The Yahoo Conundrum ‑‑ Can Media Companies Produce, Distribute and Survive?
It’s easy to shrug off Yahoo’s troubles by thinking the company has been doomed for years. After all, Google, Facebook, programmatic ad platforms and niche publishers have eaten away at the early internet company from all sides for over a decade. But in this case, indifference would be a silent killer.
Forrester Research’s Shar VanBoskirk was quoted in The Washington Post saying “Yahoo tried to be too many different things, rather than focusing on one clear identity.” Media industry veterans Larry Kramer, Peter Horan and Jeff Jarvis echoed that statement at Sailthru’s recent panel on the future of media, and according to Horan, Yahoo’s business model was “no longer valuable post-search, but they were rich enough that it’s taken them a long time to die.”
VanBoskirk speaks to the importance of vision and value, but Horan, Kramer and Jarvis further question the viability of owning both content production and distribution given how modern consumers engage. They pointed to Yahoo’s indecision as to whether it is a technology company that distributes or a content company that creates as a microcosm of a macro trend in publishing: too often, reach and scale are considered the foundation for success when in reality it works for few companies.
Essentially, Yahoo isn’t an old dog that can’t learn new tricks, rather it learned too many — and the company isn’t alone in lacking focus.
Newspapers still produce content and distribute via trucks when 74% of millennials get news from online sources. Networks continue to broadcast original content while supporting affiliate networks, international distribution and apps when 61% of millennials subscribe to stream and nearly 25% have cut cable services.
So does all traditional media fade away? According to Horan, “lazy media” will die, but there’s opportunity for those willing to either focus on content production or on content distribution. Here’s what’s clear:
Being slow to innovate is no longer an option
During Kramer’s time at CBS he fought for the network to become an early partner with iTunes, but his colleagues resisted. “Everyone in the company said no way – ‘if we drop 1 point in the ratings it’s a $40 million drop in revenue’ – and I said let’s look at it from the point of view of the customer.” Kramer wasn’t thinking just from an experience standpoint, but also about customer economics: CBS made roughly $10 million every time CSI was on the network at a time when 20 million were tuning in, which meant each viewer was worth $.50. With iTunes, Apple was set to charge $1.99 per episode and CBS would earn $1.49 or 3x.
While the numbers make a clear argument, hesitation remained and with every episode revenue was left on the table.
Fast forward 10 years and there are far more channels through which networks can distribute and consumers can engage. Networks, studios, newspapers, magazines, bloggers, YouTubers and every other content creator big or small cannot match the scale of the technology companies that have built the delivery networks and amassed subscribers. By focusing on creating better content and building better relationships media companies can go back to innovating in those arenas rather than thinking about the last mile because they’ve already lost that game. Yahoo’s failure is in both content and delivery – neither are differentiated enough to build a moat needed to sustain a company that size.
Publishers must stop thinking of themselves as destinations
The New York Times’ innovation report that leaked in May 2014 drew blood from any publisher about to launch a new homepage experience. The report showed that less than a third of readers ever hit the front page of nytimes.com and in less than two years, visits to the homepage dropped by 50%.
At the future of media event, Jarvis presented data from Buzzfeed that far trumps the impact of homepage visits: only 20% of Buzzfeed’s 5 billion monthly interactions occur on Buzzfeed.com. As he stated, “Environment is dead. It’s gone. The idea of destination has gone away.”
According to Horan, successful publishers are identifying who their reader is beyond basic demographics and more importantly where to find them and what to serve rather than thinking about how to merchandize content on their owned properties. Yahoo fails this litmus test.
You need more than an edge, you have to be relevant
When asked if he’d rather own a media company with one million readers who consume one article per day or a company with 100,000 readers who consumer ten articles a day, Kramer responded with a curve ball: “I’d rather be the one that is more important to the consumer’s life. It’s about how important and replaceable you are.”
Both Business Insider and Huffington Post — two Sailthru customers — were featured in the New York Times innovation report as “disruptive innovators”. Key to the criteria for that moniker: being advanced by enabling technology. Mashable (another Sailthru customer) summarized the report and identified the Times’ lack of modern personalization as a major, ongoing threat.
Relevancy isn’t about the number of sections in a publication or it’s volume of topical newsletters. Modern publishers are creating a fully dynamic experience for every individual reader in email, online and in apps and gone are the days of experiences siloed by channel – the most innovative have fully fluid experiences. Readers — regardless of where they engage from — engage for longer and have increased propensities to become loyal. The bottom line is that relevancy increases revenue.
Now thinking through this lens at Yahoo: Yahoo Finance is a great aggregator of content, but it’s generic and in the words of Horan, “The specific drives out the general.”
— Jason Grunberg, Director of Content Marketing and PR