Despite Yahoo's push for fees, ads still drive its growth

Yahoo’s revenues are up to $356 million from $249 million. What’s especially interesting is that despite Yahoo’s stated desire to increase subscription and user fee revenue, advertising is driving this growth:

  • Marketing services grew 48 percent to $245 million.
  • Yahoo’s branded advertising sales grew 20 percent.
  • Fee revenue (e.g. personals, e-mail and Yahoo/SBC broadband access) grew 38 percent.
  • Listing fees rose 26 percent.

A lot of their fee revenue (personals and listing fees) should be considered advertising.

The WSJ says that the SBC/Yahoo Internet service is a success, but it’s unclear how much of that success is due to Yahoo’s fancy broadband portal and how much is due to good old fashioned competitive pricing and a greatly improved installation process:

With a joint venture called SBCYahoo, the two companies together offer a package of a DSL along with a customized Web portal, priced at $29.95 a month — and as little as $26.95 per month when part of a package with other SBC services — well below the monthly fees charged by rival cable broadband operators

In any event, it’s debatable whether the SBC revenue should be considered subscription revenue or a licensing fee, since SBC is doing the selling and Yahoo is doing the developing and branding.

That’s one problem with bundling, sometimes it’s hard to know if it’s the bundle or an individual component that is driving sales.

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