Informative story in Forbes this week on the Yahoo newspaper consortium. Points out some issues we have addressed in this blog before - is this really the best deal newspapers can get? Excerpt below. Full story here.

In exchange for access to Yahoo!'s ad inventory, papers turn over half of the revenue from ads they sell on the portal. Since joining the consortium, the Atlanta Journal-Constitution expanded its local reach, the proportion of the regional population who hit its Web site in a month, from 15% to 85%, Yahoo! says. The Evansville Courier Press, an Indiana daily with a circulation of 60,000, sold $1.1 million in Yahoo! ads in a week-long "sales blitz." Yahoo! won't discuss the specifics of the revenue-sharing agreement, but newspaper partners confirmed the 50-50 arrangement.

But the partnership could have an even bigger cost for newspapers. In the offline world, newspapers have traditionally dominated advertising sales to local businesses like retailers, car dealerships and supermarkets. By introducing their local advertisers to Yahoo!, newspapers run the risk of turning over their best customers to a digital powerhouse as they try to rebuild their own businesses online.

At Mediabids, we are in a similar business. Granted, there are structural differences between selling display ads like Mediabids does and selling online advertising but splitting the revenue 50-50 seems like a very high price to pay for the right to sell on behalf of Yahoo. Newspapers have an unparralled salesforce- no one else does as comprehensive a job reaching local merchants. They should get more.

And has the increased reach among local markets helped inflate the rates publications can get on their own for ads on their websites? Or has the increased inventory diluted the value of the product and decreased the overall prices?

Side note: it would be extremely interesting to see what the rate of renewal among advertisers who buy into Yahoo via newspapers will be. My prediction - it won't be good.