Content Is a Cheap King

Yahoo! (Nasdaq: YHOO  ) is buying timely article creator Associated Content in a move to beef up its billable ad space.

The $100 million deal buys Yahoo! strength in numbers. Associated Content has a network of 380,000 freelance contributors covering a whopping 60,000 topics. It's a big army on a huge battlefield, but the end result is that the company's editorial staff reviews 50,000 pieces of articles, snapshots, audio, and video a month.

Associated Content's assignments are timely and broad enough to reach more than 16 million unique monthly users, according to Web traffic tracker comScore.

It's also a cheap date. Associated Content pays between $2 and $15 for every published piece. It then tacks on performance payments, which are $1.50 for every 1,000 page views. The price is right for a company with syndicated pull, and that's clearly Yahoo!, which plans on expanding Associated Content's stateside network abroad.

The deal is a good fit, even if dusting Associated Content will find fingerprints of other dot-com giants. AOL's (NYSE: AOL  ) CEO is an investor, and contributors are paid through eBay's (Nasdaq: EBAY  ) PayPal.

Associated Content would have made a good fit with AOL, too. As the fading access provider swaps "you've got mail" for "you've got content," it has been pushing hyperlocal content generated on the cheap through its Seed.com initiative.

What about eBay? It may not seem to make sense, though there's something to be said about cheap search-optimized content geared around popular merchandise on eBay. The company is already experimenting on that front: It launched an online fashion magazine last year.  

Associated Content would also have looked good on the arm of Microsoft (Nasdaq: MSFT  ) , Google (Nasdaq: GOOG  ) , and even Ask.com parent IAC (Nasdaq: IACI  ) . All three companies excel at placing contextually relevant ads on served pages, and this is exactly what Associated Content supplies.

Yahoo! has been trying to re-establish its identity. It has been selling off non-core properties and nibbling on tech upstarts. This $100 million is just a drop in Yahoo!'s cash-rich bucket, but it may be the best acquisition since Carol Bartz took over.

Is Yahoo! finally back? Share your thoughts in the comments box below.

Microsoft is a Motley Fool Inside Value selection, Google is a Rule Breakers recommendation, and eBay is a Stock Advisor pick. Motley Fool Options has recommended a bull call spread position on eBay and a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz wonders what would happen if he were to one day cut himself and start bleeding purple. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On May 19, 2010, at 5:39 PM, billthegrunt wrote:

    Sure it's cheap content (or should I say "content"). But with an army of SEO-trained monkeys trying to make a living by cranking this stuff out at 2 to 15 dollars a pop, is it worth reading, or for that matter, writing?

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