Delicious will go down as one of the great tragedies

As Marshall Kirkpatrick eloquently wrote, I’m also another person disappointed that Yahoo! is shutting down Delicious, the social bookmarking site that helped generate the Web 2.0 trend. But this reflects a deeper problem at Yahoo.

How Yahoo’s spreadsheets miss the point
As a “heavy” user myself, it may be ironic to say that I never visit the site; I often will not bookmark a site for month’s. And yet, it hits me like a shot to the heart to hear that it will be shut down. Why? Because it’s so valuable to me. The amount of times I’ve been able to rediscover content I’ve previously read has alone made it valuable — the tagging innovation that Del.icio.us pioneered makes my search for hard-to-recall content much more efficient. But there was even a time, where the most popular links of delicious were my homepage: the quality of the content being shared justified my daily attention in the same way other aggregators have to me like how techmeme.com have.

In fact, I’ve recently rediscovered this as I experiment with the Rockmelt browser, and I check the most popular links via the widget on the side of my browser.

Delicious via Rockmelt

But notice how I don’t visit the website? I might see what links are popular, but that doesn’t mean I will click on them. I don’t visit the actual delicious website and so the metrics the Yahoo management are reviewing are skewed. If advertising is on the site (the only type of revenue model attempted), it would not convert much. They believe no one is using the service, but the truth is, they are.

I never thought the “network” operating model could suffer due to the fact metrics measuring value can’t be quantified. So it’s completely reasonable why a Yahoo management team thinks it time to shut down this service: low on traffic, low on revenue. Numbers in the spreadsheet say this is a loss: let’s kill it, says the MBA.

What we have here though is a management team who not only are out of touch with how people use delicious (potentially because they don’t get the vision that only the founder truly gets — and he’s long gone), but more important, completely misunderstand how to capture the value of this valuable asset (not property). As a point in comparison, Yahoo acquired the other Web2.0 darling Flickr, which is a service I also have been using for over 5 years. And when I say using, I mean a paying customer that has paid his subscription without hesitation every year (which I will note, there are not many services I pay for which makes this even more impressive). Like Delicious, I store data with Flickr that I may not use for a while — but the way it manages my data has become an invaluable tool for my life.

I worry more about Yahoo and any company it acquires
Yahoo’s management should have implemented a subscription model like Flickr, because it’s obvious that a “book marking” site will never get a lot of a traffic (you can book mark sites without having to need to visit delicious.com). Tools like this don’t make money from traffic; and network business models like this generate value beyond the confines of the web property.
With the news breaking, it will now force an action. Either sell it to people who have now seen their cards (in fact, I’ve had friends of mine not in tech ask me how can they put an offer for this!), open-source it (like how Google reacted when etherpad was going to be shut down), or shut it down as they said they want to and lose the opportunity to capture its value. Of course, they could publicly announce they won’t shut it down, but everyone now knows what they think and it will kill the service due to new users being paranoid about their data. Yahoo! gains nothing with this.

But the sad thing about this, is that it’s forced them to ignore the opportunity of potentially being more innovative with the revenue model. And because they failed to do this, this impacts the company more generally — monetisation is key to sustainability and if you have a management that can’t do that (which presumably, is the reason it’s being shut down), then there’s something even more wrong with this new age media company that as Jeff Jarvis has called, has become the last old-media company.

Yahoo is an amazing company, and companies need to make tough decisions sometimes to grow the company. But not understanding the potential of Delicious will go down in web history as one of the great tragedies — and if Yahoo sells it, one of its biggest blunders.

Update: And just as I clicked “save” on this post, the Delicious blog posted saying they are now going to “sell” it as it’s not a strategic fit, which as I mentioned in my post was one of the likely outcomes. So if it’s not a strategic fit, it begs the question again, what is Yahoo?

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