• Business Week, Wednesday, September 12, 2007 10:49 AM

Yahoo is taking a cue from Facebook's playbook, encouraging outside developers to create new software programs that would make Yahoo's pages "stickier." The company has already released the source code for Yahoo Mail and aims let users embed non-Yahoo products and services into their My Yahoo homepages. The company hopes that developers' programs, also called widgets, will entice users to hang around Yahoo's pages longer.

Brad Garlinghouse, Yahoo senior vice president of communications, communities and Front Doors, is the man who sternly identified those problems. Yahoo's disparate businesses were spread thin -- like peanut butter over toast. Garlinghouse, who sounds pleased with the new course of action, sees a future in which companies like Evite (owned by Barry Diller's IAC/InterActive Corp.) The New York Times and News Corp.'s MySpace create widgets for My Yahoo, using their contact lists to display upcoming events, share articles or view updates to friends' profile pages.

The report says Yahoo's decision is about embracing consumers' desire to create or customize content, but it's also about defense: Yahoo has to innovate to keep up with MySpace, Facebook and Bebo, with which it just struck a smart ad serving partnership. Could this be a giant step forward for the Web giant?

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