Yahoo generates an estimated $500-$600 million a year in revenue (approximately 8% of total) from access partners: a share of subscription revenue in exchange for providing customised portal, email, search, etc. Yahoo just renewed its access deal with one of these partners, Canada’s Rogers (Release). According to Mr. Om Malik, it did so on far poorer terms: Instead of getting a share of access revenue, it now has to fork over a share of advertising revenue.
If this is true (we’re seeking confirmation), that $500-$600 million of revenue is likely headed to zero, as other access partners renegotiate their own deals over the coming years. Yahoo will probably get some incremental traffic from an expansion of the deal onto Rogers’ mobile platforms, but this almost certainly won’t offset the lost revenue. This won’t do wonders for Yahoo’s revenue growth and revenue diversity: Fee-based revenue will now be converted into Traffic-Acquisition-Cost.
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