I am fascinated by the speculation/rumor, which Staci Kramer so ably sums up, that News Corp would sell/merge MySpace into Yahoo for 25 percent of the company while Yahoo — now Myhoo — would outsource its search business to Google, probably making more in search than it could on its own. (More from this Times and that Times.)

This could be a brilliantly cagey move even for brilliantly cagey Murdoch, for it gives him an at-least 20x return on his MySpace investment in only two years ($580 million for MySpace now bringing in more than $10 billion in Yahoo equity) and gets him out of managing MySpace, which could be tough as Facebook gains speed. (Murdoch also becomes the rescuer — depending on your perspective — of old-media companies from Wall Street to Silicon Valley — Dow Jones and Yahoo both being old-media. But note that he was still too smart to buy newspaper empire Tribune Company; that’s just too old.)

For Yahoo, this would focus them, I believe, as a social media company. They’d be out of the search business. They’d still have services — email, Flickr,, chat, personalization, rss — but those should become aps in a larger social world of MySpace and beyond. Their content could also become modules to be distributed socially. So suddenly what I said yesterday doesn’t sound so crazy:

OK, here’s what I’d do with Yahoo: I’d pull a reverse Facebook, a Zuckerberg with a twist. Facebook opened itself up as a platform for people to come in and do things there. I’d open up Yahoo as a platform for people to export instead. I would turn absolutely every — every — piece of Yahoo into a widget any of us could export and use on our own sites. I’d take all the functionality there and enable people to enrich their own sites, to build on top of it. . . .

I would argue that this would not work if you could do all this only at Myhoo. We should be able to use these widgets anywhere — on our blogs, on major news sites now needing to focus on what they do best, on our own local social networks, on advertisers’ sites, even: anywhere. This becomes Yahoo turned inside out, the exploded portal. It is CBS’ audience network, user-as-distributor strategy to its limit. It takes Google’s strategy of turning itself into aps and widgets (a la AdSense) that can be used anywhere and one-ups them. You see, all this is possible as soon as Yahoo widgetizes itself to be used on MySpace; then those widgets can — or should — be used anywhere. So this becomes Yahoo’s own answer to the question: WWGD? This also starts to show Google’s limits: It doesn’t own social as it owns search and advertising. Orkut didn’t work (outside India and Brazil). Facebook and MySpace are ahead and they fight it out to be the organizer of people and our connections.

The odds of this happening: about 0.1 percent. News Corp. could be nimble enough to pull it off. But Yahoo is, witness the peanut-butter manifesto, just too large and lumbering and, well, old, at 14 years of age, to move decisively. But that was fun to contemplate anyway.

  • Yahoo Sports competes with Fox Sports on the web, funny not one of these armchair ceo’s knows the score.

  • Jeff, I’ve got a completely different take on what’s going on here that I plan to post on my site, late tonight. I think Murdoch’s got much, much bigger and more daring plans than making a bundle on MySpace and getting part ownership of a widget company. For now, here are some things to consider: 1) Yahoo is the #1 most visited news web site; 2) The core business of Murdoch’s News Corporation is news; and 3) Were it not for Yahoo News, AP-generated news would be nowhere among the top 10 most visited web sites. (Steve Boriss,

  • Interesting indeed. There’s always the outside chance that Jerry Yang might actually READ this blog, I suppose… But I have a feeling you’re right about the mired and entrenched thinking so typical of older organs such as Yahoo: Like the U.S. Automakers (get used to my mentioning them, folks – they’re just so perfect at exemplifying the headlong rush toward extinction), the Lords of Yahoo are probably too enamored of their own take on ‘how things should be’ to actually perceive how things really ARE. Citizen Murdoch DOES bring one very powerful new option to the table at Yahoo that wasn’t there before – the opportunity to REALLY clean house and turn Yahoo into a bona-fide moneymaker. Jerry is just too caught up in preserving the legacy of Yahoo… Rupert will approach the situation with a nuclear Dyson vacuum cleaner…

  • I think you were saying… Orkut didn’t work outside “Brazil”?

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