Has Yahoo! Gotten Its Identity Right?

Jay is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

It seems nowadays that Yahoo! (NASDAQ: YHOO) really likes to see itself as an online media company, that is, a digital content provider. Granted, Yahoo! started as a Web information portal, but the company was also an early player in Web technologies with its once popular Yahoo! search service before Google (NASDAQ: GOOG) came to prominence. It’s fair to say that by facilitating others’ content distributions on the Web, Google operates more as a content promoter, rather than a content provider. In comparison, Yahoo! has always seemed to be juggling between the two roles. After years of stagnating business performance, maybe it’s time for Yahoo! to have its identity right going forward.

To see what Yahoo! means by being an online media company, take a look at AOL (NYSE: AOL), a better example of a typical digital content provider, especially now with Huffington Post as part of its content offerings. While Yahoo! still pursues certain Internet technologies, developing digital applications and software to help create better experience of online content consumption for all users, AOL has chosen to become more of a true online media company focusing on creating its own original content. Whether or not everyone agrees with that strategy, it is what AOL tries to identify itself with. Yahoo!, on the other hand, seems to have an identity crisis, spreading thin with its business on both fronts without a set priority.

Sometimes we hear financial TV hosts and their guests talk about Yahoo! in terms of how often or not people are visiting Yahoo’s sites or by pointing out that Yahoo’s content hasn’t been made as visible and accessible on mobile platforms. All these suggest that in the back of people’s minds, they tend to perceive Yahoo! as a content provider, forgetting or not knowing that Yahoo! also develops Web software and mobile applications, tools that aim at enhancing content consuming experience for content providers and their users. Not fully informed, investors may fail to see Yahoo's whole picture, a shot at both the quality of its digital content and the promise of its online technology.

Built on Sound Print and Broadcast TV Interactivity, two noticeable Internet technologies by Yahoo!, a pair of its content-consuming-aiding applications have the potential to be a game changer in how users may better consume TV content. The apps complement TV-watching experience by displaying Yahoo!-app-prompted additional online content information on screen or a mobile device based on the TV program a user is watching at the time. Here, Yahoo! serves users by being an Internet technology company, setting itself up as a serious contender to other Internet technology companies. Internet applications in connection with content consumption can also offer Yahoo! a smart way of earning advertising revenue through app-embedded ads, reducing its reliance on self-created content whereby ads are displayed. Currently, a large portion of Yahoo’s revenue comes from display ads, making the company reluctant to scale back its various content offerings.

However, content creation may not be Yahoo’s strong suit after all, as the company traces its roots to the development and popularizing of the Internet, a period of technological innovation in network computing. Since the Internet from its very beginning was all about public information sharing, Yahoo also found itself doing content creation even though without the background of a media company. To be fair, today Yahoo Finance and Yahoo Sports have become the two crown jewels among all Yahoo content sites. Yahoo should definitely try to maintain the well-established status of the two sites, as they could become a high selling point if Yahoo ever considers to spin them off to stay more focused on the Internet technology side of the business, which appears to be what the current management team is more suited to do.

Other Yahoo’s sites do not seem to be in a strong competitive position, particularly Yahoo! News and Yahoo! Screen, the latter of which is the result of Yahoo’s foray into original video programming. Do Yahoo! investors honestly believe that their company’s news content and self-produced shows can measure up against those from leading news organizations and well-known entertainment powerhouses? Moreover, Yahoo’s long list of content sites still displays Yahoo! Dating and Yahoo! Jobs, whose old content of Yahoo! Personals and Yahoo! HotJobs has long been sold to InterActiveCorp’s match.com and Monster Worldwide, respectively. The two Yahoo! sites are now actually empty shells, serving only as links to match.com and monster.com or perhaps self-showcasing Yahoo’s impressive content lineup.

With mobile computing seemingly adding a whole new dimension to the way online content may be consumed, it would be interesting to see how Yahoo! as one of the early Internet technology starters could play a more prominent role in creating better content consuming experience for content users. While content creation is important, content distribution may be even more valuable today with the ever-changing information accessibility. A Yahoo! turnaround may also lie within its ability to facilitate content distributions by continually developing new software and applications.


JJtheArdent has no positions in the stocks mentioned above. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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