A 4 point plan to save Yahoo

Since moving to the valley I have begun to appreciate what Yahoo! is to the web. When I was young I might have seen yahoo as a search engine or a competitor to AOL, and even today Yahoo holds some of the coolest companies like Delicious, and Flickr. Yahoo, unlike Microsoft and Google has a simple brand, a brand that people like and a brand that people know. Their brand is like internet gold, almost a Disney of sorts for internet content, and that is their problem. Disney is a world wide brand but today, they find themselves competing head to head with other animation studios, like Yahoo! tries to compete with Google, if only Yahoo! would stop trying to compete with Google on PageRank, they might actually do well. Yahoo needs to work with what they have, 1 billion users, a friendly and trustworthy brand, and access to some of the webs most innovative startups. Microsoft knows this and arguably wanted to buy Yahoo!s eyeballs and brand, so we know that is Yahoo’s value, but maybe Yahoo has more?

So to help Yahoo capitalize on what it has I have a few things I would try.

1. Re monetize Flickr.

There are several photo sites that earn more revenue per user than Flickr, sites like SmugMug. SmugMug and Flickr differ in that SmugMug enables an ecosystem of photographers to earn a living, where Flickr is more of a sharing site. Flickr has more in common with Wikipedia, and to follow the comparison, SmugMug would be like Wikia. The point is that SmugMug capitalizes better on their users with accounts that range between $40-$150 a year in cost. Flickr also misses out on the photobucket revenue play, and the stock photo play that iStockPhoto, GettyImages and other stock photo sites play off of. A perfect Flickr would compete at scale with all of these markets. With 6+ million photos uploaded every day, Flickr could surely monetize better.

2. Own the Living Room

There are a number of ways that yahoo could signal they are a growth company, and one such way would be to buy a nearly recession proof company like Netflix that makes a habit of friendly interfaces, great customer services, and improving video selection and access. Sure Hulu launched and a number of other internet video sites, but Netflix has paying customers, is involved in revenue positive independent films and could draw the attention of what Mark Cuban is doing with content. Buying Netflix gives Yahoo access to software running on XBOX 360, the PS3 and their own box.

3. Partner with IBM

60-70% of IBMs revenue is based on services and in a recession services take a hit. IBM is a cash strong company with a ton of expertise in making stuff work. IBM also lacks in content distribution channels. IBM loves the idea of SecondLife, virtual world, virtual goods, and how that relates to the enterprise. Yahoo and IBM could make a great team and buffer Yahoo from being bought by Google or Microsoft; it would create a trinary web market. IBMs hardware expertise would also play well with the Netflix set top box. Yahoo and IBM also have similar brand reputations, with Yahoo being more consumer, and IBM being more enterprise.

4. buy Opera, partner with Nintendo

Microsoft has IE, Google has FF, and Chrome, Yahoo should buy Opera just to square the field. I believe IBM would support this too. Opera is also the largest mobile web browser, and is on the Nintendo Wii. Next, Yahoo should sign an exclusive distribution play with Nintendo to deliver Social Flash games via the Wii. Yahoo has Y!OS and 1 billion users to promote the Wii’s social and casual gaming status, and Yahoo has the ability to manage a safe relationship with cool Flash games into the living room via the Wii. Buying Opera would allow Yahoo to offer Flash via Javascript full access to the Wiimote’s functionality, and Opera has a history of pushing the browser experience. I think Opera would enjoy the chance at the living room.

So that is my 4 point plan to save Yahoo. Pulling all of these off ASAP would be idea, but pulling 1 or two off would still create billions of dollars in revenue a year for Yahoo!, and they are plays that are not in direct competition with Google. They are also good sources of revenue in a recession, games and entertainment typically do well and no one has won the living room like Apple has won music, this is Yahoo!’s chance.