Yahoo 2009 Annual Report Download - page 28

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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 may
decline.
We enter into distribution arrangements with third parties such as 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 maintain search and display advertising relationships with 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’ performance (in terms of ad
impressions, toolbar installations, etc.) might not be sufficient 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 may cause our revenues to decline.
More individuals are utilizing non-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, 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 environments such as
those available on the desktop and PC. The different hardware and software, memory, operating systems,
resolution, and other functionality associated with alternative devices currently available may make our desktop
and PC services unusable or difficult to use on such devices, and the versions of our services developed for these
devices may not be compelling to users, manufacturers, or distributors of alternative devices. Similarly, the
licenses we have negotiated to present third-party content to desktop and PC users may not extend to users of
alternative devices. In those cases, we may need to enter into new or amended agreements with the content
providers in order to present a similar user-experience on the new devices. The content providers may not be
willing to enter into such new or amended agreements on reasonable terms or at all.
Further, new devices, operating systems, networks, and platforms are continually being released. It is difficult to
predict the problems we may encounter in developing versions of our services for use on these alternative
devices. We may also need to devote significant resources to the creation, support, and maintenance of such
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