Competition Doesn't Stop at Free

from the good-for-yahoo dept

Good news for consumers as Yahoo announces (via Rob Pegoraro) that it's dropping those annoying ads it appended to Yahoo Mail customers' outgoing emails. The move brings it into parity with GMail, with Hotmail and AOL now looking like laggards. This illustrates a point I made last week: competition doesn't end when the price of a product gets pushed down to zero. Some websites seem to think they're doing their customers such a big favor by giving a service away for free that they're entitled to bombard their customers with annoying ads. But smarter companies have figured out that when they can no longer compete on price, they start competing along other dimensions, like convenience, speed, and features. Paring down the number and intrusiveness of ads is just another way that companies increase the value of their offerings to consumers. Indeed, we've argued before that one of Google's key strengths has been its willingness to change its products in ways that improve the customer experience even if doing so reduces their short-term revenues. That has paid off in the long run for Google with an enhanced brand image and strong customer loyalty. Yahoo seems to be learning that lesson and realizing that it's in its long-run interest to improve its users' experience even in ways that might hurt its bottom line in the short run.

Filed Under: business models, competition, economics, free
Companies: google, yahoo


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  1. icon
    John (profile), 23 May 2008 @ 1:52pm

    On the other hand...

    I have both a gmail and Yahoo account, and more and more, Yahoo seems to be adding on annoyances.

    First, can't they (Yahoo) make a decent spam filter? How hard is it to tell the e-mails server that any message with the subject of "viagr@" is spam and belongs in the Spam folder (or deleted completely).
    As a user, I can't create a new filter to move it since I used all 15 filters years ago. I also can't add the sender to my "block list" since I filled all 500 slots years ago. Plus, we all know spammers change their e-mail address, so blocking 1 e-mail won't work.

    When I log onto Yahoo Mail, I get taken to a page with news, sports, entertainment, and such. Um, I'm checking mail. The url is mail.yahoo.com. Why the **** am I not in my Inbox? Why am I seeing news? If I wanted news, I'd go to the main Yahoo page.
    Yet there's not option to change this "feature".

    Yahoo also changed their setup so I can no longer "forward as attachment", which means I can't forward spam messages to places like SpamCop.
    And after using my Yahoo account for years, I can safely say that clicking the "Report as Spam" button does almost nothing. But, "report as spam" is not going to stop spam: at the most, Yahoo will simply move the messages to the Bulk Folder. This doesn't exactly help the fight against spam.

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