As Yahoo learned with Yahoo Answers, presenting algorithmic search results with those offered by real-life humans is a challenge. That same challenge exists in blending algo results with those from Twitter and Facebook. As more content sources begin to become part of a one-box search experience, presenting them to consumers in a navigationally simple UI, will take the search world 10 blue links to 100 blue links. Lastly, I can see the merits of digging meaningful nuggets out of Twitter but still don’t understand what Facebook updates provide as value-add to search results. When I type in the search query “health clubs” do I really want to know that someone on the other side of the globe is at his health club? As my teenaged daughter would say, that’s TMI.

“The current settlement proposal would stifle innovation and competition in favor of a monopoly over the access, distribution and pricing of the largest collection of digital books in the world, and would reinforce an already dominant position in search and search advertising,” said the Open Book Alliance, which includes Microsoft, Yahoo and Amazon, three of Google’s biggest rivals.

The deal is another chapter in the Yahoo-Microsoft-Google marketplace drama. Various permutations of deals between Yahoo! and Google and Yahoo! and Microsoft have been discussed since Microsoft made a public offer to acquire Yahoo! in 2008. This deal does not include any upfront cash to Yahoo! although, according to Yahoo!, this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.

For Microsoft, the deal is a positive indication that it’s investment in search and launch of Bing in June will pay off. While no solid marketshare numbers have surfaced, Microsoft has created positive momentum and it’s that traction that gave Yahoo! the indication it would need to invest heavily in search to remain competitive with Google and Microsoft. By making the pragmatic decision to cede its search technology to Microsoft, the company effects a potential $700 million swing and shows management is able to make tough decisions.

The fine print on the deal continues to be brought into greater relief, but some key questions have been raised:

Yahoo! has put a significant amount of time and energy into its open search strategy, namely BOSS and Search monkey. According to Microsoft, that platform will fall under its umbrella which leaves developers and publishers to question the future of both efforts as well as their desire to work with Microsoft.

While some contend regulatory issues may not be a major hurdle here, Microsoft is a lightning rod for attention from governing bodies in both the U.S. and Europe. Yahoo! and Microsoft represent the two largest consumer web portals in the world, and portals (as well as their toolbars) are starting points for consumer search queries.

How will Yahoo! sell its search deal to affiliates currently powered by Yahoo’s search engine once the deal in done?

How much time, effort and expense will Google put into throwing roadblocks that stall the deal? Google, the jilted groom in a proposed Yahoo! deal in 2008 has, according to reports, shown some anxiety of Microsoft’s newly found search momentum.

Publicly stating it will be going through a brand refresh in 2009, how will Yahoo! position itself with advertisers, consumers and Wall Street having relinquished one of its key product and services pillars.

What about the future of search-display convergence, which was cited as a key principle in Yahoo!’s rejection of earlier overtures from Microsoft? Search-display convergence, which implies the use of search data to better target display ads, is a key battleground for Google as it seeks to extend its advertising business into rich media and beyond.

One question that’s been raised that may be less important is whether the Microsoft-Yahoo! combination will significantly move needle on search share. Microsoft and Yahoo! together handle about 28% of the world’s searches, as compared with Google’s 65%. However, this question overlooks the strategic challenge that this deal represents. By dividing the search advertising market between premium buyers and self-service “long-tail” advertisers, Microsoft achieves a kind of pincer move around Google, challenging it directly on its home turf of self-service AdWords (it’s primary source of revenue) while empowering Yahoo! to block its expansion into the higher end of the market, the premium advertisers, where search and display convergence (along with mobile and social and online video and next-generation television) are important. In other words, this sharpens the distinction between Microsoft’s “technology company” role and Yahoo!’s “media company” role, making it harder for Google to play both against their alliance.

For advertisers, such escalating competition spells opportunity. AdWords users may now find AdCenter to be a more competitive option, especially in categories where Microsoft has focused Bing’s development like travel and retail, while premium brands and agencies may now find Yahoo! to be more capable of supporting brand campaigns with integrated search and search-related targeting capabilities. The fly in that ointment remains the privacy issues that will impede the flow of search data between the two companies. Watch for this issue to escalate in the inevitable challenge from Google.

News stories stated that Google is looking to support a variety of reading venues, ranging from PCs to dedicated readers, implicitly inferring it will more fully support the universal e-reader standard, .epub and perhaps fully rendered .pdfs as opposed to Amazon who supports unprotected books in Mobipocket format as well as its own proprietary DRM-ed format, .azw. Amazon supports .pdfs across its Kindle family of devices, but there are some rendering issues noted for files in that Adobe format.

Google will not likely build a device, but would encourage carrier partners such as T-Mobile, who currently offer smartphones powered by Google’s Anrdoid OS, to distribute devices (smartphones, dedicated readers) that act as a showcase for Google’s ebook service. Would such a move force Apple’s hand to move more quickly on its rumored media tablet?

Google, as an ebook enabler, does put pressure on those powers in the emerging digital warehouse space such as Libre Digital, Ingram Content Group (the new name for Ingram Digital), Publishing Technologies and even Scribd. With Android, Google could open up its platform to developers who could create compelling reading experiences suited for a variety of devices and different consumer groups. Again, such a move puts pressure on Apple and its plans to offer an e-reading ecosystem.

At the end of the day, it will be publishers who will have the biggest say in who controls new digital distribution scenarios. If there’s any company publishers are more leery of than Amazon, it’s Google. Is the devil they know better they know than the devil they don’t? If this distrust remains potent enough, emerging players in the digital distribution space and perhaps Adobe, a name synonymous with publishing tools, may be best positioned to take book, newspaper and magazine publishers to the promised digital land.

I find it interesting that 86 percent of people say they have a print directory on their home. My hunch is, like me, they have no idea where it is.

I found this part of the research the most interesting: the findings revealed independent publishers (those not affiliated with local telephone companies) enjoyed a healthy share of this consumer usage, with 40% of overall Yellow Pages look-ups made in independent directories, Many independent publishers have reacted well to the segmenting of America by offering phone books (aka directories) tailored with listings and advertising aimed at specific ethnic groups or small communities or neighborhoods.

In this era of green marketing, it struck me that such Yellow Pages usage was counter to the trend of publishers turning online to conserve resources such as trees and fossil fuels (used for ink). Apparently, like many, I have bought into a myth about the YP business that is no longer true. A search on Yellow Pages and green marketing yielded a June 2008 interview in DM News with Neg Norton, president of the Yellow Pages Association that sets the record straight:

“Many consumers believe that because it is made of paper, it must mean forests are being ravaged. In fact, directory publishers use paper made of 40% recycled content along with fiber primarily derived from residual chips from sawmills. Any trees used were previously cut down by lumber producers and rejected.”

The Yellow Pages publishers, paper suppliers and printers started working together more than a decade ago to get more efficient and environmentally friendly. Directory components today include soy-based, rather than petroleum-based, inks and non¬toxic dyes. And, when it comes to municipal waste, the Environmental Protection Agency (2005 Facts and Figures) states that directories make up only 0.3% of the solid waste stream — compared to 4.9% for newspapers and 2.4% for standard mail.”

As the late Yankees announcer Mel Allen would day, “How about that?”

By the way, I have no idea where our phone books are. My hunch is the new driver in our house is using them to see over the steering wheel.