it). In other words, Yahoo will be making constant cost benefit decisions weighing short term cash flow v. long term competitiveness. Human nature and simple financial market psychology tells us unequivocally that cash will win and Yahoo’s ad network will lose.

Yahoo’s ad network will continue to erode further as they choose cash over competitiveness, creating a viscious downward cycle. As the fiscal quarters march relentlessly on, Yahoo will rely more and more on Google to make their revenue and earnings numbers.

This is the same tune I and others have been singing all summer.

Now Sen. Herb Kohl (D - Wisc.), chairman of the Senate Antitrust Committee, is taking the argument a step further. In a letter to Assistant Attorney General Thomas Barnett, he outlines a similar argument and urges the DOJ to “intervene to protect competition” in the event “Google is gaining a dominant market position” (yeah, too late). He wrote (emphasis added):

In addition, many interested parties are also apprehensive that if the transaction is consummated, Yahoo will have less incentive to compete against Google, as it will rely upon its main competitor for a significant increase in its revenue. Therefore, critics contend that an advertiser will have an incentive to bypass Yahoo entirely and only bid for Google advertisements since an advertisement purchased with Google could be placed on both Yahoo and Google’s search result pages. Opponents further argue that as Yahoo increases its revenues by placing Google’s advertisements on Yahoo’s search result pages, Yahoo will only seek to expand this activity. As a result, some argue that over time Yahoo will no longer be a significant competitor in the internet advertising market.

The full letter is here.

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Earlier this month both AOL and Yahoo redesigned their home pages to include more links to outside services.  The new AOL homepage features prominent links to Gmail, Hotmail, and Yahoo Mail, as well as to bookmarks leading elsewhere, and integration with Facebook and MySpace.  Yahoo’s new home page, which it is still bucket testing selectively, also includes more directlinkstoother e-mail providers, social networks, and a new left-hand channel strip that can be modeified by suers to include links to their favorite Web services.  For YAhoo, it is part of its strategy to become the preimier starting point on the Web, no matter where people wan to go.  But in an era when the destination site is quickly dying, if not already dead (with information pushed and personalized to you via services like Facebook, FriendFeed, and Twitter), will these redesigns be enough?

In a note today, Wall Street analyst Douglas Anmuth (formerly of Lehman Brothers, now of Barclays Capital) is not so sure.  He writes:

• Fundamentally, we believe these actions are necessary steps, but we question if they will make the portals more relevant in the context of a constantly fragmenting Web, and we certainly do not expect them to have an immediate impact on financials.
  
• We believe embracing openness principals by Yahoo! and AOL are the right steps strategically, but the key is whether both properties can improve their monetization of traffic given the current challenging display ad market.

Given that AOL and Yahoo are seriously exploring a combination, at least they are on the same page strategically. But it kind of makes you wonder how much difference the more open strategies pursued by both portals will make. Especially in this market.

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Yahoo and Google aren’t holding anything back in their effort to win our hearts minds in the search marketing war. Or rather, Yahoo’s surrender in that war as they prepare to include Google Adsense ads in their search results.

They had what amounted to a advertorial in the New York Times earlier this week. Google wrote not one but two blog posts on the matter, and launched a whole website with their side of the story. And today Yahoo President Sue Decker weighed in with a long blog post, with all the same arguments.

Microsoft, hoping to kill the deal, hasn’t been sitting quietly. They’ve got their own websites and have been lobbying the government for months to oppose the deal.

The deal allows but does not obligate Yahoo to place Google ads on their site instead of their own. Google and Yahoo stress that Yahoo is committed to keeping their own robust advertising platform to ensure long term competitiveness.

But the test results showed just how dramatically Yahoo can increase cash flow with Google ads. The more Google ads are shown, the more money Yahoo makes. And in a world where all that really matters is the financial results in your next fiscal quarter, the incentive to use more rather than fewer Google ads will be too large of a temptation.

Yahoo will be able to fine tune their financial results simply by turning up the volume on Google ads v. their own. Every time they do that they mortgage their future because they give more network power to Google’s ad system (advertisers want volume and will pay a premium for it). In other words, Yahoo will be making constant cost benefit decisions weighing short term cash flow v. long term competitiveness. Human nature and simple financial market psychology tells us unequivocally that cash will win and Yahoo’s ad network will lose.

Yahoo’s ad network will continue to erode further as they choose cash over competitiveness, creating a viscious downward cycle. As the fiscal quarters march relentlessly on, Yahoo will rely more and more on Google to make their revenue and earnings numbers.

There are three players in search today. In the long run the 80/20 rule is likely kick in unless a monopoly emerges. Microsoft needs to be that 20% player to keep the Internet healthy, just as AMD keeps Intel’s processor prices in check even though they don’t have much actual market share.

But if Google gets Yahoo, Microsoft won’t be able to be that counterbalance. And then Google will be free to charge monopoly prices to advertisers and share next to nothing of that revenue with publishers.

That’s why killing this deal is so important. It’s not about the share price of Google, Yahoo or Microsoft. It’s about maintaining a healthy Internet ecosystem that continues to let entrepreneurialism bloom.

My position on this has been steady since Microsoft first bid for Yahoo early this year. It’s destroyed my relationship with (the execs that remain at) Yahoo, and the chill is palpable during my few visits to Yahoo HQ these days. I can live with that, but what I don’t want to live with is an Internet where all the advertising revenue goes to one company. That sounds too much like the Windows/Office world of the 90s to me.

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Yahoo has conducted some rather self-serving research in conjunction with ComScore and Media Contacts that concludes the obvious: most consumers care intensely about only a small number of websites, and it’s these websites that make for the best places to advertise.

After analyzing over 12 million “passively observed site-user paired data points” from ComScore and surveying 800 users, the report came up with the following statistics:

• People visit on average 85 sites over the course of a month; they are “deeply engaged” with only about 1.5 of them
• People visit these 1.5 sites almost every day they go online
• People have been visiting these 1.5 sites for approximately 4.5 years
• People spend more than 1/3 of their time online at these 1.5 sites
• People are 13% more willing to pay attention to ads, and 200% as likely to find trustworthy information, at these 1.5 sites

The report calls these 1.5 sites “starting points” and asserts that they can be “portals or homepages or search engines”. So let’s see here…portals, homepages, search engines…at least 4.5 years…what the goodness could they could be referring to? Oh yea, Yahoo.

Since people are “13 percent more likely to pay attention to ads in ’starting points’ versus ‘non-starting points’” and “deep engagement with content can lead to deeper engagement in advertising,” the report implies that sites like Yahoo are “ideal location[s] to reach [people] with targeted messages”. The take home message: consumers love Yahoo so advertise to them there.

You gotta love these unbiased, scientific studies.

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In an effort to justify its ad deal with Yahoo, Google is making some very public statements defending it from antitrust critics. Yesterday, Google’s advertising president Tim Armstrong tried to argue, unconvincingly, that advertisers would not see increased prices as a result of the deal. Today, he tackles the anti-competitive issues. In the same Q&A style he used yesterday, Armstrong addresses one of the big fears behind the deal:

Question: Over time, will Yahoo! just outsource more and more of its ads to Google and cease to exist as an independent ad platform?
Answer: Yahoo! has made clear that it will still use its own system to serve ads, and it will use extra revenue from this deal to improve its ad platform. The arrangement only covers the U.S. and Canada, and does not cover the fast-growing mobile segment. Yahoo! also has a strong economic incentive to keep serving as many of their own ads as possible, since they get to keep all of the revenue from those ads, while Yahoo! will only receive a part of the revenue from ads served by Google. In addition, Yahoo! has a leading position in display advertising, and will be able to offer advertisers a unique combination of advertising opportunities.

Essentially, Google’s argument here is that the deal will make Yahoo stronger because it will give it more money to reinvest in its own ad platform. But what if it doesn’t make Yahoo stronger? What if Yahoo takes that money and throws it down a rat hole? There is no guarantee that by simply spending more money on its ad platform Yahoo can make it serve more relevant ads. The problem so far has not been a lack of funds.

Well, you know what they say about things that don’t make you stronger. That’s what ends up killing you.

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Just as Google is trying to deflect growing antitrust concerns (see previous post), its core search market share also keeps on growing. ComScore’s August search engine market share numbers came out today—via Citi analyst Mark Mahaney—and are reproduced above. Its share of U.S. search queries rose in August to 63 percent, from 61.9 percent in July. Looks like its march towards monopoly is back on track after a slight dip in June.

Meanwhile, Yahoo’s share went down nearly a point from 20.5 percent to 19.6 percent. Again, Yahoo’s loss was almost exactly Google’s gain.

Not that Microsoft is doing much better. Its U.S. search share fell from 8.9 percent to 8.3 percent. Its Live Search Cashback promotion, which accounted for only 8 percent of its searches in August (78 million out of 977 million total search queries), is still not helping stem its decline.

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Will the last person out please turn off the lights: Yahoo’s Director Communications & Communities Kiersten Hollars (pictured right along with CEO Jerry Yang and President Sue Decker) will shortly be leaving the company to lead Digg’s communication team.

Hollars previously reported to Brad Garlinghouse, who announced his departure in mid June. Her previous boss, Bradley Horowitz, is also gone - he left for Google in February.

This is the second reported departure from Yahoo today. More are certainly coming.

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Apparently Yahoo has caught the bizarre marketing bug. Today the company has launched “Start Wearing Purple”, a campaign that is trying to capitalize on the color’s reported association with “innovation and imagination” (I always thought it was tied to royalty). Purple has long been Yahoo’s official color, though the logo displayed on its homepage is now a striking red.

The campaign is centered around the web portal Start Wearing Purple, which includes features like “Purple Picks” - a daily series of links to things which the Yahoo team has deemed Purple-worthy. There’s also a special Flickr Account celebrating all things purple. And over at Purple Pranks, you can watch a few bizarre setups led by Improv Everywhere’s Charlie Todd. Highlights include an elevator full of people singing a song about their favorite color whenever a stranger walks in.

The coolest component of the campaign is Purple Bikes. Yahoo has outfitted a fleet of 20 purple bicycles with solar powered cameras, GPS, and mobile Internet connectivity, which are now making their way across a dozen cities around the globe. The bikes will be taking (and automatically tagging) snapshots every sixty seconds, which chronicle each traveler’s journey on a special Flickr map. You can read more about the Purple Bikes over at CrunchGear.

So is Start Wearing Purple a total bust? Major corporations launch marketing campaigns like this all the time in order to increase brand awareness and show their users that they have a soul. And as far as these campaigns go, Yahoo seems to have done a good job - the improv videos are funny, the bikes are cool, and the site is fun to play around with. Still, I can’t help but wonder if the marketing dollars could be better spent convincing me to actually use Yahoo once in a while.

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Yahoo has highlighted a few more implementations of BOSS, the search API it launched in early July that allows third party websites to incorporate Yahoo search functionality seamlessly into their sites.

This is the second time Yahoo has showcased the fruits of BOSS developers. In early August, Yahoo drew attention to 4HourSearch, the Cuil knock-off formerly known as Yuil; PlayerSearch, a sports-focused search engine; Newsline, a tool for plotting news items on a timeline; and Tianamo, a 3D search visualization tool for Windows machines with Java installed.

Now we’re presented with three more implementations: 123People, askBOSS, and BuildaSearch.

123People

123People is a search engine designed to help you find information about ordinary people. It supposedly returns the best results for people living in Europe, although the index includes those living in the United States as well.

123People has used BOSS to show web results and images about people alongside the email addresses, instant messaging accounts, documents, phone numbers, and other information it collects from elsewhere. Unfortunately (or fortunately?), I couldn’t find more than a few photos of myself when searching with my name, even when I told it which area code to look within.

askBOSS

Built by a Yahoo employee, askBOSS is like Powerset for images. It processes natural language (i.e. “who was the first president of the United States?”) and returns images that are intended to “answer” your query.

In my tests, it worked very well with some queries (“who is the lead singer of the Rolling Stones?”) and returned amusing but inaccurate results for others (“what was the first machine gun?”). But then again, this kind of search isn’t supposed to be easy.

BuildaSearch

BuildaSearch intends to remove the whole programming aspect of implementing BOSS for your website. It simplifies the setup process by letting you pick just the colors, images, and scope of search results you desire.

It took me a a grand total of 30 seconds to set up site-specific search for TechCrunch, found here. Unfortunately, our logo only shows up on the first page so the engine isn’t truly white-labeled.

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