The San Jose Mercury News’ Jessie Seyfer is one of my favorite telecom beat reporters. Her story today has me quoted on the new release of Yahoo Messenger with Voice.
One of the quotes she used `’With this deployment, Yahoo becomes the rooster in the henhouse for the partners.” is something that everyone has to realize is not an if, but a when. Yahoo, with their community is lot more portable than a telco is to the customer. When a person moves they can leave the carrier, be it landline or cell. But their Yahoo ID (for identity) is like a Social Security number and it goes with them as it’s very portable. That means the value to Yahoo on the books per customer is likely worth more than to a telco long term, as long as they can keep the consumer engaged and active.
Jessie also quoted me this way when asked how I view the Yahoo offering versus Skype: “If you’re Skype, and Yahoo comes out with offerings tied to their
content, that leaves Skype outside,” he said. “To offer ringtones,
Skype has to go out and acquire licensing rights, where Yahoo has
already established partnerships for music, video, and audio.”
The point about already licensed rights for things like ringtone and ringback tones as well as Yahoo’s partnerships with entertainment properties and things like sports fantasy leagues linked to conference calling is huge. This is what builds Wall Street support because it’s recurring revenues in growth sectors that already have metrics. It should be rather easy for Yahoo’s Investor Relations team to present those kinds of comparisons and show what it means to their balance sheets and income statements year over year. If Yahoo smartly negotiates exclusive content deals or limited windows of use type relationships from a promotion standpoint they win over Skype simply because Skype doesn’t have, and thus can’t match all the other inventory to package up together that Yahoo, as a ad driven portal play has to offer to an entertainment company. Besides, Yahoo can also point out how eBay fuels the secondary market of resold (i.e. used/pre-owned) CD’s home videos and DVDs which takes cash away from the studios and distribution companies while Yahoo plays a much greater role in driving first time, new in the package sales. At the end of the day who has more to offer the rightsholder? It’s Yahoo.
We also talked about how Yahoo makes money, something that didn’t make the story. First their is the huge gross profit in the DIDs. Like over $2.00 a month, not including Yahoo’s administrative costs for it. We also talked about the concept of breakage. That’s where consumers pay up front in the pre-paid model, but don’t use their minutes right away, but over a period of time (or never at all).
Lastly we talked about the Dialpad acquisition and what a masterful stroke that was to obtain the service that already has VOIP LCR (least cost routing) and anti-fraud detection. Telephony is a fraudsters paradise and Yahoo made sure upfront they can offer an almost fraud-proof, minute arbitrage ready product wen they came out with it. That move, sometime last year was pure genius, as it allowed them to rapidly and safely get into the game.