The secret sauce for Yahoo: Content and technology

Should it be a better tech company or should it be a content company?

(Larry Kramer is the author of C-Scape, a book on the changing landscape for media and related industries for Harper Collins (published Nov., 2010). He also founded MarketWatch, which was sold to Dow Jones in 2005.)

With all of the chaos at Yahoo, the debate is raging yet again: Should it be a better tech company or should it be a content company? Has it conceded so much ground in the tech arena to the likes of Google and Apple that it HAS to recreate itself as a content company, or should it try to regain the mojo that help it become a powerhouse of the last decade and build an audience of several hundred million users? Or, is content the right way to go anyway?

The answer is yes, to each question. Yahoo has talented and creative engineers and programmers. It also has a huge audience that it has monetized better than most with display advertising. But it has also been left in the dust by Google’s ability to build a monster search and direct advertising business. And it has lost significant ground in email and mobile application development. On the content side Yahoo has historically done a great job as an aggregator and shown the ability to add value in that aggregation by attracting significant audiences from its large pool of users. But it has not shown an ability to crack the new media formula that has begun to build businesses around a combination of aggregation, curation and original content (like Huffington Post, The Daily Beast and others.)

The magic formula for the future involves a combination of content and technology, specifically the technology that will create new forms of storytelling and guide better and more efficient consumption of content.

We are entering an age of Convergence. Content and technology are converging to create the newest forms of storytelling and giving consumers entirely new ways to consume content. The creation of IOS and Android powered smart phones, The IPad, Kindle etc, and other developments have clearly changed the landscape and they are only the beginning.

Successful content companies will need to understand and even master new technologies and truly understand how their customers will use those technologies to consume content. In order to succeed they will have to learn how to deliver their content on the new platforms AND how to optimize their content for those platforms. If the ability to give consumer content in real time continues to grow, will content companies have to accept that more content will need to be delivered in smaller bites? Will they have to include more video or interactivity on portable devices? Will targeting that content become even more essential in order to help consumers navigate an overwhelming overload of content?

We barely know the questions to ask, much less the answers. We are starting to understand those questions, but the answers are more elusive than we think. Media companies will have to continue to pay close attention to both technology AND consumer habits, particularly how consumers continue to change their habits because of new technology.

While many companies are taking steps in these directions, no one has emerged with all the answers. Apple has done a magnificent job of matching new products with consumer demand, even helping to create the demand. But Apple has done that from the perch of a consumer products company, a hardware company. They have steadfastly avoided the creations of content and have even had very rocky relationships with many of the content creators because their interests aren’t totally aligned.

Google has done a great job of building a targeted advertising business that takes advantage of its search business to uber-target and create efficient management. But Google, too, has avoided becoming a content creator. It does generate content from some acquisitions, but for the most part it’s content created by others, like the videos on YouTube or restaurant ratings from Zagat’s readers.

So the door is open for a company that can simultaneously seek to listen to and understand it’s audience and participate in the development of technology that gives them what they want and more.

Yahoo needs to be a company that commits to creativity in both technology and content, attempting to lead in both, but only in the context of how they work together. Whether content is email, user-generated video, advertising or unique reporting from a war zone, Yahoo should be all over the process of creating and delivering content to consumers through multiple platforms.
It should also take advantage of having one of the best brands built over the past decade to create branded content on all platforms.

(For more from Larry, visit his blog. To purchase his book C-Scape, click here.)