Yahoo 2006 Annual Report Download - page 29

If we are unable to license or acquire compelling content at reasonable costs or if we do not develop or
commission compelling content of our own, the number of users of our services may not grow as antici-
pated, or may decline, or users’ level of engagement with our services may decline, all or any of which
could harm our operating results.
Our future success depends in part upon our ability to aggregate compelling content and deliver that content through
our online properties. We license much of the content on our online properties, such as news items, stock quotes,
weather reports, maps and audio and video content from third parties. We have been providing increasing amounts
of audio and video content to our users, and we believe that users will increasingly demand high-quality audio and
video content, such as music, film, speeches, news footage, concerts and other special events. Such content may
require us to make substantial payments to third parties from whom we license or acquire such content. For
example, our music and entertainment properties rely on major sports organizations, radio and television stations,
record labels, music publishers, cable networks, businesses, colleges and universities, film producers and distrib-
utors, and other organizations for a large portion of the content available on our properties. Our ability to maintain
and build relationships with third-party content providers will be critical to our success. In addition, as new methods
for accessing the Internet become available, including through alternative devices, we may need to enter into
amended content agreements with existing third-party content providers to cover the new devices. Also, to the
extent that Yahoo! develops content of its own, Yahoo!’s current and potential third-party content providers may
view our services as competitive with their own, and this may adversely affect their willingness to contract with us.
We may be unable to enter into new, or preserve existing, relationships with the third parties whose content we seek
to obtain. In addition, as competition for compelling content increases both domestically and internationally, our
content providers may increase the prices at which they offer their content to us, and potential content providers may
not offer their content to us or offer it on terms agreeable to us. An increase in the prices charged to us by third-party
content providers could harm our operating results and financial condition. Further, many of our content licenses
with third parties are non-exclusive. Accordingly, other webcasters and other media such as radio or television may
be able to offer similar or identical content. This increases the importance of our ability to deliver compelling
editorial content and personalization of this content for users in order to differentiate Yahoo! from other businesses.
If we are unable to license or acquire compelling content at reasonable prices, if other companies broadcast content
that is similar to or the same as that provided by Yahoo!, or if we do not develop compelling editorial content or
personalization services, the number of users of our services may not grow as anticipated, or may decline, which
could harm our operating results.
Our intellectual property rights are valuable, and any inability to protect them could reduce the value of
our brand image and harm our business and our operating results.
We create, own and maintain a wide array of intellectual property assets, including copyrights, patents, trademarks,
trade dress, trade secrets and rights to certain domain names, which we believe are among our most valuable assets.
We seek to protect our intellectual property assets through patent, copyright, trade secret, trademark and other laws
of the United States and other countries of the world, and through contractual provisions. The efforts we have taken
to protect our intellectual property and proprietary rights may not be sufficient or effective at stopping unauthorized
use of those rights. In addition, effective trademark, patent, copyright and trade secret protection may not be
available or cost-effective in every country in which our products and media properties are distributed or made
available through the Internet. There may be instances where we are not able to fully protect or utilize our
intellectual property assets in a manner to maximize competitive advantages. Further, while we attempt to ensure
that the quality of our brand is maintained by our licensees, our licensees may take actions that could impair the
value of our brand, our proprietary rights or the reputation of our products and media properties. We are aware that
third parties have, from time to time, copied significant content available on Yahoo! for use in competitive Internet
services. Protection of the distinctive elements of Yahoo! may not be available under copyright law or trademark
law. If we are unable to protect our proprietary rights from unauthorized use, the value of our brand image may be
reduced. Any impairment of our brand could negatively impact our business. In addition, protecting our
intellectual property and other proprietary rights is expensive and time consuming. Any increase in the unau-
thorized use of our intellectual property could make it more expensive to do business and consequently harm our
operating results.
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