Is Yahoo a media company? Or a tech company?
That was how many framed the debate yesterday after Yahoo announced Marissa Mayer would be its next CEO, and I’ve personally found that puzzling. Why would anyone think Yahoo is — or ought to be — a media company?
Media companies do one thing primarily: make media. They create or buy magazine and newspaper journalism, radio programming, television shows, and movies. They distribute the media they create or buy across multiple platforms: print, broadcast radio and television, cable & satellite television, satellite radio, and the Internet. They make it available for free (supported by advertising) in some cases, or require you to pay for it in others.
The talents and muscles that media companies develop are distinct and different. They invest in people who make media, or people who are good at dealing with people who make media: writers, editors, producers, artists, photographers, directors, actors, talent agents. The best and strongest media companies develop institutional ways to know when a story is good or how to report it; whether a TV show is compelling and well-written; if a comedian is funny; or what directors or actors would best suit a specific show or movie.
ABC, HBO, Time magazine, the NY Times, ESPN — these are media brands owned and run by media companies. And on the Internet we now have new media companies like Gawker, the new new AOL (with strong media brands like TechCrunch, Engadget), Vox (with SportsNation and The Verge), Maker Studios, and GigaOm.
It’s true that Yahoo does have people who create media, and they have some media properties:OMG, Shine, Yahoo News, and the new Yahoo Originals videos. And perhaps it has, or has had, aspirations to do more of that.
But at it’s vital core, Yahoo is not a media company. This traffic analysis from Hitwise (it’s from spring 2011, but I’m pretty sure it hasn’t changed much) shows what Yahoo really is:
Yahoo started in a trailer at Stanford by two students in the Computer Science program and did one thing very well: help us to find things on the Internet by categorizing and cataloging web sites. That evolved into web-based email services, then search (outsourced but made available on Yahoo), then other informational services like Yahoo Finance and Yahoo Sports.
The bulk of its traffic, its expertise, its institutional knowledge, and its value to consumers revolves around helping people to communicate and helping them to find information via the Internet.
Yahoo is is an Internet company, not a media company.
Internet companies are distinct from tech and media companies. Absent the Internet they would not exist. They have different muscles; they invent software to do one or more of the following four things:
1. Help people find information on the Internet
2. Enable people to communicate on the Internet
3. Provide platforms for anyone to make content and to distribute it on the Internet
4. Make it easy to buy and sell goods and services on the Internet
Google, Amazon, eBay, Skype, Craigslist, Facebook, Twitter, WordPress, Tumblr, Pinterest, Instagram, Foursquare, Yelp, Linkedin: all do one or more of these things, and all are Internet companies. None of them could exist without the Internet.
Yes, some of these companies sell advertising to generate revenue; but selling advertising does not make you a media company.
Making great software is critical for each of these companies. Because of Moore’s law, it is possible to constantly improve the ways people find information, communicate, express themselves, or buy things on the Internet. Failure to innovate, to constantly improve your software, provides an opening for others to take your place.
I don’t know if Marissa Mayer will be able to turn Yahoo around, or if anyone is capable of doing that. Yahoo has had great software inventors and engineers over its relatively long history, but its many of those muscles have withered and the institutional knowledge has dissipated.
Looking at that traffic chart and thinking about what Internet companies have to do to be relevant and to grow, Mayer’s hiring makes sense to me. Yahoo has to get back in the game of making the best ways for people to communicate. And they have to reclaim the ability to help people find information. Email, search and the Yahoo front page are the reasons why 700 million people still come to Yahoo each month; if they don’t restore the health of those assets, they lose. Yahoo has to reclaim its ability to make great software in these areas again. Mayer’s background and skills would seem to align with those urgent priorities.
On the bright side for Mayer and her team, mobile truly has changed everything and that creates opportunities for Yahoo. Google and Facebook are behind on mobile, and with some smart acquisitions Yahoo might be able to reclaim leadership in some of these areas. Gmail has become a mess. More targeted, vertical search is more useful and important on mobile devices.
And, there is this final irony about Mayer’s hiring. Google was once the grand Internet partner of Apple, before the great schism. Maybe there is an opportunity for Yahoo, under Mayer, to fill that role.