Yahoo CEO Jerry Yang adds to his signature in his weblog posts the moniker "Chief Yahoo," a label that seems to be more of an epithet in the mouths of some shareholders and dealmakers disappointed by Yahoo's recent and apparently final rejection of a potential Microsoft takeover. With Yahoo stock plummeting on the first market day after the deal fell through the sore attitudes towards Jerry Yang's rejection of Microsoft's offer claims of needing some Prozac seem to be at least tied with the claimed "high fives" amongst some Yahoo executives when news of the deal failure came through. Even Yang himself on Yahoo's corporate weblog claimed that "No one is celebrating about the outcome of these past three months… and no one should." It was a tough battle with bad blood generated both inside and outside of Yahoo in the process.

But there's no doubt in my mind that Yang made the right decision for Yahoo shareholders as well as for the company itself. While there were some important synergies that would have come out of a Microsoft deal, in general it would have been an acquisition by a company driven by old concepts of intellectual property value of a company that is starting to move far more aggressively into new concepts for realizing the value of intellectual property. CNET News notes that Yang is betting heavily that its more open approach to content integration using its own APIs as well as emerging APIs such as OpenSocial will increase significantly the exposure of Yahoo content to audiences in increasingly valuable contexts. Combine that with a completed deal to use Google's ad networks and to integrate in AOL's user base and you have the makings of a company that will shine in building highly engaged audiences using content from many sources. Think of Yahoo as an enormous warehouse of content, commerce and community that can be rejiggered into countless social media applications. Sounds like the man has a plan to me.

In the meantime Microsoft is left licking its wounds from what was perhaps their last great opportunity to leverage their way into more secure online revenues in the face of stagnating income from its traditional product lines and modest growth from its online ventures. The Yahoo acquisition would have brought them some synergies but at the end of the day it was largely a cash flow fix and an attempt to buy an audience for Microsoft's online tools that may or may not have succeeded, given their history of coming in very strong and proprietary with such efforts. By the time they would have focused on Yahoo's existing efforts to open up their content and to focus on contextualization rather than IP ownership as the key to revenues it's not likely that they would have survived Microsoft's more traditional outlook on IP value generation.

In this parting of the ways Yang will face angry shareholders and some shell-shocked employees for some period of time and softened share prices as the new(er) Yahoo takes shape. It's unclear that he will survive this unsettled environment in his current position but hopefully his vision for a Yahoo more in tune with today's most valuable opportunities for content will continue to move on. In the meantime Microsoft needs to consider both new cash cows and new stars on its matrix of properties to help it make a transition to a future that is moving away steadily from proprietary software on proprietary platforms as the most certain long-term bet for steady and growing revenues.

Labels: Deals Partnerships and Sales, Microsoft, Yahoo

Yahoo joined the list of online companies reporting rosy quarterly earnings, with earnings stronger than anticipated and profits nearly tripling based in part on earnings from new Chinese acquisitions. In the meantime Valleywag notes that Amazon's 1Q sales were up 37 percent over last year's 1Q results and earnings up 29 percent. Meanwhile Google reported revenues up 42 percent over last year's 1Q and net income was up 31 pcercent, powered in large part by continuing strength in U.S. markets and rising strength in overseas operations.

For those who invested in the future of publishing and ecommerce, the payoff has been handsome indeed. For some the growth of Web services in overseas markets in which they invested heavily is a key factor but in the instance of Amazon it's a combination of people who have time and money to shop online and less of a motive given high gasoline prices to sally forth to the mall. In both of these instances there's the continuing emergence of self-service for goods and content. the tendency for people to what what they want where they want it and to favor those who are best at doing this. "Find a need and fill it" was the succinct definition of marketing given to me years ago, one that online services have done well indeed.

In the meantime over at the Web 2.0 conference there are the usual nods of the head towards Tim O'Reilly and other gurus of social media, but at least according to one report the conference is as revealing for its emerging political correctness as it is for a meaningful exchange of ideas. As now-traditional online properties come up rosy in earnings, is Silicon Valley getting bored with social media's long-term promise but short-term question marks? Perhaps so, given a toughening economy and a lack of fully effective monetization tools: just as the dot-com crash came before contextual ads made monetizing search and non-mainstream media profitable, we're sure to see a short-term fall-off in new social media investments as quick exits begin to seem less likely and the over-saturation of the market with publishing tools fragments opportunities for both marketers and publishers alike to reach scale effectively. This, too, is reminiscent of earlier dot-com days, when many publishers adopted a "wait and see" attitude - and eventually lost major market share and brand value.

What's likely to light up the charts over the next few months for new investments is "social knowledge," a loose label that combines the ability of analytics software and aggregation services to divine patterns from social media and online expert services such as WikiAnswers that build repositories of how-tos from topic experts. Whatever the particular play, being able to get more definitive insights from social media seems to be where the money is being spent.

Missing in this mix so far is a huge push by traditional publishers to counter these trends. Most social media investments by major publishers are still largely incremental, moving at a pace that's not likely to lead to strong offsetting revenues any time soon. For enterprise-oriented publishers this is probably not a major concern right away, as traditional publishing methods for scientific papers, while under great scrutiny, are not likely to hit a breaking point this year due to social media. But we're starting to see more signs of services such as content federation and software as a service creating new competitors for enterprise publishers that are going to be worrisome as service renewals begin to come up against budgets in any long-term economic slowdown. Toss in a slow start to developing social media services and we could be in a relatively brief period in which traditional database services have an opportunity to catch a new uptick in their value proposition.

This all adds up to a pattern that is clear and unmistakable: good content will find good markets, but building good brands for good content requires more new contexts than ever before. The biggest mistake that dot-com naysayers made was disputing the value of those "eyeballs" in the long run. Those fettered to quarterly returns may have felt differently about that in the short run, but once effective monetization and contextualization tools took off, the revenues and the profits followed surely. Monetizing contexts will continue to be a hot spot, and those with the tools to monetize them - not necessarily synonymous with those who own the content being contextualized - are going to do just fine for years to come. More to the point, social media is drawing us to a time when microcontexualization will increase the value of these types of venues for monetization, enabling higher-value transactions to be monetized more effectively than ever before.

So yes, it's a gloomy time for the global economy as a whole, especially for those services that depend on people walking through a doorway that might cost a fiver or so just to get there. Great for the carriage trade, but not so good for mass market sales. This will put more pressure on social media services to provide not just interesting chats but interesting opportunities to survive and thrive - as I am outlining in Content Nation. It may turn out that the greatest motivating factor for social media will be not Silicon Valley greed but worldwide need to build a more effective economy. Anyhow, congratulations around to all those who enjoyed glowing earnings reports, let's not forget that it was less then a decade ago when your revenues were mere blips on the corporate charts.

Labels: amazon, earnings, Google, Social Media, Web 2.0 Expo, Yahoo

In war it's said sometimes that the enemy of my enemy is my friend. If business deals are a form of warfare then we're seeing some interesting friendships in Silicon Valley these days. The Wall Street Journal covers an emerging wrinkle in the battle for Yahoo as they march closer to a deal to replace their ad network with ads from Google's more powerful stock of advertisers. WSJ speculates that this will make it harder for regulators to approve other acquisition offers from Microsoft and News Corporation to take over Yahoo - or at least slow down a potential re-upping of a bid from them. That may be the case, but it seems as if step by step Yahoo is navigating to a peaceful conclusion to its current woes - and forming a more healthy revenue picture that could help it to define a more comfortable independent future.

With the USD billion -plus boost it's likely to receive from Google's ad networks for ads displayed on its search pages and other page inventory and a potential pickup of already Google-friendly AOL, we're beginning to see the outlines of a duopoly to counterbalance the strong push of Microsoft and News Corp to dominate online media. In broad terms, think of Google as the search, video, database/API and ad backbone for the commercial Web and Yahoo as the media licensing, aggregation and community backbone. Each of these specific domains will overlap, of course, but in broad terms there's a symbiosis between them that offers each a path to revenue growth and the industry as a whole two distinct partners with two distinct strength sets.

This is probably the way that it should have been a while ago. I don't think that there was ever really a strong rivalry in many ways between Yahoo and Google on the product level. Each has always had their specific strengths, and probably both would have benefited greatly for earlier cooperation of this kind. Google was never going to "do media" as well as Yahoo and Yahoo was never going to "do technology" with quite the intensity and neutrality as Google. But between the two of them they both do online content very well indeed. And between the two of them they will have oodles of page inventory for ads to help them weather tougher economic times with fewer concerns - hopefully a key factor that can appeal to Yahoo shareholders being faced with choices.

More to the point, perhaps, such a duopoly would restore some natural balance to the Web that would enable marketers and publishers to understand who to deal with more effectively. There have been too many players with designs to be a "new number one," too much time wasted on kingmaking and not enough time spent on product development. It still leaves Microsoft plenty of room to focus on new and better platforms for content with mobile operators, auto manufacturers and appliance makers and to try to lock up entertainment deals for those platforms. News Corp may prove to be a stepchild in this situation for the moment, but with MySpace still chugging along healthily I doubt that it will be out of the game in any long-term sense.

The key loser in this deal would seem to be not so much Microsoft as Microsoft's strategy of domination by selling intellectual property. Be it software or content, Microsoft's continuing focus on proprietary consumer goods and services is distinct in many ways from the more open and collaborative assembly of value found in many Web-oriented environments. This may work to Microsoft's advantage where they can provide new and powerful platforms for content, such as in their Sync line of automobile communications technologies, but with ownership of content being more at the mercy of companies that own contexts it tends to be a strategy that conflicts with successful online media. It's that conflict that seems to be at the heart of their failure to convince Yahoo that a marriage would be good. At its heart, after more than a decade of online development, Microsoft still doesn't "get" the Web in some fundamental ways - nor does it seem to want to.

I'd be very happy if this path towards collaborative independence for Yahoo works out the way that it's headed currently. None of the acquisition paths for Yahoo were looking very positive for either Yahoo or the industry as a whole, even if they would have been good portfolio matches for potential stockholders. Here's hoping that we can let this deal fracas die off so that we can get back to focusing on the growth of the Web's greatest strengths - great content and powerful contexts.

Labels: AOL, Deals Partnerships and Sales, Google, Microsoft, News Corp, Yahoo

One of the more interesting things about coming back to blogging after a short hiatus is that the Yahoo deal drama has only gotten worse. There's great coverage from many sources, including a good summary of recent analyst takes on paidContent.org, as well as a New York Times story now circulating that News Corp may combine with Microsoft to complete a deal for Yahoo, presumably to combine MySpace's social media strengths with MSN and Yahoo's strengths along with a combined ad network. The counterfoil to this is a possible deal to merge AOL into Yahoo.

Certainly an AOL/Yahoo merger would help Time Warner's plan to get out of the portal business and help Yahoo to grow market share significantly - and certainly working towards one set of user accounts, one messaging network and other combined infrastructure could become very valuable over time. But one wonders how much time and effort would be spent on merging plumbing on these two legacy platforms to get a unified portal business when they could have been focusing on the growth in traffic comes from social media products that operate largely via other platforms.

By contrast the Microsoft/NewsCorp/Yahoo combination may offer a lot more punch for a shareholder's money. Leveraging the power of MySpace, a still-powerful social media platform well-attuned to mass media markets with Yahoo's strength in content aggregation and user accounts and Microsoft's strength in software development, platform strength and ad network brokerage, all in one package, has a lot of interesting parts that could produce more value in the long run. AOL and Yahoo combined, for example, will do little to penetrate mobile markets more effectively. Yahoo, Microsoft and MySpace, by contrast, could make some interesting things happen in mobile between platforms, social media, user accounts and ecommerce.

This is all well and good, but why are we so fixated on this deal, anyway? It's not that it won't create some sea changes over time, but the strengths of a deal with Yahoo come largely from what the partners may offer in combination. Yahoo is big, still powerful - but for the most part in its lifecycle a cash cow with relatively low new product investment waiting to be turned into hamburger. The real issue is what this means in terms of exit plans for online content and technology companies, as pointed out by Fred Wilson over on A VC - that is, if a company with fairly obvious marketable attributes like Yahoo has a hard time cashing in, what does this mean to online plays in general? If there's no exit at the top, what does that say to other players?

Somehow a deal will be forged for Yahoo in the next few months if the company's staff doesn't implode before then from takeover stress. But in the meantime I honestly don't think that it's all that significant a deal to watch from the overall industry's standpoint. Big will get a bit bigger - and that combined entity will still look nothing like Google. I think that we're seeing that overall getting any bigger is not necessarily going to solve anything in online markets. Online publishing is still in its infancy, still requires an enormous amount of investor patience as new ideas face daunting risks and still will have periods of high uncertainty that don't lend themselves to quarterly reports, much less private shareholder reviews. In other words, while some people are still focusing on making larger dinosaurs the long money is still probably in making more and better mammals. Be patient, be foresightful - and don't get too caught up in the scuttlebutt.

Labels: Deals Partnerships and Sales, Google, MSN, MySpace, News Corp, Yahoo

What does it mean when a company announces disappointing earnings and has no strategic plan to move forward? It means that you've been shopping your company like crazy and you're waiting to see what comes out of it. It should come as no major surprise that Microsoft finally made an offer for Yahoo that it will in all likelihood not refuse - USD 44.6 billion to be exact, more than double Yahoo's closing shares value. With an expected 23 percent drop in earnings over Q406, Yahoo's ability to fund a better position in the marketplace in the face of a looming recession was dimming rapidly. Microsoft wisely waited to buy low.

Six months ago I poured cold water on such a merger, seeing News Corp as a far better partner in the long run. I still believe that a News Corp acquisition would have been a great exit for Yahoo in many ways, as the negatives in a Microsoft deal that I pointed out in that earlier post still stand. But at the end of the day this is a merger of necessity, not of opportunity. Neither Microsoft nor Yahoo can compete with Google effectively at this point, a factor that's only going to be exacerbated as Google's mobile strategy begins to unfold this year.

While one can crow about "the merger of content and technology" or some such meme and marvel at the combined online audiences that these two megaportal providers can offer advertisers through the powerful combination of Microsoft's ad-brokeraging system and Yahoo's own ad marketing services there's one key and overarching problem for both companies: they've been slow to bring hit products to the marketplace. Old media and old technology product cycles are not Web product cycles, and neither company has done well in figuring out how to build online hits as effectively as they know how to buy them. Google may not pop out perfectly conceived products and has product issues of its own, but they're constantly letting new things hit the fan to see what new markets they can open up while others spent time trying to build perfect products for old markets.

The big plus of the deal - there is now going to be only one dominant portal for established content brands and marketers looking to position their own brand advertising - is certainly important, but for an upcoming generation of Twitterers who see their own Facebook homepages or newsreaders as the portals that matter most to them it's not clear that this will be a great solution for either company as the new generation of content consumers gains pruchasing power. If you want corporate content and corporate advertising on corporate technology, one certainly knows where to go now. But in three to five years corporations eager to eliminate the "middle man" of media to manage their own market conversations directly may not see as much value in this union as they might today.

The potential feather in the cap for this deal could be the opening of mobile broadband. With a strong position already in mobile devices and now armed with tons of content and a great ad network Microsoft could stake out an early advantage in broadband mobile frequencies now being opened to all devices based on their existing momentum alone. The struggling Vista platform will continue to be refined for enterprise purposes but Microsoft's mobile Windows CE operating system may become instead the default Windows platform for Microsoft's media efforts as home entertainment shifts between mobile gizmos and HDTVs. This is likely to bring strong profits over the next few years and is a very viable strategy overall.

But in the meantime one wonders whether there will be enough focus to make this happen. Having just survived a failed marriage between Hollywood media culture and Silicon Valley culture Yahoo must now adopt to Redmond ways. Microsoft has been redefining its own culture and focus rapidly in postitive directions as the Ballmer period fades away, but the scale of this merger is going to require some major dust settling. All this as a looming recession slows down both enterprise and media markets cannot be helpful.

It's a "Brangelina" marriage that's bound to eat up media cycles, but at the end of the day the fame of these brands is not necessarily going to yield substance out of thin air. This will benefit Microsoft in the short run, to be sure, if it can get to the short run issues in time, but in the long run onie wonders whether two overripe old brands can make a fresh and effective new brand. Time will tell, but at least we can read about this openly now and watch it play out.

Labels: Deals Partnerships and Sales, Google, Microsoft, Yahoo

Sramana Mitra at GigaOM tries to makes sense of the recent reorgs, cutbacks and general malaise at Yahoo. Mind you it's sometimes hard to figure out how people can cluck about a company that has over 500 million unique audience members, but clearly a USD 20 billion loss in market capitalization since its peak is bound to bring soul-searching in many major company. Sramana's suggestion is for Yahoo to focus more on excellence in specific vertical markets rather than to get lost in trying to out-everyone everyone else. Oddly Sramana gives as one suggested change the addition of photo processing service Shutterfly to Yahoo's Flickr photo community, even though Flickr has had the QOOP photo printing service for some time now.

This points out a major problem that many content aggregators face: it's almost impossible for an all-singing, all-dancing content vendor to buy enough good content to compete cost-effectively with specialists in any one market vertical. Yahoo could buy its way into a more dominant position in verticals such as travel, jobs and real estate classifieds by purchasing market leaders and then position management that wouldn't stop until they had dominant positions, but there are only so many verticals in which one can dot this effectively and still manage to maintain both rapid responses to market needs and the advantages of scale. Thomson has discovered this to a large degree as it has chosen to divest itself of market verticals in which it was both not possible to dominate effectively and to take advantage of common infrastructure for legal, scientific and financial markets more deeply.

The main problem Yahoo faces is that its brand does not resonate effectively with many of its holdings as well as many of its core offerings. In terms of breadth of content that it licenses or manages there's no single provider larger than Yahoo in online markets. That's a fine position to be in if you're a Google with a brand that is functionally oriented more than vertically oriented, but when you're more about destination content it's hard to get a broad encompassing brand to work for both functionality and destination content - even when there's comparable functionality or content available. People gravitate to Google for search over Yahoo as much for branding reasons as they do for its technology: that is, Google is a "techie" brand, so it's viewed more as a tool for solving specific problems. Yahoo has great content, but with a handful of exceptions it's not really seen as a tech tool intuitively. Strangely Yahoo's focus on well-designed user interfaces only seems to exacerbate this branding issue. By looking more user-friendly and idiot-proof than Google and other tech-oriented brands it continues to send signals that it's a company focused more on destination content than leading-edge content technology.

I'd hesitate to call Yahoo a dying brand, for it has a wealth of assets that are hard to beat in many arenas. But it is a brand in search of its soul, captive in large part to an earlier generation of the Web when aggregating content from existing media brands seemed to be a lot more powerful business concept than it is today. Google's more agnostic approach to content aggregation and more askance perspective on marketing alliances with established content brands has enabled to keep its content acquisition costs relatively low and its ability to focus resources on transformative technologies and approaches to markets relatively high. In an era in which a brand creates trust moment by moment Google's more contextual and flexible approach to brand management carries with it inherent advantages, as do many social media brands focused on transformative technologies.

Yahoo need not become another Google from a branding perspective, but it does need to think about the positioning of its brand far more carefully before it tries to focus on improving existing product lines that may not be well aligned with a repositioned Yahoo brand. I remain optimistic that this can happen over the next few years, but I don't expect a short-term turnaround.

Labels: aggregation, portals, vertical search, Yahoo

You have to hand it to Yahoo: there is a lot of pressure on them from pundits and analysts to come up with something that would put them in the game with major social networking portals. But while still incubating their Mash social media platform they've come up with a product that says in effect that they know that they have a long ways to go. As such the introduction of Kickstart by Yahoo needs to be looked at through kinder, gentler eyes than might otherwise be the case. Instead of rushing a "we're everything to everyone" portal to market that would be sure to be met with disappointment Yahoo has gone to war with the platform that they've got and has chosen specific battlegrounds as a starting point.

The specific focus of Kickstart is young adults making the transition from college into professional lives. This is a gap that may be more theoretical than real given the strength of services such as LinkedIn, Facebook and Classmates.com in covering alumni relationships, but by focusing specifically on young adults making a transition Yahoo may have an opportunity to catch a toehold of acceptance with these people just at they're considering how to move out of campus mode into corporate mode. Sounds good on the surface, but this may be a case where traditional marketing analysis will leave Yahoo several yards short of their goal. Many of today's college-age generation see a strong blend between personal lives and careers that carries over well into their twenties - the odyssey years, some have termed them. The "prosumer" concept is something very comfortable to this generation, so sharing photos and videos is not necessarily something that conflicts in their minds with professionalism. The division between the Mash project and Kickstart seems like it's aiming at a gap that their audience may not perceive.

At the same time, though, there may be a few young adults who look at their Facebook profiles and say to themselves, oops, I did it again. The danger in mixing consumer and professional outlooks is that it takes a fair amount of maturity to show that you know how to balance these lives effectively. So Kickstart may be named as such to suggest the notion of "fresh start" to those young adults who didn't make the best use of social media to put their most adult foot forward. But at the end of the day it's far more likely that a service like Facebook can help these young adults to maintain meaningful relationships that can include their professional personnae than a service like Kickstart can loosen up and make networking seem to be a little more fun. From this perspective the dead-serious LinkedIn network seems like a more likely target for Kickstart than Facebook, creating a new generation of highly professional networkers that can make the most of people in their networks with great skillsets.

At the end of the day it's not Yahoo that's broken in designing products such as Kickstart but an information industry as a whole that focuses on databases more than the audiences that they serve. Social media is far less about what is stored on a server and far more about what happens in the browsers and mobile phones that connect peers to one another. Social media can yield highly valuable data and demographics for licensing and advertising support but as demonstrated in Facebook's new socially contextual ad and marketing program the premium value in social media is in the contexts that databases can generate on the fly based on interests and activities. Facebook may yet be trumped by a maturing brand out of a Yahoo that can manage some of the details of one's life with more professional panache but by separating the content experience from the networking experience Yahoo seems to have missed out on developing a platform that will create the most rich environment for both advertisers and content licensors.

Hopefully Kickstart can get some quick yardage for Yahoo to consider its next move in social media but in the meantime the rest of the teams are moving to a more sophisticated playing field altogether. Whatever way you slice it Kickstart is trying to define a niche product, in effect ceding the ground already seized by other social networks. With the introduction of Google's OpenSocial the Yahoo crew is becoming that much more isolated from the greater social media environment, becoming increasingly an island for copyrighted content and traditional brands that are powerful in their own right but missing out on many of the contexts in which they can find their greatest value. There's money in that model, but not necessarily money that has a future.

Labels: facebook, kickstart, Social Media, Yahoo

I have enjoyed using the Compete.com traffic analysis service, which provides some useful data to compare Web site traffic performance more accurately and finely than the oft-bashed Alexa statistics. While Compete offers a more limited range of sites for analysis and only a year's worth of data to mull through it's able to track real visitors, audience engagement and growth with more meaningful data. On the Compete blog recently was a post that looked at how major search engines are performing in comparison to one another for both traffic and performance. While Google leads Yahoo and Microsoft with 67 percent of market share, the Compete stats claim that Yahoo comes out on top in terms of search fulfillment - the percentage of searches that actually result in someone clicking on a link in a search results page. Compete claims that Yahoo's search fulfillment rate is 75 percent, compared with Google's 64 percent and Microsoft's 61 percent.

Does this mean that Yahoo's search results are more "clickable" than Yahoo's? Maybe so, but it's a rather ambiguous claim to make. One has to assume that with only 20 percent of people using Yahoo for searching to start with that a minority find its search results to be more useful than Google's. So for that minority they seem to use them more effectively. Overall, Yahoo searches are more optimized for people in a purchasing mode than Google search results, which tend to be optimized more for people seeing general information. With this in mind it could be that Yahoo tends to lead shoppers somewhat more specifically to product information that they're seeking - a factor that's likely to attract the brand advertisers that are at the core of Yahoo's marketing strategy.

Yahoo search benefits from doing fewer things better for fewer people, but Compete also shows that Yahoo as a whole performs far better than Google in the total attention that it gets from audiences:



While Yahoo's strong destination content helps to bolster its attention ratings it's losing ground to Microsoft in total page views as Microsoft bolsters its Live.com search engine:



In the middle of this is Google, still the overall search leader but beginning to stagnate as a destination as other search-oriented sites bolster content that transforms search portals more into destination content sites. Google has these abilities also but focuses more on solving a broader array of requirements for a broader search audience. Google also has more partners using its search technology as well as mashups and other API-based services so to some degree the Compete statistics are not revealing the full strength of Google's market presence. Google's growth as a destination search engine may have slowed, but its presence as a technology platform that influences where and how people find content in valuable contexts is growing in highly profitable directions.

All of this should serve to remind us that there is no longer one clear answer to how to create marketable value through search. You can focus on becoming more portal-like, you can focus on being more embeddable, you can focus more on a specific function such as ecommerce or you can focus on a range of functions - but regardless of the focus it's no longer a matter of just having great ranking algorithms or great server farms. Search has become just one of many tools for contextualizing Web content effectively on demand, one that will continue to grow in importance but just one tool in an arsenal of methods to be used for more effective audience engagement.

Labels: Compete.com, Google, Microsoft, search, Yahoo

CNET News reports in the past tense on the net neutrality movement, the effort by a coalition of online publishers and technology companies to keep U.S. telecommunications companies from charging different rates for Internet access based on arrangements with content partners. CNET notes that in the wake of last year's successes in stalling changes to current policies and new focus on carving up the 700 MHz radio spectrum for wireless broadband access the movement has become fragmented. The original "It's Our Net" group has reformed as the Open Internet Coalition, trimmed down from 148 to 74 members, with major technology and portal players such as Microsoft and Yahoo out of the picture. Notably Apple was never a part of this coalition, a fact underscored by its interests in acting as a "toll gate" of its own sort as it uses its iPod and iPhone proprietary platforms to pressure media companies into price cuts for premium content.

All of this could be relatively moot except that while legislators and companies may be focused on other things the communications companies who have so much at stake have certainly not forgotten their original goals in opposing net neutrality. In a parting gift to communications companies outgoing U.S. Attorney General Alberto Gonzales filed an ex parte filing (PDF) with the U.S. Federal Communications Commission suggesting that net neutrality regulations were not necessary to ensure open competition. The absence of Yahoo and Microsoft from the coalition and their advancing plans to develop premium content services may also imply that they see themselves becoming more like Apple and being able to dictate content pricing and licensing terms to a broader array of content providers through alliances with communications companies.

In the bigger picture, then, the fight for neutral access to publications over public infrastructure
is far from over and in fact widening with the 700 MHz spectrum also in play. In all of this traditional publishers have been largely in the background, with no apparent major role in the lobbying efforts. This seems to be wishful thinking at best, akin to the efforts of publishers to ignore the Web in its early days, but now only worse since such a large percentage of their growth depends on it. The New York Times reported dwindling revenues from their ever-smaller print editions yet a 28 percent increase in online revenues, to cite one example of robust online revenue growth. If there were a chance that newsprint or mailing costs would go up publishers would be all over it: why do they ignore potential regulations that may have a huge impact on the profit margins of their most promising new source of revenues?

In the meantime the opting out of Microsoft and Yahoo from the net neutrality movement and the non-participation of Apple points towards what many publishers hope: that a handful of major portals can help along with communications providers to re-create the cable television model and create a brand advertising Nirvana where consumers behave as they ought to and pay for premium access. Yet with user-generated content and search engines providing more context for content than ever before it's not clear why consumers will be persuaded easily to opt for being charged premium prices for access to specific sources when flat-rate access has been such a successful way for them to determine for themselves what's worthwhile content.

In largely ignoring the net neutrality debate publishers' hopes for controlled access are more likely to fall prey to communications companies and portals who will take higher percentages of their revenues from their online content through access channels that are not optimized for audience growth and that will give them less autonomy on pricing. The open Web may be a bit more of a wild and wooly place for some publishers but for those that have embraced it most efficiently it has been the most promising revenue and profit driver in an era where many channels are becoming far leaner and meaner. It's time for publishers to think about what's really in their best long-term interests and to begin to embrace net neutrality as an essential component for both audience and margin growth.

Labels: apple, Congress, FCC, Google, Justice Department, Microsoft, net neutrality, publishers, Trends, U.S., Yahoo

Bloomberg News covers Stanford Group analyst Clayton Moran's claims that the seeming listlessness of Yahoo's management since Terry Semel's departure and sinking share prices are laying the groundwork for an inevitable and likely sale of Yahoo. Moran cites Microsoft as the likely bidder and beneficiary of online synergies that would boost both properties into a newly competitive position against rival Google. There are a lot of things that still argue for this combination - invigorated search technology and online office components from Microsoft, advertising know-how and effective destination content development from Yahoo - and a such sale is certainly not improbable. Yet I can't help thinking that this may be one of those "perfect" marriages that would go south far more quickly than people may imagine.

The main rub that I see is that both companies suffer from two similar maladies: weakening market mindshare for their brands and dysfunctional product development cultures. Microsoft has had a remarkable string of product introductions that have been flops, duds or near-misses, in spite of having a near lock on many key technologies. Its Internet Explorer browser, once the unchallenged ruler of online Web content consumption, now boasts only about 70 percent of the European marketplace, a problem only exacerbated by mobile content markets moving further away from Microsoft technologies. Yahoo has many comparatively healthy and innovative initiatives, but some of its most innovative properties such as Flickr, del.icio.us and Yahoo! Pipes are either standalone brands or initiatives that are relatively orphaned from the mainstream Yahoo offerings. The Semel legacy of traditional media development stalled the effective development and integration of social media, a strategic error that Yahoo is working hard to correct but nevertheless a legacy of poor market timing that Microsoft will do little to bolster.

Moreover a Yahoo acquisition will do little to help Microsoft penetrate the enterprise/prosumer space very effectively. Yahoo's withdrawal from enterprise services a few years back left the playing field open for Google, which is still at the foothills of enterprise content but building a steadily growing array of products and integration resources to build that base over time. On the consumer side the addition of Microsoft properties to Yahoo's ad base would be a strong plus, but not one that could not be offered by other parters as well with greater online growth potential.

Which brings us to the question: who would want to buy Yahoo? I think that it's far more likely that News Corp will see a Yahoo acquistion as a perfect complement to its holdings.Its online management team is both upbeat and highly experienced with social media via Fox Interactive Media's MySpace platform and would offer Yahoo a better chance to develop as a dominant media brand with a strengthened advertising base. Yahoo's strong online finance portal would complement potential content fed in from Dow Jones holdings should that deal close, a deal that would have already provided News Corp with good enterprise revenues and technology platforms. Yahoo entertainment offerings would complement MySpace nicely and its enormous base of user accounts would offer MySpace a shot in the arm as Facebook builds a stronger market share.

The only real question for a Yahoo sale is timing - and it's likely that Yahoo's nascent social media replacement for its less-than-booming 360 portal may be the timing telltale. If the introduction of this effort is not stunning or if management becomes discouraged in its early testing phases then it's highly likely that a deal will be executed fairly quickly one way or another. But don't be surprised if quiet talks are already in the works - no doubt awaiting News Corp's finalization of Dow Jones details before focusing on Yahoo. Other potential suitors such as TimeWarner could enter the picture (AOL round two? Probably not.) but few offer clear synergies. We'll see whether Microsoft has the gumption to pull the string on a Yahoo deal, but my guess is that they have their hands full with many core competitiveness issues already - and that News Corp will be able to define more profitable synergies and longer-term brand strength before Microsoft gets to pop the question.

Labels: Deals Partnerships and Sales, facebook, Microsoft, MySpace, News Corp, TimeWarner, Yahoo

Will Yahoo's replacement for its 360 social media product take off, StumpleUpon helps publishers in the long tail of content and Springer deals with an Open Access publisher who turns out to be quite vocal about their early efforts' shortcomings.

Labels: shoreviews, springer, stumpleupon, video, Yahoo

A preview of the SIFMA show, thoughts on Jerry Yang in it for the long haul against Google, Reuters Interactive and Science Magazine's content previews. Let us know what you'd like to see in our ShoreViews reports!

Labels: financial information, Reuters Interactive, science magazine, shoreviews, video, Yahoo

AP reports on Terry Semel's stepping down from the CEO role at Yahoo after challenges to his leadership at a recent stockholders meeting made a swift move to restore investor confidence an imperative. The move is notable as much for what didn't happen as what did: Yahoo co-founder Jerry Yang will be taking on the CEO role to re-establish both investor sentiment and Valley creds for the short term while Susan Decker, thought to have been Semel's hand-picked probable successor, notches up to President from overseeing ad operations. This may mean a wait-and-see period for Decker while the company as a whole adjusts to Semel's departure before moving up to the top role but more likely it's a move for Semel to have a proxy for his vision at Yang's disposal to ensure that his initiatives have some leadership to prove out his legacy.

Semel's media background was seen as a plus when he took over at Yahoo, promising "adult" leadership and the ability to lead Yahoo towards deals with mainstream content providers that would help to build up its portal in the eyes of online audiences. But a funny thing happened on the way to the earnings reports: search engine Google proved that being able to contextualize the world's content was more important than trying to build a bigger and better AOL. Yahoo has made some strong moves in recent months towards building up the power of user-generated content to drive Yahoo traffic, but the key revenue driver - contextual ad performance - continues to lag.

What are the prospects for Yahoo in the wake of Semel's reign? All in all, pretty good. While Yahoo has suffered from focusing too intently on traditional media products in the past, its push towards stronger social media offerings and innovative reuse of these assets for new portlets for consumer goods and hot topics offers Yahoo a role as a lead innovator amongst traditional media companies. With Semel out of the picture it's likely that staff trimmings will cut through some loyalty factors and allow Yahoo to gain some momentum in deal-making to shore up its innovation position and market share. Yahoo is building high-quality content that appeals to mainstream Web users, effectively bridging the gap between AOL-like neophytes and seasoned users with highly focused interests with an array of well-designed content products.

But the key problem remains that Yahoo has mapped out a strategy that weds it largely to the goal of most traditional media companies: build market share and viewership for a destination portal. While its ad network will help Yahoo to expand past that footprint effectively, their dedication to making it work for brand advertisers is likely to make it too focused on the declining footprints of traditional media companies to build market share quickly enough to be fully competitive with Google's ad campaigns. As pointed out by TechCrunch recently the "long tail" of content is getting only thicker, placing a premium on products that can absorb and interpret its content for highly focused audiences. This will continue to play to Google's advantage as it builds both revenues and margin from an abundance of less-expensive content sources that can be monetized through its contextual ad technologies and dominant search engine.

Yahoo has also neglected its enterprise strategy for many years, effectively ceding this arena to Google and a host of other services that are effective in contextualizing both enterprise and Web-sourced content. W