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Amazon Elbows Into Online Yellow Pages

By Rob Hof Few commercial creations have survived as long as the Yellow Pages, which just turned 119 years old. Now, the venerable collection of independently produced local-business listings faces an unprecedented challenge. For the past year, most of the Web's giants and a good many upstarts have each created specialized search sites that target local businesses. On Jan. 27, (AMZN) will strike what could be the biggest blow yet.

That's when the Web retailer's search subsidiary will debut Yellow Pages, offering a 21st century version of the household staple for 10 top U.S. cities. The move hikes the stakes on local search, which is widely viewed as Web search's next big frontier.

Despite entries from nearly all the major search players, including Google (GOOG), Yahoo! (YHOO), America Online (TWX), and Ask Jeeves (ASKJ), none has yet captured the high ground. "The local search offerings have been kind of spotty," says Chris Sherman, associate editor of the Web site Search Engine Watch. "This is really going to heat up the competition."

UP YOUR STREET. Few of A9's individual features are unique, but they're wrapped together in a package that Sherman thinks will be appealing to people who want a more visceral connection with businesses in their local communities. Search on "sushi," for instance, and the site -- which knows where visitors live from their Amazon account or deduces it from their network address -- brings up a list of nearby sushi joints along with a map showing where they are. They also can click a button to call the business using a free Internet phone service.

It's when visitors click on a particular business that the most innovative feature comes to the fore. The sites for the business listings contain photos of each section of the entire city block in which a particular business is located. That makes it easier to find it, determine if parking is nearby, or simply get a feel for whether a restaurant, say, looks romantic or funky. "The ability to 'walk' up and down the street is what's powerful here," says A9 Chief Executive Udi Manber. "People are local, and connecting people closer to their communities is a big deal."

Although PagesJaunes in France pioneered the use of photos for online listings, A9's go much further. The Palo Alto (Calif.) Amazon subsidiary sent out a small fleet of trucks with automated digital cameras mounted on top. Drivers traversed tens of thousands of miles of city blocks from New York and Chicago to San Francisco and Los Angeles to shoot the photos -- a total of 20 million so far. They also were outfitted with global positioning systems and laptops with special software that automatically matched the photos with their exact location.

PAID PLACEMENT. The Yellow Pages, reachable as well via a tab on Amazon's home page, also include features already familiar to customers. Visitors can write reviews of restaurants and other businesses and upload their own photos. Using a feature of the main A9 search engine, they also can type in personal notations that are attached to each site that come up when the visitor calls up the page in the future. Businesses can submit photos and additional information, too.

What's in it for Right now, not much beyond the glow of association with a hot new area of Web search. It's charging neither businesses nor visitors. For now, the directory has the same revenue model as A9: running sponsored ads from Google's AdWords program, in which advertisers pay for placement on search results.

Manber says he anticipates other revenue sources but steadfastly refuses to speculate. Several possibilities suggest themselves from what Amazon already does. It could refer people to partner stores for items it doesn't stock, as it already does with some online stores as well as physical chains such as Circuit City (CC).

SEARCHING FOR USERS. Or businesses could pay to offer a related product or service to someone browsing products on Amazon. A theater, for instance, could offer a ticket to a local screening of the movie Sideways to a person searching for the book it's based on. Ultimately, the A9 Yellow Pages visitor might get a much more personalized experience, essentially building an online network of preferred businesses that could be shared with friends.

All that depends on A9 getting a big crowd of searchers, and that's far from certain. It still trails far behind leaders such as Google and Yahoo in terms of search traffic overall. And while Yellow Pages contains some unique offerings, the others have a head start on features such as local maps and customer reviews. And they're beefing up their technical capabilities. Google recently bought Keyhole, a Mountain View (Calif.) digital-mapping company that lets users zoom into locations down to the street level.

Both A9 and its rivals face an uphill battle in the market for local business ads. Online Yellow Pages-style ads are growing rapidly, up 50% last year, to $669 million, and are expected to jump 57% this year, to $1.1 billion, according to market researcher Kelsey Group. But that's still less than 7% of the total for Yellow Pages-type advertising, including online and print.

READY RESOURCES. The reason: Traditional Yellow Pages publishers, such as the phone companies, have big sales forces to approach local businesses. What's more, says Kelsey analyst Neal Polachek: "The publishers are starting to get it together online." Last November, for instance, SBC Communications (SBC) and BellSouth (BLS) bought to expand their online ambitions.

Still, Amazon, with its 44 million active customers, has the means to build a critical mass behind A9's Yellow Pages. "Amazon is a big player with the resources to really evolve this," says Sherman. If he's right, that canary-colored doorstop may be on its way to the recycling bin before too long. Hof is BusinessWeek's Silicon Valley bureau chief

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