The New Media Elites
"Yahoo! wants to become an end-to-end media ecosystem," says Allen Weiner of Gartner. "They will become the newspaper and radio station and TV station and also your communications provider."
Competitor Google's audacity appears boundless. The $36 billion company is plastering help-wanted signs all over the Net and even in newspapers. It is going ahead with a controversial plan to digitize the world's top libraries on its site and is joining forces with NASA to research such topics as supercomputing, linking up with former rival Sun Microsystems to take on Microsoft, and testing an online classified-ad business that takes aim directly at eBay.
Yahoo!, which pulls together content from a wealth of sources and whose 400 million unique monthly viewers make it the world's most visited Web portal, is expected to post revenues of about $5.3 billion this year, up 47 percent over 2004, with a fat profit margin in excess of 40 percent. "Yahoo! is so hyperfocused on meeting the needs of its users, and it continues to innovate around them," says Charlene Li, a technology analyst with Forrester Research. "For them, it's not just about having the best content but having the best aggregation of the best content." And now the portal is giving its own users more control over what goes onto its thousands of Web pages through an array of user-generated content sites such as blogs and social-networking sites, where photographs, product reviews, movie and music recommendations, political opinions, and other consumer information are posted on the site by users. It has even put a toe into producing original news and content, hiring TV journalist Kevin Sites to do online reporting from the world's trouble spots and adding a bevy of personal finance columnists to its popular Yahoo! Finance pages.
What the upstarts are doing is turning upside down the age-old relationship between the brokers of information and their audiences. Remember when Walter Cronkite was in everyone's living room ending his CBS newscast with "And that's the way it is" ? Now, "it isn't somebody else who programs you anymore," Yahoo! CEO Terry Semel told an industry audience in New York recently. "The consumer is the programmer. All those folks who used to make those decisions for us, thank goodness they're not in our lives anymore." (Cronkite, meanwhile, appears on an online blog.)
Photo album. Hyperbole aside, Semel's vision is playing out. During Hurricane Katrina, Yahoo!'s coverage offered traditional reports from the Associated Press, USA Today, ABC News, and other news outlets. But it also included hundreds of pictures posted by locals on Flickr, the amateur photo gallery Yahoo! purchased in March, blogs from ordinary people reporting the scene in their backyards, home video, and even emergency contact information. "It was a comprehensive package of all forms of media," says Morgan Stanley Internet analyst Mary Meeker.
The shifting tectonic plates have left executives of the old media--who a few decades ago controlled the news agenda from offices just blocks apart in midtown Manhattan--playing catch-up at a time when their stock values pale in comparison with those of the new kids on the block. "When the bubble burst and the stock prices on all these new media companies tanked, [they] breathed a collective sigh of relief that they could go back to normal," says Esther Dyson, editor at CNET Networks, which publishes Release 1.0. "But they were totally mistaken, and now they're finally waking up to what they're losing."
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