Last week, we made the prediction that Yelp will buy build or partner to bring Vine-like functionality to its mobile products.  This comes in the wake of Yelp’s positive Q1 earnings, and moves by Facebook and Foursquare to compete more directly.

So we’re getting lots of questions about Yelp. There’s a lot to talk about here and we have a longer report in the works. For now, I outlined some of our current thinking on Yelp in my monthly Street Fight column. An excerpt is below and you can read the whole thing here.

Let us know your thoughts, or if you want to engage deeper about the quickly moving mobile local space. There’s obviously a lot to it, and more flying at us every day…

Following Foursquare’s slick website revamp and Facebook’s Yelp-like mobile SMB profile pages, we’ve heard the standard chorus of Yelp “killer” claims from generalist tech media. This was followed closely by Yelp’s positive Q1 earnings.

Facebook’s scale is scary and Graph Search has clear local applications. But the hard part for Facebook will be convincing the world that it’s a search utility like Yelp, in addition to a place to look at drunk pictures of friends. Can its fun persona coexist with being the go-to place to find an electrician?

Yelp meanwhile has a reviews volume that erects a sizable barrier to competition. More importantly, it has something that the Facebooks and Foursquares of the world wish they had: direct local sales. That’s the unsexy part of the discussion, but the key to monetizing the products we do talk about incessantly.

I always say that Yelp combines the nimble and engineering-driven product focus of a Foursquare or Facebook, with the direct SMB sales of a YP. It’s a powerful combo that few companies have, and few people talk about in blogospheric proclamations of category killers.

Another thing seldom discussed is how exactly Yelp makes money. I thought I’d take this opportunity to spell out the model, because I’m constantly asked. It also reveals of some of the moats that Yelp has built and where its product development and growth opportunities may lie.

In terms of revenue sources, of Yelp’s $138 million 2012 revenue, about 80% was local advertising. 15% came from brand advertising (think restaurant and hotel chains), and the remaining 5% was affiliate revenue for things like OpenTable or Orbitz bookings.

The local ads segment consists of Enhanced Profiles for SMBs and national chains with individual locations. Of Yelp’s 47 million global listings and 1 million claimed listings, 40,000 have upgraded to one of these Enhanced Profiles at an average spend of $4,200 annually.

Read the rest.