33 Comments

Summary:

The appointment of Ross Levinsohn as CEO is a sign Yahoo wants to focus on media as the core of its rebirth, but does the company have what it takes to succeed as a new-media entity? There are plenty of reasons to be skeptical.

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Now that Yahoo has managed to make its way through yet another CEO shuffle — its sixth in just five years — the former portal has to get back to the main task at hand: namely, figuring out what its future looks like. By replacing Scott Thompson with Ross Levinsohn, who currently runs Yahoo’s global media business and used to be a senior executive at News Corp., the company seems to be indicating that it wants to focus (again) on being a media player. But does Yahoo even have what it takes to succeed as a new-media entity? There are plenty of reasons to be skeptical, and the company’s knowledge gaps are not going to be easy to fill.

The news that Levinsohn had been elevated to the top spot sparked a lot of favorable reactions from those in the media and tech sphere. Although some observers — including former Adweek editor and author Michael Wolff — seemed less than enthusiastic about his abilities, others such as former Myspace president Jason Hirschhorn were much more positive, saying the company couldn’t have made a better choice. Many pointed to his purchase of Myspace while at News Corp. as a sign that Levinsohn is both a forward thinker and willing to make big acquisitions to further those goals (Myspace’s decline into irrelevance began after Levinsohn left the company, his supporters say).

Media is no longer about who has the most eyeballs

But while seeing Myspace as an opportunity in 2005 may be a mark in Levinsohn’s favor, some of what the new CEO has said about Yahoo both before and since he took the position raises questions about where he sees the company going as a digital-media entity. In a memo to the troops in the wake of Thompson’s departure, he said Yahoo was “achieving genuine and meaningful successes in the marketplace every day and heading in the right direction,” and in an interview with paidContent last year he said:

Yahoo is the premier digital company in the world and embracing that isn’t a hard thing to do. That’s just fact-based. Tell me what other type of media can sit with you and say ‘I’ve got the top 19 #1 or #2 newspapers, I’ve got the top 20 shows, I’ve got the 19 of the top 20 radio stations, 19 of the top 20 magazines’?

But does that mean Yahoo is well-positioned to be a media player for the next decade, rather than the past one? That’s not entirely clear. Levinsohn seems to think having a huge number of eyeballs aggregated around Yahoo’s various properties is a sign of success, but that’s arguably not what media companies of any kind ought to be concentrating on right now. Increasingly, advertisers don’t want hundreds of millions of eyeballs to show banner ads to anymore. They want targeted reach and they want mobile and they want social, and there aren’t a lot of signs that Yahoo has what they need.

In an interview on Friday at Harvard, the head of Google’s news division — former Salon CEO Richard Gingras — compared newspapers to Yahoo and not in a good way. He said newspapers have suffered from the same kind of problems portals like Yahoo have since the social Web started changing the landscape: Namely, they are still operating on the assumption that aggregating a lot of miscellaneous content together in one digital bundle is what readers and advertisers want. But that is not the case.

Where is Yahoo’s social or mobile strategy?

Google may not have solved the issue of adding social signals and features to its business, but at least the launch of Google+ has been a credible attempt in that direction. Does Yahoo even have a social strategy? Not long after it gave up on the search business and handed that responsibility over to Microsoft, the company effectively admitted defeat on the social end of its media operations by integrating with Facebook. Is that the beginning and end of its ambitions when it comes to adding social features to its business? If it is, then Yahoo is going to have a big problem on its hands.

Mobile is another aspect of a modern media strategy where Yahoo seems to have virtually no role to play. Apart from the occasional bundling deal, there is no sign the company has anything to offer — and what it does offer often seems to be a day late and more than a dollar short. Could it acquire something like Flipboard as a way of making a move in that area, the way CNN acquired Zite last year? Possibly. But then Yahoo’s history of acquiring things only to let them wither on the vine isn’t likely to fill anyone with hope.

The biggest challenge Levinsohn and Yahoo face is thinking about media in a different way, and it is the same challenge newspapers face: Just as they got used to being the main destination for people in search of content when paper was the dominant delivery system, Yahoo still seems to be stuck in a mindset that sees media as a game of scale, where the player with the most eyeballs wins. AOL has arguably been playing the same kind of game, and it hasn’t been having much more luck than Yahoo has.

If the rise of Facebook as an advertising entity has shown anything, it is that what matters now is targeting and focus — the ability to drill down into precise market segments and base decisions on actual user behavior. Just how valuable that is for Facebook and for advertisers may still be a question mark, but there is no question that advertisers want it. And Facebook is a lot better positioned to offer that than Yahoo is. If Levinsohn wants to own the future of media, he’s going to have to figure that out, and fast.

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  1. Robert Scoble Monday, May 14, 2012

    More complete answer: Facebook is a modern media company. Here the media comes TO YOU. You just sit here and stuff streams to you. On Facebook you have to go TO THE MEDIA. In other words you have to go to Yahoo.com/sports or Yahoo.com/finance to see the media. The problem is that Yahoo hasn’t figured out how Facebook works and, worse of all, it hasn’t figured out how to get all those different teams to work together to build a new media company and give a consistent story about what Yahoo is.

    Buying Flipboard would be a disaster for Yahoo. On the other hand, I can see how Facebook will make billions with an acquisition of Flipboard.

    1. Thanks, Robert — well said. Appreciate the comment.

    2. ” On Facebook you have to go TO THE MEDIA…”

      Perhaps you meant Yahoo there.

      1. Yeah, sorry, I meant Yahoo there.

    3. It’s about mobile, and Facebook has admitted as much with the acquisitions of mobile companies – Instagram, Glancee – to make its mobile service and offering better.

      What – if any – mobile strategy is there at Yahoo?

    4. “I can see how Facebook will make billions with an acquisition of Flipboard.”

      Excellent, care to expand on that ridiculously flippant comment?

    5. scottcarmichaelgaming Robert Scoble Tuesday, May 15, 2012

      I disagree. Facebook’s content is an inch deep and X-wide, where X is the number of people you friended or liked. That’s a lot of setup for what amounts to very little payout.

      Tell me Robert, what are you posting on? This sure isn’t a Facebook page! And it has more than 140 characters, so it’s not a Twitter page either. Oh, it’s a blog – you know, those “dead things” from half a decade ago.

      I admit that Yahoo has a lot of problems and virtually no solutions, but to say Facebook is the pinnacle of modern ways of doing business? Oh geez. Step outside Silicon Valley every once in awhile and get a dose of reality.

      1. Well said, Scott Carmichael.

  2. Yahoo should not try to compete with or aspire to be Facebook or Google or Twitter. It’s too late for that and the worst thing that Levinsohn could do is to try to turn Yahoo into a modern media organization focused around social content.

    That being said, Yahoo has all the assets, experience and leadership talent — I’m thinking particularly of Cody Simms who leads Yahoo’s entertainment and lifestyle properties — to dominate the production and distribution of social content; ie., content that will get shared on social platforms like FB, Twitter and G+. There’s no reason why Yahoo should not be able to take on companies like Gawker, Buzzfeed and even Huffington Post with its army of content editors, massive audience and its distribution channels.

    The key, however, is to learn from Buzzfeed and turn Yahoo into a data-driven content company where real-time metrics and predictive analytics drive content production, aggregation and social distribution strategies. Add to that a full court press on social platform integrations; a la the success of Yahoo Social Reader and Yahoo may have a chance at becoming the social content leader for

  3. >> Once again. Original comment got mangled.

    Yahoo should not try to compete with or aspire to be Facebook or Google or Twitter. It’s too late for that and the worst thing that Levinsohn could do is to try to turn Yahoo into a social platform company.

    That being said, Yahoo has all the assets, experience and leadership talent — I’m thinking particularly of Cody Simms who leads Yahoo’s entertainment and lifestyle properties — to dominate the production and distribution of social content; ie., content that will get shared on social platforms like FB, Twitter and G+. There’s no reason why Yahoo should not be able to take on companies like Gawker, Buzzfeed and even Huffington Post with its army of content editors, massive audience and its distribution channels.

    The key, however, is to learn from Buzzfeed and turn Yahoo into a data-driven content company where real-time metrics and predictive analytics drive content production, aggregation and social distribution strategies. Add to that a full court press on social platform integrations; a la the success of Yahoo Social Reader and Yahoo may have a chance at becoming a modern media organization focused around social content production and distribution.

    1. That’s definitely one thing Yahoo could do, Mark — and they do have a bunch of people on the editorial side who could probably help with that. But is competing with HuffPo or BuzzFeed really a strategy that is going to save Yahoo as a whole? I’m not sure. Thanks for the comment.

      1. What do you mean by ‘save as a whole’? In some ways, maybe Yahoo should accept being the new newspaper – i.e., one that could be, with careful management and sensible investment, profitable, but not necessarily at the same level as it was when it was able to waste billions on stupid purchases.

        I’m still not sure why, if it is still going great guns in Asia (which, by all accounts, it is), it doesn’t ditch the US and head east to regain its mojo, rather than selling the bits that make the most money to please western share-holders.

  4. Nice post and interesting comments. On a tad different note, I am a bit concerned about Yahoo Mail. I have been a Yahoo plus user (you pay 20.00/year) for an ad free, better spam filters, etc. They have been always discussing upcoming features and they never show up, like integrated an calendar. Not only that, my spam folder used to be zero every day, now I get at least 10 spam messages a day.
    I do have gmail and hotmail accounts to jump ship to if need be, but Its hard to let go of an email address I’ve had for almost a decade. It just feels like the quality isnt there anymore.

    1. I’ve seen the recent jump in Yahoo! spam traffic, too. But it has come to Gmail as well, so something larger must be going on, though I can’t find stats to support this theory.

  5. Ever since Yahoo lost its search raison d’etre to Google, the company has totally lost its moorings. As a modern internet company, the company either has to be good at inventing new hit products/services or be good at acquiring them. It’s evidently good at neither.

    As for content, what a joke! Even great content providers have a hard time monetizing let alone an also ran like Yahoo.

    1. Which would be why Yahoo’s revenues overall are higher than Facebook’s? And in the past quarter grew when Facebook’s fell? But whatever – don’t let reality get in the way of your thesis.

      1. Gee Alan, you make a g-r-e-a-t analyst. Revenues ex-TAC grew 1% YOY. Incredible, sparkling growth, I’d say.

        And who’s comparing with FB (whose half life maybe shorter than Yahoo’s)? I sure didn’t but maybe you have a bit of FB envy?

      2. Geraldine – YOU are the one who made the comment about monetization – and yet when it is pointed out to you that Yahoo makes more money than any of the content companies referenced all you have is snark. No facts – yet again. As for the Facebook comparison – did you actually read the original article?

        I may not make a great analyst but at least I DID some analysis – you did literally NOTHING but spout opinion. I will repeat because you clearly aren’t actually reading anything. Yahoo grew revenues but you call it an also ran and failing. I did not ever say sparkling – I simply pointed out that you were full of it. And your defense – throwing insults that you can’t back up. I’m clearly a better analyst than you are – and more accurate and more honest and not full of shit.

        The bottom line is that Yahoo is not failing or an also ran. It isn’t the market leader either. Back to your cave with you.

        And since you like talking about envy, why is it that you are attacking Yahoo? (and without an ounce of evidence)

      3. Poor Alan, such tender, easily bruised feelings. Must have been skinned your knees on the slide today.

        I hardly call 1% growth remarkable but if you think it so, then it must be so ;). Yes, I did read the article, but I’m not enamored of FB as I said — nor of Yahoo.

        But, there, there, now, tender heart, in time all wounds shall heal.

      4. Darling Geraldine – I’m not wounded or bothered in the slightest. Just every now and again dislike seeing liars, poltroons and fools spout ignorance as fact.

        Who cares if you like Facebook. Not me or anyone else. The issue was you saying Yahoo was failing – that was it. You were wrong and have thrown up the usual trolling distractions in any direction to deflect from that.

        Wrong is wrong. You still are. You said failure. 1% growth is growth not failure. You said content providers have a hard time monetizing and that Yahoo is an also ran there. Except that it isn’t – is is a success and growing (even slowly). As I said. Wrong is wrong. Insults, deflections, distractions, asides, and everything else don’t change that.

        You are good at being a troll though – I’ll give you that.

      5. Oh, there you go again, Alan. Imagining slights where there are none … then missing them when extant. Your web “success” Yahoo is a has-been who’s milking traffic momentum from the first generation of Internet users. It reminds of people (perhaps you) who still have an aol.com email address. But keep imagining that 1% is scintillating growth and that an Internet company can stay static, virtually not grow, not innovate any new hit products and still survive in an increasingly competitive future.

        Reality is hard to take sometimes, isn’t it?

      6. Thanks for making my point so well Geraldine.

  6. Dave Harrison Monday, May 14, 2012

    Here’s a couple of easy steps to saving Yahoo! Step 1, turn URL’s into a currency like gumroad did. Step 2, mash them up with a human curated semantic web ala Reddit. Step 3, watch Barry Diller’s face when he realizes he could have done it… but he didn’t.

    http://tradewithdave.com/?p=10293

  7. Why does Yahoo! have to have a social strategy akin to Google+? If they’re aiming to be a media company, why isn’t integration of the most successful social network in history a good social strategy? You don’t see anyone asking ‘where’s the New York Times’ social network? Or where’s GigaOM’s equivalent to Google+?’

    1. That’s a fair point, Ian — if they truly want to be a media company focused on original content then perhaps they don’t need their own in-house social network. But is handing everything over to Facebook the right strategy? I’m not convinced that it is.

      1. If Ross is smart, he will negotiate a deal with FB that settles the patent lawsuit and partners with Zuck to become the premier news and information provider on FB. Y!’s Social Bar that was launched last fall already has 70M active users. Ross is known as a dela-guy, seems to me that could be a deal worth doing.

  8. Richard Donald Jones Tuesday, May 15, 2012

    I have no vested interest in Yahoo or Facebook but the Facebook is the future and Yahoo or ( Insert any Internet company older than 6 years) Google does not get social is just tired. Facebook is what Yahoo and Aol were 13 years ago. The companies of the moment. In about a decade, the crowd will have moved on to something else and the “What is Facebook?” meme will be all the rage. Facebook is AOL circa 1998 without the dial up access. And Yahoo for all its faults is the original “social network”…email, chat, groups, geocites, etc. The truth is Facebook is not the “modern media company but the “the new new thing”

  9. Matt – Provocative article. I agree with some of your comments on mobile, and I think Robert also nailed it to a certain degree. But I do disagree with some of the points here. As a disclaimer, I used to be VP/GM of Yahoo News, Tech, and Education way back in 2007-2008.

    First of all, I know Ross pretty well and I believe he’s a great choice to be CEO. He gets the digital media business, and he’s already made a lot of smart moves prior this recent promotion. Specifically:
    1) recognizing that Yahoo has to play to its strengths. Sorry, reach DOES matter. There are very few places on the web today to go do buys in trusted well-lit environments. Yahoo is one of them. Yes FB has more share, but they also have more reach right? So it makes a TON of sense for Ross to call out the sheer numbers of people that go to Yahoo sites every day to get their daily fix.
    2) One of the moves that was made while I was there that left all of us in the media group scratching our heads was putting all of our premium inventory onto the exchanges. It was an attempt to get ahead of the curve, but it did so against everything that is media 101 – it completely diminished the unique value of the Yahoo reach. Ross has undone that decision, which I am certain was not an easy thing for him to do.
    3) I would take everything Google News says with a grain of salt, as they have never, despite investment and effort, come close to beating Yahoo News.

    I do think they Yahoo had a massive miss in Mobile – there was an opportunity to go out and replicate Yahoo Sports’ acquisition of Sportacular across properties and content areas – and people left and that opportunity has sailed. Instead there was an ill-advised “all-in” focus on Livestand as the bedrock of their mobile strategy.

    Having said that, I think we are still in the early innings, and just as Facebook went out and acquired Instagram there will be opportunities for Yahoo to use its ample scale to really drive a mobile strategy.

    And I think Ross, with his focus on where the dollars actually are, is the right guy to make this happen.

    1. Thanks for the comment and the perspective, Alan.

  10. Thomas Hawk Tuesday, May 15, 2012

    Sell off the Asian assets.

    Sell Flickr to Google or Facebook (Google needs it more — Flickr could be an interesting property for either company to get into stock photography and would result in more interesting/beautiful photos driving traffic to G+ or FB).

    Give the cash back to shareholders through a big dividend.

    Sell search and maybe the rest of it to Microsoft.

    The end result? Significant shareholder value (Dan Loeb and shareholders win) and probably better management of the various Yahoo properties.

  11. Chas Malloy Tuesday, May 15, 2012

    When I first heard of this company, eBay had barely an auction complete, MCI was a long distance company. The Transmogrification of this Sunnyvale internet stalwart is again proving to be a puzzler, From Yang’s initial vision to today…. Yahoo still provides mail, search, mobile services, Yahoo sports covers the NFL very well, Millions still use it as a landing page to open their path to The8th Continent -the8th.org on many browsers. It is a global Internet brand and it will never truly be a media company. Yet that said is Facebook an Internet company??? The interesting angle will be the intellectual property battles ahead, which will intensify

  12. alexmedawayhasleftthebuilding Thursday, June 28, 2012

    i think yahoo axis can be a big deal. check it out, especially for the ipad

  13. alexmedawayhasleftthebuilding Thursday, June 28, 2012

    also i love, LOVE my.yahoo. is it just me? i check email, facebook, twitter through there, get a dozen rss feeds in one page, have a nice calendar and to-do list, 4 x 4 currency converter, weather, bookmarks, y! messenger, calculator, scoreboard, tv listings. that´s just my homepage. oh and you can check gmail through my.yahoo just as easily. i mean, facebook is just a big waste of time. i like having it as just one of 40 modules i have on my homepage. i´ve never seen anything like my.yahoo, it makes me insanely productive.

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