Yellow Pages, Yahoo Local, and Channel Conflict

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As I mentioned earlier, I had the opportunity to dine with Lincoln Milstein and Peter Negulescu last night. Peter, or Petey as I like to call him, is an old friend who started with IBM and ran through all sorts of interesting companies, including Excite, before landing at the helm of SFGate (the San Francisco Chronicle's digital arm), which got him just in the nick of time, to my mind. Lincoln was the number two guy at the New York Times Digital before jumping over to Hearst earlier this year. The conversation wandered happily all over the place, but an interesting tangent focused on local search and its impact on the Yellow Pages. Given that Hearst runs a bunch of newspapers, including the Chronicle, and that the Chronicle has scores of ad sales reps and a strong brand in its local region (I know, "strong" is an arguable term, but let's leave that one aside for now), I asked Petey why SFGate isn't an aggressive player in the local online advertising market. While I can assure you Peter has very interesting plans in the content space, he chided me for my ignorance regarding the 800-pound gorilla of local markets - the Yellow Pages. "They have like 6-700 local sales people in every major region," he told me. "They visit every merchant in town." In other words, the Chronicle can never compete. I then asked their opinion of an idea I have been turning over in my mind for some time - that of Yahoo becoming the new Yellow Pages. Stay with me here, it might take a while for me to explain. My idea is this: Given that Yahoo Local is a very well received service, and given that it basically builds a web page on the fly which...

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