Buzz Kill at Yahoo!

If you want to know what's wrong with Yahoo! (Nasdaq: YHOO), you probably don't have to look much further than this morning's launch of Yahoo! Buzz.

The new social news site has nothing wrong with it, but it's a crystalline example of why Yahoo! is going in circles these days.

The premise of Yahoo! Buzz is simple. Third-party news sources, blogs, and multimedia can be tagged with "Buzz Up" buttons. Users who click on the buttons on the content provider's site or through Yahoo! Buzz's listings will be voting for the story to climb higher.

First problem: This idea is not original. Digg has been doing this for years. Other Web 2.0 sites such as Reddit and StumbleUpon have also democratized the process of sorting submissions by popularity.

Second problem: Yahoo! isn't a good follower. Its attempt to copy Google's (Nasdaq: GOOG) AdWords with the Panama upgrade to its paid search product has been a dud. Why should it fare any better here? Even if Yahoo! has a great carrot to attract publishers -- the allure of top draws finding their way onto the promotional hotbed of Yahoo.com's home page -- there is little reason to believe that the idea will inspire its user base in the way it counts the most: ad revenue.

Third problem: The branding is flawed. Don't bother keying in Buzz.com -- that is the intellectual property of AT&T (NYSE: T). The site is a subdomain located at buzz.yahoo.com. Yes, this worked for Yahoo! Answers, but there was an original driver on that end. Later, others like Amazon.com (Nasdaq: AMZN) began copying Yahoo! Answers. Even Google is hopping on the Answers train. Anchoring itself to a subdomain won't fly as well as the zillionth Digg wannabe.

Fourth problem: Yahoo! Buzz is unlikely to be the golden ticket of monetization. Yahoo! hasn't been able to grow its online ad revenues at the same pace as Google or even an IAC (Nasdaq: IACI). This site won't help, especially in the news aggregator and entertainment space where clickthroughs to ads are sparse.

I hope I'm wrong. I hope that Yahoo! Buzz is a spark plug for a moribund giant. If Yahoo! Buzz gets publishers -- and readers -- thinking Yahoo! outside of the company's owned sites, it may help draw folks back to its original search engine where the real dot-com gravy is waiting.

That would be awesome. The problem -- let's call it the fifth problem -- is that this is Yahoo! here. It's not King Midas. More often than not, everything it touches turns to mold.

For more on Yahoo!:

• Yahoo!: Dead Dot-Com Walking
• Yahoo!'s Final Mistake
• It's Too Late to Apologize, Microsoft