February 16, 2001
10:22 AM   Subscribe

You're the world's number one Web destination, responsible for 40% of Internet traffic. You've been making money from advertising for years, but you know that you need to diversify your revenue streams. You run a popular auction site with over 2.8 million listings, but the only money it generates is from ads. The number one site in the auction space charges fees, so why can't you? You come up with fees that are lower than your competitor, and implement them. And then, over the next six weeks, the number of listed items on your site falls 86%. What went wrong?
posted by tranquileye (13 comments total)
seems easy to me, as long as you have to pay, you may as well (theoretically at least) get what you pay for and go to the number one site in the auction space...
posted by DiplomaticImmunity at 10:43 AM on February 16, 2001

Do you have a source for that 40%? I'd like to know what definition of "traffic" is being used, because I highly doubt that 40% of the packets traversing the Internet - even ones destined for web servers - go to Yahoo! I'd like to see how they munged that number.

Otherwise, I agree with DiplomaticImmunity. If I'm going to pay, I'm going to the biggest market. Oh, and also to a place that doesn't kowtow to local governments. Localisation of the Internet pisses me off, I'd hold Yahoo! much higher in estimation if they just told France to piss off, and blocked out known French IPs.
posted by cCranium at 11:00 AM on February 16, 2001

cCranium, Yahoo accounts for about 40% of referred Web traffic. In other words, if someone is coming to a site from another one, that other one is Yahoo 40% of the time. Sorry that wasn't clear.
posted by tranquileye at 12:18 PM on February 16, 2001

Also, cC, I wouldn't necessarily say they were "kowtowing" to the local government so much as obeying a judge's orders. Plus I don't think blocking IPs by region is nearly accurate enough to block out all French IPs & only French IPs. I do think it was a stupid decision by the judge, but Yahoo still has to abide by it.
posted by zempf at 12:50 PM on February 16, 2001

I recently saw the figures for web traffic and it's insane, the number 2,3,4,5 sites are sort of close to each other in pageviews, but Yahoo at number one is many, many, many times more popular than them.

I think getting 14% of your customers to pay when you've previously offered the service for free isn't really that bad. Maybe it doesn't qualify as a stunning success, but it's not a huge failure either.
posted by beefula at 1:38 PM on February 16, 2001

tranquileye: okay, I can see that. I'd still like to see the stats if you (or you, beefula) can point me to them, just for curiosity's sake.

zempf: French court, American company. France is the place trying to enforce localization of the Internet which is what I don't like, if you (as a country government) don't want your citizens seeing something, then block it from them and explain to them why you're doing it, and let them decide if it's a good idea or not.

I'm veering the subject too far off course by continuing this train of thought though. Feel free to bring it off-board if you're inclined.
posted by cCranium at 2:37 PM on February 16, 2001

I just wanted to say tranquileye's phrasing and writing and, especially, hyperlinking on this post is just about the best-formed thread I've ever seen on MetaFilter. I know this should be in MetaTalk, but I figured the compliment ought to go where more people would see it.

I can see that discussion is a little distracted with the other big news of the day, but this is the kind of linkage that I come to MeFi for. And "All your base" is the kind of discusson I come to MeFi for. :)
posted by anildash at 2:46 PM on February 16, 2001

cCranium, take a look at Upsdell Browser News. The page and site present a variety of stats around search engines. I can;t find the source for the 40%, but my point was that Yahoo generates a lot of traffic, and I think Upsdell backs that up.

anildash, thanks for the complement. It is especially welcome after the week I've had :-)
posted by tranquileye at 7:09 PM on February 16, 2001

beefula, the only problem with that is that if you don't have any listings, people won't come to the site looking for them, and if people don't see the auctions, they won't be able to bid or buy, and if nobody's bidding or buying ... I'd be afraid that the slide has hardly stopped. And with local newspapers joining the niche, they're pretty hosed.
posted by dhartung at 8:22 PM on February 16, 2001

Tranquil, I agree with anildash, it was a great post. And I sympathize, I've had a lousey week as well.
posted by xtrmntr at 9:46 PM on February 16, 2001

"as long as you have to pay, you may as well (theoretically at least) get what you pay for and go to the number one site in the auction space"

That's really interesting. I don't agree, but if that was the majority's perception, then that spells bad news for a lot of businesses online... Is there any research out there on if people have that perception?
posted by pedro at 7:18 AM on February 17, 2001

I'm a bit late to this discussion, but as I understand it, most of the listings on Yahoo were carry-overs from earlier auctions that never sold because one of the Yahoo services was free re-listings. So that would explain the drop.
posted by daveadams at 4:44 PM on February 17, 2001

pedro: I think it's more a matter of the nature of auction spaces than the nature of online businesses as a whole. If they have to pay for the privilege of listing, sellers will tend to gravitate towards the auction site with the greatest chance of maximizing sales, which causes the site to gain market share, which makes it an even more lucrative choice, etc. Short of drastic measures - say, widely disparate listing costs - the big invisible hand starts pushing everybody towards big ol' eBay at the expense of everybody else.
posted by youhas at 10:48 PM on February 17, 2001

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