I have been monitoring a keyword in my industry for months now. It is a seasonal term that is just now getting big. We had #1 position in Y! until yesterday when 5 directory sites jumped above us. These directory sites have no business at the top for this highly competetive term. The #1 site is brand new with 0 backlinks except for the Y! directory.
I have noticed this on other terms as well. Has anyone else seen this? When a term gets really hot, the directory results take top position?
I do sympathise Kris as some of my clients are suffering the same fate. In particluar their own directory listings take over their "optimised" (for want of a better word) index page for their own sites and send it down down down never to be found.
Me-thinks time to remove all their sites from the directory and advise all new clients never to pay for listings in the directory any more.
IMO directory results belong in the Directory NOT the main Search results
I've also noticed directory sites getting a boost in the serps, but nothing as extreme as suggested by kris. In general I see nothing wrong with this. It benefits both yahoo and the searcher. It encourages people to pay the $299, which is good for yahoo. All other factors being equal, a site in the yahoo directory is more likely to be a good non-spam relevant site than one that is not, as it's been reviewed by a human. So giving these sites a modest bonus improves the quality of the serps in most cases and is good for the searcher.
I doubt yahoo would deny that they're doing this. They are a business, and they don't deny that. Unlike some other company, yahoo doesn't claim moral high ground about not being evil, pull stunts like the sandbox, and then deny they're doing it.