Yahoo's Open Invitation

(page 2 of 2)

Trojan Widgets?

In the future, Yahoo plans to release source codes (known as APIs, or application programming interface codes) enabling a wide array of third parties to develop modules to personalize Yahoo users' surfing experience. For example, a user could choose to see a specific set of sports scores on a section of the Yahoo sports homepage. "We are trying to make Yahoo into more of an open platform that lots of people can plug into," says Scott Moore, head of news and information for Yahoo's Media Group.

Of course, how much Yahoo actually embraces the open-platform model remains, well, an open question. The company wouldn't provide a timeline for releasing new APIs or details about which Yahoo properties could soon become playgrounds for developers. Tapan Bhat, Yahoo's vice-president of Front Doors, the division of Yahoo that oversees the homepage and start pages, would only say that more modules were coming and that Yahoo users will be able to share them.

Yahoo's unwillingness to set a timeline could be because it wants Yang to spread the news after a 100-day review, which will end in October.

Or, Yahoo could simply be uncertain of how committed it really is to openness. While it may be hip to be open, Yahoo has to be more careful than the typical young social network about letting in third-party developers. Done poorly, a torrent of advertisement-laden widgets could diminish the experience for Yahoo users. They could also anger Yahoo's own advertisers, who could view the applications as competing for attention with their own ads. Yahoo must also be leery of letting in widgets laden with glitches.

Facebook has learned all too well the benefits and pitfalls of opening up. In part thanks to its decision to let in outside developers, the site's user base has swelled, to more than 30 million in August from less than 8 million a year earlier. More than 65 million "applications," as widgets are known on Facebook, were installed just a month after the company announced its new openness. At the same time, however, Facebook has had to deal with outsider applications that spammed user contact lists with notifications or showed visitors user sites' advertisements instead of the applications the page owners saw.

Encouraging Participation

Still, Yahoo, like Facebook, is likely to see more positives than negatives from an influx of tools and other content that keep people on Yahoo's site longer. "Part of the reason people come to Yahoo is people expect a certain amount of editorial professionalism—so I think there is some downside and reason for them to be careful," says David Weiden, a partner at Khosla Ventures, who has invested in widget companies such as music discovery service iLike. "But overall I think the upside way outweighs the downside."

Yahoo has already caught a glimpse of that upside. In July, the company teamed up with widget maker RockYou to create a Yahoo music widget for Facebook after first creating its own version. Yahoo's solo version garnered about 8,000 users, says RockYou Co-Founder and CEO Lance Tokuda. The RockYou version was adopted by more than a million users in the first month. "What we are seeing is that everyone is opening up their APIs," says Tokuda, "That is the direction that the majority of social networks are heading."

Other Web giants also say they plan to open up, albeit perhaps not as broadly as Facebook. In June, Google began offering widget makers several-thousand-dollar grants, or up to $100,000 seed investments. The company reiterated the importance of outside applications during a conference the following month, when an executive said it is as focused on widgets as it is on search. Microsoft has enabled developers to build widgets for its Live.com personalized homepage for years. Time Warner (TWX)'s AOL has released the API codes for its instant-messenger service to encourage the creation of communication widgets.

Whether Yahoo will open up broadly, like Facebook, or give access to only a few properties such as My Yahoo, is still anybody's guess. Yet, it's clear that openness is on Yang's agenda. Yahoo Media Group's Moore even hinted that long-awaited comments from Yang due in the coming weeks on the company's future direction would touch on the topic: "It will have elements of being open."

Holahan is a writer for BusinessWeek.com in New York.