In my previous post I said that Google is a data company, Yahoo is a content company. How so? They are both search engines, right?

Both Google and Yahoo provide lots of web services. Yahoo always was a portal & search engine, but over the years Google has continued to add more “portal” services — Google Maps, gmail, Google finance, and so on.

Take a closer look at the companies. Compare Google Finance to Yahoo Finance. One of these companies needs an engineer with a cup of coffee, the other needs an engineer, editor, and staff.

Yahoo is focusing on their own on-site content because of the display advertising revenue, there is no doubt about it. There is a problem with this approach. Short term, its not helping them keep up to pace. Long term, this model risks killing their company.

Yahoo is demonstrating a strong interest and desire to pursue an old model — a centralized content distribution structure (walled garden has been a popular phrase lately.)

Consider the two models. Yahoo pushes traffic to their own properties, presumably of good quality content. Google pushes traffic to outside properties, of the most popular content. Google doesn’t have to struggle or focusing on providing fresh content of the best caliber day after day. And, to make things even better, every hit to something the audience like is yet another point for Google’s brand value.

Take a look at YouTube and compare their traffic data to the monster video sites that existed years prior (such as eBaumsworld.) The owners of eBaumsworld certainly weren’t generating their own content. Like Yahoo, they were re-ordering and collecting outside content, presumably by hand. No matter how good the human element got at it, at some point, Youtube’s exponential growth rapidly dwarfed these older video sites within mere months.

Why? Because automated systems can sort and aggregate data far faster and far better than human editors.

Weigh these two things: As Google’s engineers work on rolling out next generation systems Yahoo’s editors have been building sub-portals aimed at a specific age demographic of women.

10 to 15 years out, where will Google be? Where will Yahoo be?

I’ve spent a lot of time weighing content verse data myself. Data won, I changed my business model. More on this topic in the near future.