MySpace for 25% Yahoo!

Note: The following views are just that: mine and not my employer's.

News Corp is considering swapping MySpace for 25% share in Yahoo.

Made me think: Is it "the" sign that Yahoo! has given up or is MySpace really worth that much?

Yahoo! holds some key IP assets and it can certainly make a come back, or so I believe. It is just a matter of leadership that can find the right balance between monetization and user experience.

Monetization today is all about contextual. Sure there are many companies today that are pitching behavioral targeting as bigger, but honestly speaking, we are not there yet. Behavioral targeting just cannot monetize as well, at least not now.

Contextual, on the other hand, is a gold mine with relevancy being the key. I cannot stress how important the relevancy is. It is relevancy that is not spam, satisfies a query and makes a user feel ads are not intrusive. Relevancy is so important that I believe it was the primary reason that DoubleClick didn't become Google. Lack of attention to relevancy is where MSN fails as well.

Sure, Google can and will continue to diversify into many areas, but I doubt they will find a cash cow that is not based on, or directed related to relevancy.

Valuing MySpace for 25% of Yahoo! is not a good deal from Yahoo's point of view, at least not from the financial perspective. Giving the changes that are in the air, I would value Yahoo! for what it will be worth five years from now. Making such a big decision today is going to cause a lot of regrets later.

I believe, that's a lot of Yahoo! for a lot of teenagers who may not get Yahoo! out of the situation it currently is in: lack of balance between monetization and relevancy. If you see things differently, I'd love to know.