ZDNet UK / News and Analysis / Business of IT / IT Strategy

Yahoo! launches advice site

By Troy Wolverton, CNet, 30 April, 2002 09:03

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Yahoo!, Finance, Internet, Portal, Chat, Services, advice

NEWS
Yahoo! is hoping to offer some better advice. The online portal company is launching a new advice site Monday night that will pair customers seeking advice with self-described experts. The site, which will be powered by online advice company LiveAdvice, will replace Yahoo!'s homegrown experts site. "This is a pretty good opportunity for Yahoo!," said Mark Hull, director of community services at Yahoo!. "This is part of Yahoo!'s overall strategy of focusing on developing deeper, richer services, while maximising our financial returns." Yahoo!'s move comes as the online advice market seems to be in flux. A number of competitors such Exp.com and ExpertCity.com have changed their business models. And online directory service LookSmart closed its live advice site after it became difficult to support during the online ad market slump. Meanwhile, LiveAdvice-rival Keen, which is backed by eBay, went through a management shakeup last week, firing its chief executive and chief financial officers. Despite the shakeup, closely held Keen says that the demand for its services is growing rapidly. Yahoo!'s move comes as Google, which is steadily moving beyond its search services, has branched into the advices market. Earlier this month Google launched a beta site called Google Answers. Google users pay to list a question on Google Answers, then pay a flat rate to a company-selected expert who provides an answer. Yahoo! launched Yahoo! Experts, its own entry into the advice market, in the fall of 2000. Yahoo! will close the site, which allowed customers to connect via text messages for free, at the end of next month. Yahoo!'s new advice site is part of a 2-year agreement signed Monday between Yahoo! and LiveAdvice. As part of the agreement, the two companies will share revenue generated by the site. The companies did not disclose other or more specific financial terms of the deal. LiveAdvice, which is involved in a patent infringement battle with rival Keen, has some 600,000 registered users. As with Keen, LiveAdvice connects experts and advice-seekers over the phone or through email. LiveAdvice charges a 6-cent per minute connection fee for phone calls made through its service within the United States and Canada and takes a 30 percent to 50 percent commission on fees charged by advise givers. Yahoo! Advice will charge the same rates, a LiveAdvice spokesman Michael Fox said. LiveAdvice users will be able to link their LiveAdvice ID to a Yahoo! ID if they enter through Yahoo!'s site. Meanwhile, Yahoo! users will be able to use their current Yahoo! ID, but will need to provide supplemental information such as their phone number to use the site. LiveAdvice and Keen have claimed high growth rates and growing revenues and have drawn investments from companies such as Draper Fisher Jurvetson for LiveAdvice and Benchmark Capital for Keen. But the sites have often been derided for being merely Internet updates on phone sex lines or psychic hotlines because of the preponderance of such listings on their services. Although Yahoo!'s advice site will include psychic, relationship and related listings, the site will not include any adult listings. LiveAdvice plans to drop all adult listings from its service within three days, said Beth Haggerty, the company's chief executive officer. Such listings contribute only about 2 percent of LiveAdvice's revenue, Fox said. The decision to drop adult listings is unrelated to the Yahoo! deal, Haggerty said. LiveAdvice made the decision because it didn't want its brand associated with adult listings, she said. "Our investors felt strongly about this," Haggerty said. "There might be a fair amount of revenue there, but it's not really a business that we want to be in." The advice site is the latest fee-based service Yahoo! has launched in recent months. Plagued by plunging revenue and mounting losses, the portal giant has been trying to find additional sources of revenue to supplement its core advertising sales. Earlier this month, Yahoo! launched a new Webcasting service targeted at business clients and announced plans to debut a new premium gaming service. The company is also testing the feasibility of charging customers for phone support.
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