Yahoo's secret weapon

With all the talk about Google's IPO and Gmail, there was almost no mention in the media when Yahoo! released a beta version of the next version of Yahoo! Messenger. While this new version of Messenger offers some fun new features like avatars, new "stealth settings", additional emoticons, and games... there is one feature that I think is an important strategic move for Yahoo!. Yahoo! has integrated the LAUNCHcast Radio service into messenger which will now dramatically broaden the distribution and awareness of the LAUNCHcast service. For those of you that don't know anything about LaunchCast, think of it as an internet radio service with the ability to customize your own station so that you only hear favorite artists, albums, or tracks. I used LaunchCast last summer during my internship and really enjoyed the service. At the time you would listen to about 5 or 6 songs and then hear an advertisement mostly around offering the ability to upgrade to LaunchCast pro and stop being interrupted by commercials. There is no doubt in my mind that this integration into messenger represents the first step before either a full blown iPod music store or a Rhapsody like music subscription service.

In addition to launching music services through messenger, it is only a matter of time before AOL, Microsoft, or Yahoo! realizes that their IM clients are really platforms to launch social networking services. Just think about it, Yahoo! and any other IM service already knows who your friends are, how you have classified them and your email address. All they need to do is extract all the relationships that exist in the application today and dump them into a service like Friendster or Orkut. Imagine just logging into Messenger and being told that you can simply accept an invitation into the Yahoo! social networking service and all your friends will be there without having to send out invites to your friends.

In summary, companies like Microsoft, AOL, and Yahoo! can utilize their IM platforms to launch compelling services. The real question is what is taking so long?