Question for a CEO: What is Yahoo?

What is Yahoo?

That straightforward question has so far baffled the people who run the company.

I
got a taste of the fuzziness when I visited Carol Bartz, then the chief
executive, back in 2010. She was funny, profane and articulate, except
on the question of what the company is. After five minutes of listening
to her I still had no idea. Seventeen years after the company was
founded, you still have to wonder whether the frothy trademark Yahoo!
should be replaced with Yahoo? to convey the uncertainty of purpose.

Now
that question falls to Marissa Mayer, who was named the new chief
executive last week. Anybody who has followed tech knows she has
remarkable credentials and savvy – she embodied much of Google’s
intellectual charisma – but her tenure will be a pass/fail test based on
answering that single question.

I’m going to take a whack at it
and say that Yahoo is a media company, mostly by accident (more on that
in a bit). Yes, its headquarters in Silicon Valley are filled with
technologists and have the familiar trappings of a digital enterprise –
foosball, anyone? – but for most Americans, Yahoo is where they get
news.

In business, people will tell you that everything else is
secondary to being first. And Yahoo, despite its tattered reputation, is
No. 1 in 10 content categories, according to the measurement service
comScore, including news, finance, sports, entertainment and real
estate. Yahoo reaches more than 75 percent of the total Internet
audience in the United States, with 167.2 million unique users in June.
On any given day, 30 million or more people stop by. Globally, about 700
million people visit the site in 30 languages every month.

What
they get, more often than not, is carefully selected and displayed
commodity news drawn from a variety of sources, but they also can read
smart proprietary reporting from one of the 300 journalists – that’s a
huge newsroom these days – who work for Yahoo.

It is worth
remembering when people start talking about poor, feckless Yahoo that
the company suffers from a severe contextual handicap. No, it is not
Google or Facebook, but it isn’t nothing, either. Second-quarter
earnings announced last week reflected a slide of 4.4 percent from the
year before, but the company had $1.22 billion in revenue and earned
$226.6 million. Display advertising was actually up, to $534.9 million,
compared with $523.5 million from the year before.

So Ms. Mayer
may be taking over a stagnating company, but it is not a collapsing one.
Yahoo has what all media companies want, which is a large audience. The
company just doesn’t know what to do with it.

When Ms. Mayer
starts poking around under the hood of the news operation, she will find
a home page that has the kind of traffic that can melt servers when it
points to another site.

The secret sauce of Yahoo’s front page is
more clicky than sticky: the slide show of news that runs at the top is
not very deep, but it is difficult to resist. Editors have real-time
analytics on click-through rate and can adjust the presentation on the
fly; underperformers are quickly dumped or reconfigured. Yahoo uses a
combination of technological and human curators to feed a robust
audience. (Lest you think that’s easy, compare the home page to that of
AOL, another legacy portal. Yahoo smashes AOL flat.)

On Friday,
news of the shooting in Aurora, Colo., was mashed up on Yahoo’s home
page with an article about a Taiwanese teenager who had died after 40
hours of video gaming and a picture of a Burger King employee standing
on tubs containing lettuce about to be served to customers. But that was
juxtaposed with a thoughtful, original take on why the New York Knicks
had not signed Jeremy Lin.

Yahoo did not set out to be in the news
business – it ended up there by default. It was delivering useful apps
to consumers long before there was an iPad. Early excellence in search
and e-mail generated a huge realm of users. Its ability to help
consumers use data led to remarkable success in its finance and fantasy
sports portals, which generated huge, loyal comment groups.

Eventually,
Yahoo began feeding its audience bare headlines on news it bought from
The Associated Press. It added pictures and began making other
content-sharing agreements, while adding its own journalists over time.

Yahoo
Sports was the prototype for what the company hoped would be a broader
play in proprietary news. The money from fantasy sports bought must-read
bloggers doing timely work in various verticals, deep investigative
projects and big-name columnists.

But sports turned out to be the
exception. Because Yahoo’s journey to being a news site was somewhat
inadvertent, there was no comprehensive policy for developing content.
Yahoo became a series of editorial fiefs – there are dozens of separate
subject areas – all competing for attention from the front page with
little cooperation or standardization among them. And when you have that
much internal traffic to play with, any harebrained programming idea
can look like genius just because it received some love from the giant
home page.

Chris Lehmann was hired as a deputy editor (then
promoted to managing editor) to bring original voices to Yahoo News
through a series of news blogs in 2010. He made a number of hires, but
he left in 2011, frustrated by yet another change in strategy.

“News
is an activity, a verb, really,” Mr. Lehmann, who now works at
Bookforum and The Baffler, said, “and we would end up mired in these
endless conference calls where you would learn a lot about what
buzzwords were gaining currency and very little about how we were going
to cover the events of the day.”

John Cook, a news blogger for
Yahoo who is now at Gawker, suggested that Yahoo’s effort to create its
own content was more of an effort to pressure providers like The A.P.
“They backed into an audience and had no idea what it would take to
build a real news operation,” he said.

I exchanged a dozen
e-mails aimed at setting up a chat with Mickie Rosen, a senior executive
in charge of media and commerce, to get Yahoo’s take on the matter. But
the interview was canceled just before it was supposed to occur.

It
is possible, of course, that Ms. Mayer will choose code over content,
treating news as just the skin on a technology enterprise. But in that
space, Yahoo is not No. 1 in anything. It yielded search to Google,
flailed at social media and let its messaging product languish.

Even
if Ms. Mayer gets the disparate parts of the content apparatus moving
in concert, news presents its own problems. Yahoo has done well in
display advertising by creating desktop content that is all things to
all people. But the desktop is going away in favor of mobile.

Taking
that desktop franchise, a 10-pound bag of stuff if there ever was one,
and cramming it into the one-pound bag of mobile space will require
difficult choices, which will have to be settled by asking the same
question over and over: what is Yahoo?

Copyright 2012 The New York Times News Service


Yahoo! CEO – The cursed job?