YAHOO! has concluded that TUMBLR, the social blogging service, is worth more than $1 billion. That’s what their betting on the service. Whether it’s worth that amount will depend upon whether or not the combined company can turn its millions of users into an interlocking set of services that no competitor can hope to replicate.
The holy grail for any business is to bring in exceptionally high profits and have something unique that keeps the competition out. For GOOGLE, it’s an interlocking system of Gmail, Goole Search and Google Docs and Google Earth that become so much a part of users’ lives that they can’t fathom switching to another service.
YAHOO! has a few business lines where, if you squint, you can see an advantage. Its financial message board and stock portfolio tools are “sticky”, in that once you’re a user, you don’t want to move to another service. But much of what YAHOO! does is to develop content that people people will like, and sell ads off that content. That has few inherent advantages over AOL, or, for that matter, any other media across the land.
Thanks to Neil Irwin and the Washington Post, and
Thanks for listening,
Howard
The Neu Facebook
