Yahoo 2008 Annual Report Download - page 25

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.
We rely on third-party providers of rich media products to provide the technologies required to deliver rich
media content to our users, and any change in the licensing terms, costs, availability or user acceptance of
these products could adversely affect our business.
We rely on leading providers of streaming media products to license the software necessary to deliver rich media
content to our users. There can be no assurance that these providers will continue to license these products to us
on reasonable terms, or at all. Our users are currently able to electronically download copies of the software to
play rich media free of charge, but providers of rich media products may begin charging users for copies of their
player software or otherwise change their business model in a manner that slows the widespread acceptance of
these products. In order for our rich media services to be successful, there must be a large base of users of these
rich media products. We have limited or no control over the availability or acceptance of rich media software,
and to the extent that any of these circumstances occur, our business may be adversely affected.
If we are unable to attract, sustain and renew distribution arrangements on favorable terms, our revenues
might decline.
We enter into distribution arrangements with operators of third-party Websites, online networks, software
companies, electronics companies, computer manufacturers and others to promote or supply our services to their
users. For example:
• We supply search and display advertising to Affiliate sites, which integrate our advertising offerings into their
Websites;
• We enter into distribution alliances with Internet service providers (including providers of cable and
broadband Internet access) and software distributors to promote our services to their users; and
• We enter into agreements with mobile device manufacturers and carriers as well as Internet-enabled television
manufacturers and other electronics companies to promote our software and services on their devices.
In some markets we depend on a limited number of distribution arrangements for a significant percentage of our
user activity. A failure by our distributors to attract or retain their user bases would negatively impact our user
activity and, in turn, would reduce our revenues.
Distribution agreements often involve revenue sharing. Over time, competition to enter into distribution
arrangements may cause our traffic acquisition costs to increase. In some cases, we guarantee distributors a
minimum level of revenues and, as a result, run a risk that the distributors might not generate enough ad
impressions, toolbar installations, etc. to otherwise earn their minimum payments. In other cases, we agree that if
the distributor does not realize specified minimum revenues we will adjust the distributor’s revenue-share
percentage or provide make-whole arrangements.
Some of our distribution agreements are not exclusive, have a short term, are terminable at will, or are subject to
early termination provisions. The loss of distributors, increased distribution costs, or the renewal of distribution
agreements on significantly less favorable terms might cause our revenues to decline.
More individuals are utilizing non-Personal Computer (“PC”), devices to access the Internet and versions of
our services developed for these devices might not gain widespread adoption by the devices’ users,
manufacturers, or distributors or might fail to function as intended on some devices.
The number of individuals who access the Internet through devices other than a PC, such as mobile telephones,
personal digital assistants, smart phones, hand held computers, televisions, and set-top box devices, has increased
dramatically, and the trend is likely to continue. Our services were originally designed for rich, graphical
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