This is a fundamental shift in strategic direction for Interchange. In my previous conversations with the Interchange team, we often broached the destination vs. distribution argument. Interchange's answers to date were clear: We are focused on technology and distribution, not destination.
Now that they have changed their minds, I wonder what their 200+ distribution partners (destination plays) are going to think. Current distribution agreements were struck under the premise that Interchange's partners have an opportunity to derive destination value using the Interchange Ad and Assured Response platform, while sharing advertiser dollars. Now they are arguably direct competitors.
I believe that Interchange recently lost their Yellow distribution agreement, and maybe they feel that in order to generate stable advertiser value and appeal to and generate new advertising dollars, they have to introduce a more visible and maintainable destination environment of their own with a strong brand. This in turn will help them from being susceptible to the whims of their distribution partners.
Destination is a long, hard road that requires time and significant capitalization. Sure local.com is a great brand, but Yahoo, Google, Yellow, SuperPages, Amazon, AOL, Ask, and others are competing for the same eyeballs and destination value.
I wonder whether local.com is destined to become a marginal destination environment, not too different to what GoTo.com was back in the day - essentially a platform to generate advertisers that are more likely to serve their ads off-site than on.
Interchange business model is to generate a platform which faciliates for its partners to easily introduce pure search utility with assured response and shared advertising dollars. Now, it will try to enable its technology + distribution focus, while attempting to become a top-of-mind destination site. Playing both cards will be quite an accomplishment.
From what I gathered to this point, there was little to *no* outreach to their distribution partners letting them know of their plans. If local.com becomes a viable outlet for their partners to serve more of *their* advertisers ads, current sentiment amongst partners may change. If local.com struggles, however, while tapping into the strategic marketing knowledge and direction of their partners, things could get a little strange.