The coverage of Yell’s halving of its dividend and the accompanying collapse in its share price has been brutal in its reflections on the future of that business. Add this together with Thomson directories being put up for sale and it does look like the writing may be on the wall for traditional directories. If you are in any doubt, its worth reading the comments to this article from the Times many of which were written by SMEs.

What’s happening to the directories business is a classic example of the impact of digital disruption. I’ll drill down into why I believe this is the case in another post. But for now it’s worth considering that Yell was seen as a recession-proof stock because the classifieds directories business was “more resilient to economic downturns than other forms of advertising” according to its 2003 flotation. Well, that was true in previous recessions, but not now. And the reason why this one is different is that the Internet happened in the intervening period!

With that in mind, I’d like to plant this rogue line of reasoning. According to Nielsen Netratings about 70% of online local search is done through search engines and Google is the launch pad for most searches for local business on the Web. Now the Mozilla Corporation made c.$67M USD in revenues in 2006 (the latest numbers I could find) with 85% of this revenue coming from Google. In comparison yell.com’s 07/08 revenues were c. £140M GBP (c.$277M USD). I question whether yell.com can sustain its current growth as Google is becoming ever more dominant in search and is now going after the SME advertising market. And we do know that Firefox usage is growing year on year, so it’s revenues from Google are likely to increase too.

Against this background, is it just conceivable that the Mozilla Corp. could, in the near future, end up making more money from online local search than Yell.com? Yikes!