Is Yahoo public enemy No. 1 for Big Media?

Rare is the moment when a newspaper actually thinks out loud. Even more rare is a newspaper thinking aloud about its competitors and about the future of its own business. But that’s what happened on Sept. 13, when The Los Angeles Times ran an unsigned editorial under the bland headline “News to View from Yahoo.”

The editorial wondered about the impact of Yahoo’s first big foray into original content, “Kevin Sites in the Hot Zone,” where broadcast journalist/blogger Sites would be doing “solo journalism” from conflict zones around the world. The Times editorial figured this was a hybrid project that looked more like a blog and hence wouldn’t compete with ABC’s “World News Tonight.” But, the editorial stated, Yahoo was being “coy” about its plans — and about just how much the site actually would be competing with mainstream media.

“Yet the so-called mainstream media (aka the MSM) can’t take too much comfort from Yahoo’s strategy,” the editorial concluded darkly. “The MSM has established more than just a beachhead on the Web, of course, but few sites can match Yahoo’s ability to make a wide array of material available on demand, filter it to suit a person’s tastes, then allow for further refinement through user feedback. If programs such as Sites’ are compelling, they will hasten the public’s shift toward the interactivity of the Web and away from more passive traditional sources of information and entertainment, such as TV, magazines and (here we are again) this newspaper.”

The new Yahoo Media Center is in Santa Monica — right in The Times’ backyard — with former studio execs Terry Semel and Lloyd Braun calling the shots. If old-line media companies weren’t paying attention before, they are now, as coverage in Wired Magazine, The New York Times and BusinessWeek shows.

And the results are in: Yahoo is a media company; it has designs on doing original news and entertainment content tailored specifically for the Web; and it’s time for old-line media companies to think hard about how they’re going to compete. News Corp. and Barry Diller’s InterActiveCorp have already showed their hands, rolling up all the Internet content they can buy. But the MSM is caught between a rock and hard place, because dozens of news outlets have licensed content to Yahoo News and rely on Yahoo and Google to do their online search, paid-search advertisements, and contextual ads.

Of course Yahoo doesn’t want to lose those deals. The company thinks it can build out original content that complements the traditional-media material it licenses — rather than replacing the latter entirely. Scott Moore, vice president of content operations at Yahoo, stressed that the Net giant’s aims were peaceful.

“We have I think 70 different news publishers who have relationships with us,” Moore told me. “I don’t think any of them will be threatened by this. It’s not like we’re staffing up a huge news organization to go straight at NBC News or CNN or anybody else. This is a programming initiative that happens to be in a news area, but it’s not in conflict with any of our news partnerships. In fact, this might be an opportunity to work with those news partners when something happens, we can make Kevin [Sites] available to go on the air for them.”

Yahoo’s second move into original content was hiring nine columnists to write for its finance site. But Yahoo took pains to use book writers and not hire away established financial journalists — the better to keep its licensing deals alive with BusinessWeek, Reuters and Forbes.

Neil Budde, general manager of Yahoo News, told me that Yahoo is still a friend of news organizations, especially the ones who get traffic when Yahoo links to their stories.

“What we’re doing with Kevin Sites is to venture into an area that allows us to understand better the future of online journalism, building something from the ground up and have someone cover something in a multimedia way,” Budde said. “But we’re trying to stake out areas that are not getting a lot of coverage. We’re not going to go out and replicate what is already available from other media sources and news organizations. We’re looking at areas where we can cover stories in different areas or areas that aren’t getting any coverage.”

Advantage: Yahoo

Keep in mind that this current push is not even close to being Yahoo’s first into original content. Before broadband exploded, the site tried original video shows with Yahoo FinanceVision — and failed. And Yahoo ran original sports columns during the 2004 Summer Olympics, and has run an original finance column from Suze Orman since February 2004.

But the Kevin Sites initiative bears watching because it is much more than an online column or blog. Sites is offering up video, audio, and text dispatches — and he plans to interact with his readers in live chats along the way. Plus, Yahoo and Sites have posted an ambitious journalistic ethics code that goes beyond the Society of Professional Journalists’ code by adding four more criteria: transparency, vulnerability, empathy and solutions.

Sites told me he considered this project a “dream job,” but was realistic about the tough task of working with an organization that has never had a foreign correspondent.

“It’s true Yahoo isn’t a worldwide news organization that has bureaus around the world where I can get resupplied on the road,” Sites said. “But we have sales offices in different places so there could be infrastructure for me to get a fax, or get a supply of videotapes. So you build on that, you use creative problem-solving techniques, and I’ve seen that from everybody here.

“It’s tiring in the sense that you have to build it from the ground up. But I would much rather do that and be a part of something that is going to have a long-lasting impact than to just continue what I’ve been doing and wonder at the end of my career if I really served my career and the people who depend on me. I know with Yahoo I will probably do the best work of my life.”

Sites said he turned down other offers, including from network TV, because of the freedom and innovation Yahoo offered. Plus, he noted that Yahoo’s global audience numbers — in the hundreds of millions per month — dwarfed that of “NBC Nightly News.” Yahoo’s Moore said the portal would promote Sites heavily. In fact, I recently noticed a small graphical ad for the Hot Zone in Yahoo Mail in a space I had never seen advertising before.

Media consultant Vin Crosbie, president of Digital Deliverance, said it’s true that Yahoo doesn’t have a news culture now, but that doesn’t mean the company can’t build one. He’s bullish on Yahoo’s chances to innovate online, and says Big Media has only itself to blame for moving slowly on the Net.

“Yahoo has an advantage over the legacy companies here,” Crosbie said. “It doesn’t have a legacy, it can start from scratch by utilizing the new medium the way it should be, which has been a challenge for the legacy companies because most of what they do is shovelware. It’s interesting that Yahoo is doing original content when out of 1,400 newspaper sites, there are what, 15 that are doing original content? To say, ‘How can Yahoo do original content?’ begs the question of why 95% of the media companies out there haven’t done original content [online].”

Jay Rosen, PressThink blogger and associate professor of journalism at New York University, agrees that Yahoo has a better chance to succeed with original online content than the mainstream media does.

“I think we’re missing the story if we keeping asking: Is this new player or that new player (bloggers, citizen journalists, Yahoo) going to replace the big news providers?” Rosen told me via e-mail. “I’m convinced that journalists love that question — will we be replaced? — because it’s actually more comforting than the alternative: Who’s in a position to realize the potential advantages of the Web, and bring new them forcefully into news and editorial? To me the answer, right now, is clear: Yahoo is in a better position. That’s not solved by starting some blogs.”

Disadvantage: Yahoo

But that doesn’t mean Yahoo will become a journalistic powerhouse overnight. The company has very little experience with news reporting and has a fledgling infrastructure for doing vast amounts of original content.

And it’s an open question whether the company really wants to rival news organizations such as CNN or The New York Times. But even if Yahoo wants to play coy and prattle on about only complementing news from other sources, the fact is that Yahoo has a massive audience of people who depend on it for their news fix, and it has the army of programmers and product managers who could create technological innovations in the blink of an eye — compared with the slow-moving MSM.

Part of Yahoo’s push is into entertainment and broadband video. Author/blogger Brad Hill, who writes the Unofficial Yahoo Blog, told me the explosion of broadband usage has been a plus for Yahoo but that real living-room convergence was still some time away.

“Many observers are not looking far enough out,” Hill said via e-mail. “A certain convergence still has to occur in the home, whereby people pull Internet-delivered programming into the living room, not into the home office. The boundary between broadcast and IP packet, and therefore the boundary between pull and push, must be softened before Yahoo gains real traction with original TV-style programming. But in the long run, very few companies are as well positioned.”

Then there’s the issue of Yahoo balancing the promotion of its own content with that of its dozens of licensees in Yahoo News. How does an original news outlet run a neutral news aggregator with clean hands? That’s still to be determined.

“I don’t see any reason why Yahoo could not establish trust and reliability as a common carrier — that adjustable filter that Yahoo News is now — and, at the same time, become a credible producer of its own editorial content,” Rosen said. “There are problems to solve in the dual track approach, because its requires two different kinds of user trust. The day when Yahoo starts hesitating to point out to the rest of the Web (because it covets the traffic for locally produced goods) is the day decline sets in. My guess is they know that.”

Indeed, Yahoo’s Budde is well aware of the issue of balancing promotion for in-house content and that of licensees’ content. He said the issue is not unique to Yahoo and he previously dealt with a similar balancing act while at The Wall Street Journal.

“[At The Journal] we had to choose between online-only content and content from the print side,” Budde said. “So even at a smaller organization, you’re going to have a balancing act on what to promote, things created within your organization or from outside. I’ve talked to CNN about how they decide to promote things on CNNSI versus CNN/Money. It’s something we all have to do to balance what we think our audience is interested in versus something that helps us build an audience for something new.”

Leonard Witt, who holds an endowed chair in communication at Kennesaw State University, northwest of Atlanta, and blogs at PJNet.org, went over the advantages and disadvantages that Yahoo has as a newbie journalism outfit. He loved the code of ethics espoused by Yahoo and Sites, but said he wasn’t sure if he wanted Yahoo to win out because the company has had dealings with China that call into question its ability to promote freedom of expression and the press.

Most recently, Yahoo collaborated with Chinese authorities, turning over e-mails that helped put Chinese journalist Shi Tao in prison for 10 years for simply passing on a government edict to foreign press. Witt noted that Yahoo wasn’t being transparent to Chinese users about censoring search results — something that made him extra skeptical of the Kevin Sites code of ethics relating to transparency.

Budde said the Chinese issue was outside his purview at Yahoo, but that Yahoo as a company had to work within the laws of China.

“I think as a news person I regret that it happened the way it did [with Shi Tao], but any corporation has to operate within the laws of the countries in which it operates,” Budde said. “Yes, Yahoo has a lot of different parts to its business and one piece is the journalistic operation of Yahoo News, but there are other pieces as well. There are a lot of other news organizations that have large corporate ownerships with a wide range of businesses. It’s not unique to Yahoo that it is a news organization within a company with many other businesses.”

What to do, MSM?

Yahoo and even Google represent a clear danger to media companies and to their advertising income. Is there hope that mainstream media can learn from their past mistakes online and take bold action to fight off the Yahoogle threat?

Rosen, for one, is not holding his breath. After a big-wig meeting with media honchos and bloggers in New York, Rosen answered his own tough questions about Big Media’s chances online.

“Big Media does not know how to innovate,” Rosen wrote on PressThink. “What capacity for product development do news organizations show? Zip. How are they on nurturing innovation? Terrible. Is there an entrepreneurial spirit in newsrooms? No. Do smart young people ever come in and overturn everything? Never. Do these firms attract designers and geeks who are gifted with technology? They don’t, because they don’t do anything challenging enough. They don’t innovate, or pay well. So they can’t compete.”

But Kennesaw’s Witt feels that Big Media still has a chance to wake up to the threat and act. He says the problem is one of imagination and not of revenues. Witt asks why The New York Times couldn’t learn from Yahoo and let solo journalists loose in its own hot zones in Brooklyn, the South Bronx and Queens.

“[Big Media] has reams of content and at least a few million bushel-baskets of money they could wisely invest,” Witt said via e-mail. “Unfortunately, their reaction to change moves like molten lead, which probably is still in too many of their veins, vestiges of the good old days. Hence, they have become the aggregatees as the Yahoos and Googles of the world become the aggregators. The once high priests have become supplicants, bearing gifts to the masters of the Internet.

“It doesn’t have to be that way. They could learn to work with all the citizens who want to make media, start linking to each other, copy open source models, and find the best solo journalists in the world and set them free. Bring their audiences in from the cold, make them a part of what they do. In other words, don’t revert back to the journalism you have known, reinvent an even greater journalism that provides our republic what it needs to move forward as a strong democracy, while maybe figuring out how to get a piece of that $1.2 billion quarterly Yahoo pie.”

Correction: An earlier version of this story stated that Yahoo’s headquarters was in Santa Monica, Calif. The story has been corrected to state that the Yahoo Media Center is located in Santa Monica. Yahoo’s headquarters remains in Sunnyvale, Calif.

About Robert Niles

Robert Niles is the former editor of OJR, and no longer associated with the site. You may find him now at http://www.sensibletalk.com.

Comments

  1. After deadline, I got this quote from Charlie Tillinghast, president of MSNBC.com, on the subject of Yahoo being a friend or foe of Big Media:

    “I think that news sites that have distribution deals with Yahoo are in a pact with the devil. It’s like Boeing contracting the production of plane wings to China to gain access to that market. The next thing you know, the Chinese will be building their own commercial jets and competing directly with Boeing. Yahoo depends on their news partners to attract users TODAY, but they won’t necessarily need them in the future. When that day comes, Yahoo’s partners will be marginalized as news sites.

    Of course Yahoo won’t admit that, it’s not in their interest to do so. The whole issue is quite intriguing.”

  2. Jeremy Verba says:

    Media consumption is not necessarily a zero-sum game.
    Why don’t the print media figure out what they do better than Yahoo (or for that matter, what they do that Yahoo can’t do! – such as on a daily basis, deliver something to someone’s front door!), and use what Yahoo is doing (i.e. Kevin Sites) to augment their product?
    There are enough consumers out there that love the feel and user interface of a newspaper who continue to subscribe and/or buy the product on a daily basis. If traditional media play Yahoo’s game, they likely lose (although there are exceptions such as bbc.co.uk!). So just as Yahoo has used, and continues to use, traditional media to create a better, all-encompassing experience, so too should print et al use Yahoo to augment their experience to retain customers (and dare say, even attract new ones!).

  3. Ross Bradley says:

    From Jeromy Verba’s comment:

    < So just as Yahoo has used, and continues to use, traditional media to create a better, all-encompassing experience, so too should print et al use Yahoo to augment their experience to retain customers (and dare say, even attract new ones!). >

    Maybe even, they (“print et al”) could do even better and “share” among themselves!!! Along with a DAILY (relevant) “combined” news source passed on to selected (many) partner Verticals with all/any articles contributed, having a Link back (from an article), to that contributor’s site!!

    Now THAT could help attract new customers!! I’m sure.

    “Bloomberg Cites ‘Specific Threat’ to N.Y. Subways”

    http://www.nytimes.com/

    http://www.looksmartparents.com/p/search?free=1&qt=threat+to+new+york+subways&x=16&y=7

    So, in time, even your favourite Looksmart Vertical could very well have a selection of “up to the moment”, relevant news, sourced from the likes of The NEW YORK TIMES, WASHINGTON POST, BLOOMBERG and REUTERS,…. Maybe even The New York Post ???

    :)
    LC

  4. Looks like Yahoo will be enabling the average joe to “get off the grid” of current news service. Thank you! I am so tired of reading “what we’re supposed to know.”

  5. Despite the huge influx of talent, I have to admit it’s hard for me to take Yahoo as seriously as I might as a news enterprise as long as it ducks behind it’s “Let China be China” arguments in the case of the jailed journalist Shi Tao. I don’t even recall seeing much of a protest from Yahoo over the matter. As good as it is, Yahoo’s news organization may be in the same position as, say, ABC News – a good group of journalists often forced to compromise because of wider corporate concerns.

  6. It will be interesting to see if Yahoo has the ethics to be a credible media player. From 1999 – 2001 I was a reporter at Upside.com, the online site of now-defunct Upside magazine, covering, among other firms, Yahoo. At the time, the vast majority of our traffic came from Yahoo Finance. We would write about public tech companies, and our stories would be associated with the ticker symbol for each company.

    I was writing about Napster, digital entertainment, and large portals like Yahoo. I noticed Yahoo was receiving scant coverage on Yahoo Finance so I began to write about them more often. Some of these reports were fairly critical. Here’s just one — http://ryantate.com/clips/upside/yahoo_numbers-jul_13_2001.htm — raising skepticism about a plan to focus on premium services rather than online advertising and skepticism that Yahoo could prosper even as its core advertising was deteriorating and traffic growth had halted thanks to folks like Google who remained focused on search.

    Anyway, as I was writing these mildly hard hitting stories on Yahoo, on more the one occaision, someone from the business side of the building would come over and say, “I really liked your Yahoo story, but I think it got under their skin. I am not supposed to say this to you, but the last time we talked to them they said, ‘Do not bite the hand that feeds you.'”

    The ‘bite the hand’ quote I remember verbatim, and it was repeated often in the newsroom as a kind of joke. Of course, this is second or third hand information — I never heard such words from Yahoo directly. When our contract with Yahoo came up, it became considerably more expensive to plug our news into Yahoo Finance, but that may say more about what a sweetheart deal we had originally than about any retaliation.

    By the way, it is pretty fascist of USC to require my birthday before allowing me to post.

  7. The Feds make us do it.

  8. Ross Bradley says:

    If I could make one more “biased” comment? – Thanks.

    “Is Yahoo public enemy No. 1 for Big Media?” or, Is Yahoo hearing footsteps????

    Yes …. I’d also like to point out that Looksmart have “FIND”-“SAVE”-“SHARE” all over their Vertical Sites ….And in spite of it having a TM (Trade Mark) notification, read on.

    http://www.gobelle.com/p/search?free=1&qt=+headlines+The+New+York+Times&x=23&y=6

    Whilst it has been said, that “Imitation may be the sincerest form of flattery, it must also be said …….. but why flatter your competitor? … Copying is the lazy way to avoid the discipline of naming. Be unique. …”

    I noticed a post from the SearchEngineWatch blog:

    Hey Dude, Yahoo Wants You To Dig It, Tag It, and Share It!

    The Yahoo team in Sunnyvale has filed for a new trademark/service mark with the U.S. Patent and Trademark Office that hits on tagging and sharing (aka MyWeb 2.0).

    What’s the phrase Yahoo wants to register?

    + Dig It. Tag It. Share It.
    Serial #: 78720852

    Might this be a new Yahoo/MyWeb slogan?

    I’m guessing (oh no!) that “dig” means to look, search and hopefully find material of value. If not, using the word “dig” just sounds so cool! (-: Of course, the slogan plays on Yahoo’s FUSE philosophy of finding, using, sharing, and expanding knowlege.

    Posted by Gary Price on Oct. 9, 2005 | Permalink

    _______________________________

    That Looksmart’s CEO David Hills has been using this “FIND it”-“SAVE it” and “SHARE it” theme for months now, is maybe an indication of the fact, that Looksmart are not only being watched by competitors, but also being copied!!!

    Yahoo, not satisfied in copying Looksmart’s Furl with Myweb, now they want to clone Looksmart’s signature phrase, it seems??

    Great!!

    “Is Yahoo public enemy No. 1 for Big Media?” or, Is Yahoo hearing footsteps????

    I ask you???

    Thanks.

    :)
    LC