How to save Yahoo while there is time

Larry Kramer · May 23, 2011 · Short URL:

They could finance a real run at becoming the next-generation media company.

Yahoo is 17 years old, and like any teenage it’s having an identity crisis. It used to be a tech company, dominated by engineers who won the Portal Wars, ultimately defeating AOL, Excite and wounding MSN. Because it was a cool company and one that gave new-to-the-internet users (that was all of us, at the time) the best overall experience, it triumphed.

Its success happened because it was the best experience on the web, and for many years kept surprising its users with new and interesting things to do online.

But along the way, like many kids its age, it got diverted from its mission of pleasing its users. This happened for a number of reasons. Competition grew and while Yahoo got comfortable in its business model as an aggregator of content, deriving revenue streams from partners, it left behind that commitment to give users exactly what they want. Instead, it gave them what the highest paying partners were willing to give them. So when consumers got more sophisticated about what content they wanted, and how they used digital platforms, competitors popped up and started picking them off.

In search and email, along came Google. In social media, along came Facebook. In music, first came My Space then came ITunes. In news and information categories, hundreds of existing and new businesses got better on the web.

There is an interesting post about Google by Matt Rossoff on Business Insider this morning that is a perfect backdrop for this post. It’s thesis is that Google needs to hire some Liberal Arts Majors before it hires any more engineers.

“Engineers are great at solving problems,” the post reads. “But they’re not always so great at figuring out which problems to solve.”

Yahoo has figured out that Content has become king on the Internet and across digital platforms, but it still hasn’t figured out what it has to do to become a great content company. It is still a company run by engineers. In fact, after an ultimately less-than-successful CEO reign by Hollywood Mogul Terry Semple, Yahoo saw the engineers come back and take an even stronger hold on the company. Actually, the engineers never really let go. Even when content people were hired with large promise, control of the key pages on Yahoo was kept in the hands of engineers.

To be sure, even though the next CEO, Carol Bartz, came from the technology industry, she fairly quickly decided the company had fallen too far behind in technology in several areas to compete and wisely announced that Yahoo was now a “content company.” It then did begin to spend some serious money to build its own content. It has built some strong franchises in Yahoo Finance and Sports, for example.

But the company hasn’t really taken the plunge. For it to be a content business, content people have to run the company. The business has to be obsessed with what it’s consumers want and be able to give them that and much more. In fact then need to give them things that they didn’t know they wanted. Content consumers ultimately need to be surprised and fully expect their sources of information to be smarter than they are about the topics they are reading or viewing.

Content businesses need an editorial intelligence, and personality, built and maintained by a strong team of creative people, whether they are called editors or producers, they need to be obsessed by giving their readers everything they want and much, much more. They need to live for delighting their customers. And they need to include the CEO or someone reporting directly to the CEO.

No one reads a magazine, or goes to a play or movie, expecting to see exactly what they want to see. They expect to be surprised, entertained or even educated. The brilliance of a great content company, whether it’s The New York Times or Warner Bros. or Harper Collins or The Harvard Business Review or Conde Nast, is that it cultivates and rewards people who can figure out what is about to become interesting before its audience knows. It does that by giving creative people the time and rope, and even the ability to fail, en route to creating great content, whether it’s explanatory journalism or a moving and entertaining movie, TV show or Magazine article.

Those creative types, as difficult to understand and to manage as they are, are the secret sauce. They need to permeate to process. Great engineers will be needed to create great tools, sites, apps and many other aspects of what makes a media company great in the future. But they must work arm in arm with the creative content people who are defining the brand and who understand the needs of their consumers.

A great example is the recent launch of News Corps IPad news product, “The Daily.” Despite the fact that the company has done exactly the right thing by creating a content company to specifically exploit a new medium (the tablet), the initial product was designed largely by engineers before the first journalists were brought on board — because people didn’t want to hire reporters and editors before they had any place to put their content. Then, when the journalists got there, the technological underpinning of the product was about done and guess what, it was over-engineered and wasn’t the least bit user friendly. The engineers built a product from specs so it would take advantage the new platform, but no one spent enough time thinking about how the audience would actually want or use the information.

As the product matures and as the technology of tablets improves, The Daily could grow an awesome audience. But it has to go through some difficult transitions. It might even find that there is a large audience for its content on other digital platforms and broaden its distribution. But that’s OK, it’s one of the first native digital news products in existence and it has a real chance to learn to be great before it’s caught.

Back to Yahoo, it’s hard to say from the outside if it’s too late to save. But they still have something that is very hard to build from scratch: a huge audience and some real cash flow. They could finance a real run at becoming the next generation media company. It’s still an easier path for them to go that way than for an existing media player to go heavily digital, because those companies don’t want to risk the huge revenue streams they already have from existing distribution, whether that’s print, video or audio. But the future is in the combination of the three on to the digital platform and there appears to still be room for some new winners.

(Image source:

Support VatorNews by Donating

Read more from our "Trends and news" series

More episodes