New Yahoo! Inc. CEO Jerry Yang may have still been adjusting the seat-back on his Executive Aeron chair when Ruport Murdoch — through a well-timed leak, one presumes — showed him what being the big chief is all about. As shown by News Corp.'s reported interest in swapping MySpace.com for up to 25% of Yahoo!, that role entails putting vulnerable competitors in a head lock and squeezing 'till they turn pretty shades of blue.
And really, Yang can't win on this one. On the one hand, with Google Inc. kicking the CPM out of Yahoo! on search, investors are urging Yang to focus on businesses where it can (theoretically) compete, such as social networking. On the other, despite all the hubbub, as a business there's nothing magical about social networks.
Like other standard consumer Internet plays, they're subject to the whims of, well, consumers. The reason MySpace took off is because the cool kids thought it was cool. Now, there's no telling how much longer MySpace will remain the place to hang out online, but being owned by Yahoo! wouldn't help. That's because in recent years Yahoo! has shown little ability to create that elusive mixture of utility and exclusivity possessed by MySpace, YouTube and other hip online properties (which is why Yahoo! is sniffing around Facebook). And in expanding under Yahoo!, MySpace would risk further fragmenting its user base (goodbye, cool kids), diluting its brand and ultimately hurting the company's value.
Bet Murdoch knows that. Hope Yang does too. —Alain Sherter
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