It’s no secret that Yahoo! is having a tough year.
Thanks in part to delays in a new advertising system and criticism that it’s falling behind nimble competitors like Google and MySpace, the world’s biggest Web portal has faced a barrage of negative publicity and seen its stock drop by 31%.
Largely ignored amid the debate, however, is how much is changing for a big part of the Netco: Santa Monica-based Yahoo Media Group, which houses all of its content sites, including movies, music, TV, news, games, and sports.
Led by former ABC prexy Lloyd Braun, YMG has recruited an almost entirely new team of senior execs, primarily from other netcos, who are re-designing aging sites and launching new ones. They’re also re-thinking how to interface with the “old media” congloms who are all increasing their own investments in the Web.
And while Braun has completely eschewed big bets on original content, save for a failed attempt to revive ABC project “The Runner” for the Web, there’s a new division called Yahoo Studios that’s dipping its toes into programming for the first time.
When Braun joined Yahoo as its head of media and entertainment two years ago, Hollywood buzzed with the same questions that surrounded Terry Semel when he became the netco’s CEO in 2001: Would he draw on his ties to traditional entertainment to transform the world’s biggest Internet company into a Hollywood powerhouse?
In the ex-ABC prexy’s first year on the job, those questions only continued, as little seemed to change on the Web sites under Braun’s purview and there wasn’t any public sign of a new strategy, save for relocating all of the netco’s content-driven Web sites to Santa Monica, where Yahoo Center recently opened next to neighbors MTV and HBO.
It didn’t help that rumors of the exec’s supposedly imminent departure started swirling within a few months of his joining.
But after nearly two years during which they were seemingly stuck in neutral, Yahoo Media Group executives say they now have a clear vision that is starting to bear fruit.
They’re quick to note, of course, that many of YMG’s sites remain among the most popular in their respective categories.
But much of that traffic is simply a result of links from Yahoo’s hugely popular home page and it’s not a recipe for long-term success.
While granting that they can’t, and probably shouldn’t, take the risks that have turned MySpace and YouTube into overnight sensations, YMG execs are trying to turn their part of Yahoo from what’s widely seen as a slumbering giant into an industry leader.
“We can post big numbers almost effortlessly, but to me, leadership is not just about being number one, but getting to a position where the rest of the market is looking to you,” says Vince Broady, who was recruited from CNET Networks in the spring to head Yahoo’s entertainment, games and youth properties.
In some cases, that’s as simple as re-designing sites that haven’t been significantly updated since, literally, the last century. Yahoo TV, for example, got a new look this past week, and big changes for the Yahoo Movies site are in the works.
“Yahoo built these properties pre-bust in the late ’90s and at the time they were cutting edge,” notes Scott Moore, who came from MSN last year to oversee sites like news, finance, health, and the new ones for tech and food. “Then Yahoo focused more on search and didn’t invest much in them. But two years ago, the company made a strategic decision to invest in the media space again, and we’re starting to see the results.”
The only division that hasn’t been significantly affected by Braun’s changes is Yahoo Music, which has remained under exec Dave Goldberg since his radio website Launch was acquired in 2001. The site has struggled to compete with Apple iTunes when it comes to selling music to its users, but has consistently dominated in musicvideos and online radio.
Yahoo also has a new strategy for dealing with Hollywood. In areas like like news, food and sports, content deals have been piling up with partners such as “60 Minutes,” the BBC, Martha Stewart, and the NFL.
But when it comes to pure entertainment, Yahoo has been largely inactive — or unsuccessful — since Braun came on board. Netco previously touted a strategy of hosting sites for major TV brands, and managed to land both “Entertainment Tonight” and, in a deal with Mark Burnett Productions, “The Apprentice.” “ET” is back to running its own site, however, leaving “The Apprentice” as Yahoo’s only exclusive partner in the entertainment world.
While Yahoo wouldn’t shun deals like that, it’s focused now on a new strategy it calls “brand universe.” Rather than just searching for exclusive content, Yahoo has identified over 100 brands that are most relevant to its users. It plans to launch new sites that bring together all of the content relevant to each brand from across the Yahoo network, as well as whatever the netco can get from the big media firm behind it.
First “brand universe” to launch was for the Nintendo Wii, with many more along the lines of “American Idol” or “Lord of the Rings” expected to launch throughout 2007.
“We’ll build destination sites around the brands, and to the degree we can work with their owners, we think we can help them make a great business,” says Broady. “But we don’t believe we need to have their participation.”
Yahoo is looking to work with “traditional” Hollywood, however, on the talent side, where it’s finally starting to produce some original Web shows. While the Netco has made a small number of videos in the past, there hasn’t been a clear strategy of what Yahoo wants to develop and who is responsible for greenlighting and making it.
“We’ve been waiting ever since Lloyd Braun was installed for Yahoo to become the digital studio we thought it could be,” says one agent who deals with online content. “Just recently, they’ve started to do that in a meaningful way by financing and developing original content.”
Yahoo hasn’t approached content in the same way as its competitors AOL and MSN, who have signed splashy deals with producers like Ben Silverman, Ashton Kutcher, and Mark Burnett (though Braun was developing “The Runner” with Burnett before the “Survivor” producer went to AOL with “Gold Rush”).
Instead, it has quietly launched low cost programs like viral video round-up “The 9” and a new talent show for user generated video (both produced by Michael Davies, former exec producer of “Who Wants to be a Millionaire” when Braun was at ABC),along with a fantasy football show on its sports site.
Launched in August, “The 9” is being watched by between five and six million people each month.
All three projects were developed by Yahoo in-house. But for the first time, the company is consistently taking pitches and developing projects under the auspices of a dedicated exec, former CBS Internet topper David Katz, who heads the new Yahoo Studios (as well as Yahoo Sports).
“All of us here were being inundated with pitches we weren’t sure how to handle, but now it’s clear for outside talent that this division is the place to go,” Katz said of his new unit, which handles development and works with sites where the programs are placed on production. “There are opportunities in video that we shouldn’t pass up and, previously, they just weren’t getting done.”
While Yahoo Media Group is finally stepping into video, the corporate structure has kept it out of the user generated video space. Yahoo’s entry in the category grew out of its attempt to build a video search engine and it is thus run by the company’s “social media” group in Northern California’s Sunnyvale.
That led to the curious situation in which Current TV recently pacted with Yahoo to host its online video effort, but didn’t work with Yahoo Media Group, which is headed by an experienced TV exec.
Under the “social media” rubric, Yahoo considered billion dollar-plus bids for YouTube, which Google landed for $1.5 billion, and social networking site Facebook, but it has ended up keeping its investments in new Web technologies relatively small. Its purchases have been interesting start-ups that cost in the millions, like photo site Flickr, video editing site Jumpcut, and social bookmarking service Del.icio.us. All report to Sunnyvale, not Santa Monica.
While YMG and its compatriots in the north do work together, the separation leaves the netco’s media division somewhat isolated from the Web 2.0 properties that are increasingly popular with young people and considered by many to be the future of the Internet.
Despite the huge amount of hype around such sites and the criticism leveled at Yahoo for not taking better advantage of them, YMG is taking a cautious approach that reflects how differently its sees itself than those start-ups.
“When I look at these sites I see great traffic and traction, but I haven’t yet seen the revenue,” Broady says. “We’re in this business for the long haul, so we want to have these tools available, but only pull them in when they fit naturally into a mature business.”