Yahoo! has signed a "transformational deal" with seven US newspaper groups under which the site will share classified ads and content with 150 local newspapers.
Yahoo! will publish local classified ads across its network of sites including the recruitment site HotJobs. The newspapers will supply local news content for Yahoo, complemented by relevant mapping tools and links back to the news sites.
The newspaper groups, which hope to boost their classified advertising sales, are EW Scripps, Hearst, Belo, Cox Newspapers, MediaNews, Journal Register and Lee Enterprises. They represent 13 of the 15 largest newspaper markets in the US.
Scripps reported that newspaper classified revenues were 3.2% down in October from the previous year, reflecting the general decline in print advertising revenues as audiences migrate online.
Financial terms have not been disclosed but the deal is believed to be for five years.
The deal follows an announcement that Google is extending its experiment with magazines into newspaper ads, and is trialling a system that will offer its online advertisers slots in 50 US newspapers.
The announcement by Yahoo! clashed with the leak of an email from one of its senior vice presidents, Brad Garlinghouse, criticising the company's strategic vision and recommending a 20% cut in the workforce.
Mr Garlinghouse described Yahoo!'s diverse investment strategy as like a thin layer of "peanut butter" across "everything we do and thus we focus on nothing in particular".
Although he makes it clear that he loves Yahoo! - ("I proudly bleed purple and yellow everyday") - Mr Garlinghouse argues that the company is falling short of rivals in three main areas.
There is a lack of an overall focused, cohesive vision; there isn't enough clarity in terms of accountability in a management system that has become too bureaucratic; and that Yahoo! lacks decisiveness that often sees the company held "hostage by our analysis paralysis" that has meant as a company it has "lost the passion to win".
Mr Garlinghouse argues that "direction needs to come decisively from the top" and that the company needs to exit or sell non-core businesses to get back on track.
The leaked memo is likely to put increasing pressure on the chairman, Terry Semel, who has already been criticised by analysts for the performance of Yahoo!. The company recently posted a steep 38% decline in third quarter profits as pressure from more youthful internet rivals such as Google and MySpace bit.
"We have awesome assets," said Garlinghouse in the memo. "Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet. We may have fallen down, but the race is a marathon and not a sprint."
The Garlinghouse memo was published in full by the Wall Street Journal.
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