So now Carol Bartz, Yahoo CEO, says "we didn't care about search anyway". That may be retrospective sour grapes, but the truth is that Yahoo has acted as if search was not strategic, all the way back to 2000 when it effectively outsourced it to the then-small Google. Meanwhile, content-head CEO Terry Semel put out the word that Yahoo was to become a media company. The wisdom of those decisions is now obvious, but they are a done deal, and trying to evade the outcome has taken Yahoo nowhere. I've written here before suggesting that the company had better find a new positioning taking the reality into account.
So what's the new position? To, err, be a media company, it seems. From the NYT article:
"Its Sports section..., has reporters producing top-notch original material ranging from scoopy news items and blogs to long-form analysis pieces.... According to Ms. Bartz, the majority of Yahoo’s sites will go the way of Sports. In particular, Yahoo will throw investments behind its entertainment, finance and news operations. Ms. Bartz noted that there are plenty of unemployed journalists out there to pick up."
Interestingly, there have been similar strategic noises emanating from another fallen star, AOL, saying:
"...we are a low-cost producer of high-quality content at scale.... we have none of the legacy costs associated with producing print publications, for example. We don’t own printing presses, or fleets of delivery trucks. We don’t have the elaborate editorial structures geared to producing products over a printing press."The linked article further notes that AOL has hired 1,500 journalists, most as freelancers, and intends to double or triple that number in the next year. AOL has developed a stable of vertical sites, e.g., EnGadget, that most readers don't recognize as part of the parent company or brand.
If there's wisdom in the Yahoo and AOL positions, it may simply be in picking a target they can beat with their existing capabilities. Both of the companies have figured out how to live within the economics of Internet advertising revenue. They are going up against an industry whose print business lies in financial ruins, that is getting ready to drive away its Internet readers with pay walls, and indulging in delusions that some form of DRM wrapper will let it start charging for goods that are no longer scarce.
Yahoo and AOL may not be able to beat Google's 21st century management style, or slug it out with Microsoft's multi-headed technology hydra, but if they can't beat the likes of the AP, the Tribune or Pinch Sulzberger's NY Times, they deserve to go under. The outcome may not be as lucrative as winning the search wars and making the market in attention, but becoming the heirs to a large chunk of the news and entertainment industries is not a bad consolation prize. (And someone with more patience than myself should line up the various strengths and weaknesses of AOL and Yahoo and see if they are natural competitors, or would be stronger together once Time Warner cuts loose the AOL assets.)
The biggest note of caution in these plans is all those aforementioned journalists. A major factor in the decline of the legacy media has been the exposure of the degree to which cant and attitude had replaced research and knowledge of their beat among reporters. Sloppy editing due to ideological bias and financial constraints has compounded the problems, which have been made glaringly obvious by the rise of citizens media. AOL and Yahoo both propose to take on large numbers of employees and stringers who have grown up in that environment. Some number of them are on the streets because they and their organizations ceased adding value; their new employers are going to have to figure out how to organize and manage them so they don't end up with similar product.
They are good reasons to think that both AOL and Yahoo might be equal to the job, for differing reasons. AOL has a deep history of organizing itself around communities of interest. Online Old Farts like myself will recall that AOL (née QuantumLink) got its start by pursuing and supporting the senior and gay and lesbian communities, among others, before it went to a horizontal consumer strategy. Those organizational genetics for getting close to virtual or physical communities may still exist. In spite of grossly wasting its community assets for years, Yahoo still has an impressive collection of virtual communities under its groups umbrella, many of which could be exploited as source, channel, or quality control on related reportage or analysis. Many of Yahoo's focal content areas - I'll mention finance in particular - correspond to vibrant blogging communities that might be brought into alignment with a true new media strategy. This will be interesting to watch.
(Update: See this follow-on post.)