Yahoo was once the gateway to the internet. The forerunner to Google, it began life in Santa Clara in 1995 and represented the first method of transportation around the world wide web. Its directory listing approach to indexing information predated search, which later itself succumbed to social. And while Yahoo attempted to take steps into these new technological epochs, it’s clear to see that even the site today harks back to its directory roots. If you think about what a hard time Google had in keeping up with the transition to social, then it’s easy to imagine the difficulties presented to an online information system that predates even search.
More recently key mistakes have been made. The 2013 acquisition of Tumblr for US$1.1bn was, even at the time, seen as a high risk manoeuvre. The fact that a whopping $712m has now been slashed from that valuation, with commentators like CNN Money going as far as to suggest that Tumblr is now worth exactly $0, makes the pill even more difficult to swallow.
But did it have to be like this? Yahoo’s core assets still have value, to the tune of $3bn – $6bn, if analyst reports are to be believed. And the bulk of the value making up these assets? Eyeballs. Ironically in an age when legacy publishers are themselves looking more and more to transition into the technology game, we find a quirk in which the world’s largest technology brands are finding success through media.
Look at Facebook for example, and its ad-funded business model based around user generated content and social shares. The conversation is the media. Google News, itself a nod to the more directory looking days of search, gives you your own online front page, without ever having to click-thru to a publisher site. Both are currently being met with suspicion from the traditional publishing world and rightly so: they are becoming media, and using aggregated content to get there.
Yahoo on the other hand already had ready-made content in place to make this transition. Yahoo Finance, Yahoo Sports, even the much maligned Tumblr had segment upon segment of different types of content that attracts audiences around the globe. The fact that many of these assets and the eyeballs they attract are still worth billions, would in any other sector of the industry suggest a legacy brand with hope.
But Yahoo has to a large extent not capitalised on this opportunity. It has not rebranded its core assets. It has not syphoned off content and segmented out its audience to create a portfolio of editorial brands. It has not applied old-school media industry ingenuity. It has not applied its wealth of data to create targeted publications for targeted readers. It has not built up its social channels to seriously amplify its content reach. It has not stood outside tube or subway stations handing out copies of your free morning print newspaper, Yahoo! Your morning call. Because, obviously, that publication never existed. There was an opportunity there for Yahoo to transition away from technology into becoming more of a traditional media brand. Whether that would have been a profitable venture in the mid to long term is of course, an additional conversation to have. But $1.1bn for Tumblr is a huge price to pay, and while hindsight is a wonderful thing that is money that could have perhaps been better spent on redefining its own core capabilities. Rightly or wrongly Yahoo missed its opportunity to become a real media player, and I know if I had one billion users, I’d certainly have given it a go.
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