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Conflicting Visions: Yahoo Aims to be
Master of All Media, Google the Servant |
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21 November 2006 |
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Yahoo has been faulted for being slow on the draw in its
deal-making efforts as of late, but with its deal with 176
major newspapers and a separate deal to provide
user-generated content to Answers.com Yahoo is seeking to
place its content and its ads in a broader array of
destinations to make the bottom line look as good as the
top line. In the meantime the global contextualization
engine that is Google keeps chugging along with far better
margins. Is it better to serve in the heaven of user-driven
context than to rule in the hell of decaying media empires? |
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The folks at
Yahoo have
done a great job of amassing licensing deals with major content
companies, getting key content from others and pushing its own
content out to new partners. Its recently
announced deal with Answers.com, for example, provides a
new venue for its
Yahoo!
Answers user-generated content that
gives it good context in a leading reference service. Even more
striking is its new deal with 176 major newspapers to syndicate
its HotJobs
listings service to their local portals (NYTimes
- subscription) along with promises of further ad
integrations and optimizing partners' news for search on
Yahoo's search engine.
But while Yahoo has been chugging along at a corporate pace
with licensing deals faster players have beaten them to the
punch on pickups of major user-generated properties such as
MySpace and
YouTube. For its own
user-generated acquisitions Yahoo has been
slow to integrate their content and services into the main
Yahoo brand, leaving sites such as social bookmarking
del.icio.us and photo sharing
Flickr to
compete with its own Yahoo-branded offerings. This scattershot
approach has weaknesses. As noted by Yahoo Senior Vice
President Brad Garlinghouse in an
internal Yahoo memo surfaced by Reuters, "We lack a
focused, cohesive vision for our company...We want to do
everything and be everything -- to everyone."
In trying to become the major classic aggregator of the Web,
Yahoo is suffering from all of the same classic structural
problems and commercial limitations with which traditional
database-oriented aggregators have been wrestling for years.
Building a killer portal is still a viable strategy, but it is
beginning to be one that has hard limits - the most important
one being the limits of owning content versus owning context in
an ad-driven revenue model. By contrast
Google,
which has focused less on content ownership and more on
providing content contextualization and creation tools, is
still fueling forward on a model that places its ads against a
limitless inventory of content waiting to be contextualized for
finely targeted audiences everywhere - including audiences
served by
an increasing number of offline sources. With Google its
brand is the context, not the content. One seeks to be the
master of all media, the other the servant.
In its deals with Answers.com and local newspapers Yahoo is
making a strong bid for being the servant of established media.
Newspaper companies involved in the Yahoo deal for HotJobs
noted rightly that the wealth of opportunities beyond career
searches that Yahoo offers in the long run made it a more
interesting partner for an exclusive deal than a
CareerBuilder.com
or a
Monster.com: there are more types of ads and content from
Yahoo that can be explored for contextualization in their
own services for local audiences. But at the end of the day,
which is more valuable: 176 newspapers or billions of search
results and millions of weblogs that serve up exactly the
content that people are looking for?
Here are a few thoughts on where Yahoo's likely
restructuring to provide a more competitive cost basis versus
Google might take them in the land of online media:
- Find a better rationale for search. Yahoo search
results have improved substantially over the past year, but
they've done little to increase their share of searches - in
part because it's hard to be a service that's pretty much as
good as the leader's. Measured as a portion of its overall
traffic search is only about ten percent of Yahoo's audience.
If it's Yahoo's intent to become more of a center for
traditional media, then it should consider offering a
radically different approach to search that can highlight
media content far more effectively and offer a broader array
of services that cater to content publishers and producers.
Yahoo search cannot lead Yahoo to higher margins as a plan
"B" for people using Google search: it must come up with a
new rationale to make it a plan "A" for a different kind of
content seeking that can justify higher ad rates for
advertisers.
- Find a better approach to user-generated content.
Viewed in aggregate Yahoo has an impressive array of
user-generated content offerings: Flickr and del.icio.us are
no slouches, and Yahoo! Groups is still a strong presence.
But none of its Yahoo-branded user offerings - and for that
matter most of its individual portal offerings - is much more
an a single percent of its overall traffic. There needs to be
a more convincing "there" for people to go to for hanging
their online content hat. This may mean, for better or worse,
merging brands like Flickr and del.icio.us into the main
Yahoo brand to reinforce its value as a user-generated
content destination. Better hint: half of Yahoo's traffic is
from its email services. What better place to start a
conversation with the world?
- Develop a broader approach to localized content.
The HotJobs deal with newspapers is a strong bet to place
jobs content in a local context with high potential for
value-add content and ad services. But unless newspapers can
strengthen their position as local portals more effectively
their value as a starting point for these kinds of services
is going to deteriorate rapidly. The publishing industry as a
whole is ill-equipped to deal with the radical changes to
local content consumption that are engulfing their markets as
digital natives leave print brands behind. Just as Amazon is
trying to extend its margins by offering its infrastructure
on an OEM basis, Yahoo should begin to think how it can offer
infrastructure and APIs that will allow Yahoo to be the
publishing platform of choice for lagging local publishers
needing to accelerate their move away from print services.
While Yahoo seems to be taking its fair share of punches
lately let's not forget that it is still the number one
destination site on the Web. It has a fair amount of trimming
to get itself down to a weight suited for context battles with
Google, but in the process of whittling it should consider just
what shape it wants to be as much as its size. After all, there
is only so much room out there for masters - or servants.
-
John Blossom
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