Updated 2:56 p.m. PST with further details.
SAN FRANCISCO--After months of preamble, Yahoo on Monday flipped the on switch for a massive project to increase activity--and advertising--on its Internet sites through social connections and online applications.
The company has been working mostly behind the scenes to build what it calls the Yahoo Open Strategy, but now the strategy's changes will become evident to U.S. users of some of Yahoo's main properties such as Yahoo Mail, My Yahoo, and Yahoo's music and TV sites. In addition, the company will begin previewing a new Yahoo Toolbar later this week.
"We wanted to establish a social dimension," Ash Patel, executive vice president of Yahoo's audience products division, said of the Yahoo Open Strategy goals. And to attract programmers who can build applications on Yahoo properties, "We wanted to engage with the developer community and to open up the power of Yahoo's products and platforms."
Yahoo Mail, which according to ComScore has about 275 million active users each month, gets some significant changes, with more to come. First is a new welcome page that now spotlights messages from people in a person's Yahoo social network and invitations from others to join their networks. And the in-box page now includes a new "from connections" button that shows e-mail only from those social connections.
Second is the arrival of online applications tied to Yahoo Mail. One inaugural program from Xoopit lets you view all the photos in your e-mail archive, even expanding links to online galleries. Another lets you convert an e-mail message into a WordPress blog post in two clicks.
"The opening of the mail platform is a huge benefit to users in terms of the additional forms of sharing and communication we can build in and to the developers who can build applications," said John Kremer, vice president of Yahoo Mail, speaking to reporters at a launch event here.
More mail changes are coming, he said. Among them will be birthday reminders and the ability to exchange large files, Kremer said.
The new mail abilities require a the cooperation of Yahoo users' contacts: they must agree to be listed as your contact before they can become a part of Yahoo social activities. That's because of privacy considerations, Kremer said. For example, the right-hand side of the new Yahoo Mail welcome page also shows contacts' activity such as photos posted, movies recommended, or applications added, and that's information those people might not want to share with just anyone.
Leapfrogging the Joneses
It's not all fun and games. Building use of Yahoo into members' social lives and letting them use applications housed on Yahoo sites means more advertising for Yahoo. That was important earlier this year when the company was stagnating financially, but it's even more important now that the recession has put extreme pressure on the ad market. And Patel believes the ads that can be delivered with the social context--for example clicking on the Yahoo Music page for an album a friend just rated highly--will provide valuable context for advertisers.
"Targeted (ad) inventory sells better than untargeted inventory," Patel said.
The Yahoo Open Strategy theoretically could help Yahoo not just keep up with the Joneses, but leapfrog them. Although Yahoo capitalized on the first generation of online social activity, e-mail and instant messaging, it lagged rivals such as Facebook when it comes to letting people build online communities of friends and business contacts. Yahoo's new strategy, though, is tuned to its own assets.
Google has got a powerful search engine, but its online community is nascent compared to Yahoo's. Facebook and MySpace have got social ties, but not Yahoo's breadth of finance, sports, entertainment, news, and communications. Yahoo Open Strategy is a recipe not easily reproduced in full by Yahoo competitors.
The hard part will be bringing the transformation to fruition fast enough.
For the Yahoo Open Strategy to pay off, the company must encourage its members to register new profiles and to link their friends into their social network. And it will have to coax a lot of programmers to build good applications then coax Yahoo members to activate them. All this takes time, and Yahoo, with Microsoft and Google breathing down its neck, doesn't have the luxury of time.
Getting people to sign up for yet another social service--Yahoo strenuously objects to calling its work just another social network--is another hurdle.
"There is going to be some fatigue on that process," Kremer said of people getting inundated with a new round of online service invitations. "It may slow down the virality of what we're doing."
But the company believes it will spread because people will find it useful. And unlike some services, Yahoo hopes people only set up their service with a small number of important contacts rather than compete for the biggest networks.
"I don't want my users to sign up for 500 connections," Kremer said. "I want this to be for the tight inner circle--those five or ten or fifteen people they scan for" when checking their in-box.
The Yahoo Mail change is one of a host announced Monday. Among others:
Yahoo also announced changes to its customizable home page, My Yahoo, that lets people add applications and customize the page's appearance. For example, Yahoo showed a wine-themed page with its own background and content.
A new toolbar for Web browsers also gets drop-down interactivity that can show what a person's contacts are doing, what e-mail has been received, and other information. A preview version of the toolbar will be available later this week for download.
Yahoo's media properties can spotlight contacts' activities, such as when they assign a five-star ranking to a particular song. "Our media properties monetize really well," Patel said.