Yahoo Adds Content Aimed At 'Social Media Environment'

In a report issued yesterday, Derek L. Brown of Pacific Growth Equities said Yahoo and Internet advertising have already reached "an inflection point" that he thinks will propel Yahoo through years of "robust growth, expansion and market share gains."

David Edwards of American Technology Research also was bullish, writing that Yahoo "is currently being penalized because it isn't Google." Search-focused Google is more of a software company, he suggested, while content-rich Yahoo looks more like a media network.

Edwards noted that the number of Yahoo's fee-paying customers jumped in the quarter, to 10.1 million, up 58 percent from a year ago, generating $159 million in revenue. In addition to music, Yahoo charges for enhanced e-mail, fantasy sports games, personals and content bundled with access from such partners as SBC Communications Inc. Edwards said the increase supports his view that Yahoo is building a successful subscription business for enhanced services and content, helping diversify its revenue.

In addition to search ads, which account for the biggest portion of its money, Yahoo collects several hundred million dollars per quarter for display ads, which Google hardly sells at all. Yahoo declined to break out how much revenue it gets from each category, but analysts said its take from search is larger and growing faster.

Google, whose revenue eclipsed Yahoo's in the first quarter for the first time, is slated to report second-quarter results today.

Like Yahoo, Google has been adding services and content almost weekly. Yet it has largely eschewed human-edited content in favor of the computer-generated variety. As a result, its expenses are much lower: It had only 3,482 employees at the end of March, less than half the 8,800 Yahoo had at the end of June.

As I said, Yahoo is betting on content of the human kind. And I, for one, always root for the humans.

Leslie Walker's e-mail address iswalkerl@washpost.com.