Advice for Terry Semel

Making sure he listens to Kiles? Not Likely! Yahoo!'s Terry Semel. (Getty Images)

Why is Yahoo! flagging so badly, losing traction in ad revenues during a legitimate advertising boom?

Just today they announced a reorg in the face of falling stock price and (apparently) a completely blown opportunity with their Overture assets. CFO Susan Decker is now in charge of online ad sales in addition to marshalling the books.

Honestly, things do not look good. Yahoo!, just 2 years ago everyone's darling after a few years of buckling down and becoming an internet media engine while parlaying an IP lawsuit with Google into billions, is now viewed as a Company that simply missed it, heading toward the door with AOL.

What happened and what can they do about it?

What happened can and does happen to everyone- they did not see a tsunami- the social networking wave was huge and they missed it, losing out completely as portal to the MySpace generation. YHOO had neither the tools to manage content (Google was already the search engine of choice) or the focus on self aggrandizement the new "me" generation looks for with MySpace and YouTube or the autommated ad system to capitalize. In short- they missed an opportunity because they were not prepared!

Now it's time to watch their reaction and see what they do about it. They are under immense pressure to respond with a social solution of their own, take on MySpace...My take is that they have already missed that ship and that they should stay the course.

If they cannot compete with Google in technology and have lost the social space to MySpace, what do they do to compete?

Yhoo must make a play now to become a significant media company, internet rights holder and manager of important content. They should take a hard look at the CEO and ask what does this guy know anything about?

Bing! You got it! Terry Semel is a studio genius! He knows how to build a studio from the financial perspective and attract the very best to his world. He has bright guys working with him. Now they need a real internet content guy. Not Lloyd Braun, but a real Valley guy that knows media and technology; someone who can create a system for churning out compelling content for the internet environment and start pouring it into the Yahoo! distribution monster. Roger MacNamee or someone like him (Geoff Yang?)

Forget about Hollywood- focus is still the Movies and TV and will always be. Yahoo needs internet content and that happens in their backyard. They need to be the home of massively multi-player games and interactive images and video. They should open the doors and create opportunity for the publishing community to create and make $. Make tools for creating, engineers for refining, systems for hosting, offer customers for distribution and ad systems for $. Make it generally available to anyone for free in exchange for content rights of well developed content. But insist on quality!

Find the developers on MySpace, YouTube and Facebook and bring them to Yahoo! Make their lives so easy that they can succeed if they just create content! Yhoo does the rest! Invest $10B in internet content over the next 5 yrs! Not in purchasing rights but in delivering the systems required to create...

I ask you Terry Semel, is that much different than what you made happen so successfuly at Warner? Do what you know how to do and do it well!

Go out and do something wonderful! Now is the time!

Why do the major rights holders miss every dotcom opportunity?

NBA Commissioner David Stern Testifies before Congress about steroids (Getty Images)

You see it over and over- a new tech service comes to market with a great idea on distributing content to consumers (Yahoo!, Real, Napster, Google, Tivo, Bit Torrent, YouTube...). The content rights holders hold back from the service attempting to impose their traditional market metrics (big cash up front) on the new service. Consumers hijack the content anyway and put it into the new service. The rights holders scream and hire lawyers. If the service acquiesces and does business the way the rights guys want (RealOne, Napster, Bit Torrent(tbd)...) the service dies, the rights guys win the near term battle.

With the smarter players, the rights issues are somewhat subtle and often involve the creation of a "piggyback" service unique to digital media (Yahoo!, Google, AOL, iTunes, Tivo). On unfamiliar turf, the rights holders shake their heads and put their hands out, begging for a morsel! The tech services laugh, having created a service that people love, with or without the rights holder content! They send over a few bucks, but, their lifeline in no way dependent on the rights holders, they forge ahead with public market strategies that realize real value that could easily have belonged in part to the rights guys. What they fail to do is analyze the situation and act in their own best long term interst- the success of new channels and the realization of shared value!

Think I'm crazy? Consider this- who made out the best in the Google IPO (other than the VCs and founders)? If you are thinking Yahoo! you are right- they got more than $1B in value by asserting their "rights" in a way that did not threaten the life of Google, just made clear that where YHOO IP created value, they should get to share in that value! This is a concept that is lost on the NY/LA media guys, all of whom think their universe wll be king, failing to understand the need to PARTICIPATE in the Webocracy to win big. Yahoo! got it because they have smart guys on their Board!

Want to see a disaster in failed web strategies? Look at the web sites of any of the major rights guys (NFL.com, NBA.com, all the TV shows and movies, the record guys (though they are more advanced now out of necessity), MLB.com and so on). Every one of them has the same strategy they launched with ten years ago. In every case, they have failed to realize the potential upside that their content naturally brings because they think the computer is a TV and they want to be the portal for their own customers! The essence of the failure is that they lock down their content on their sites, force consumers to go there to get the content and ignore consumers who don't get there! In short, they are all trying to be Portals, but failing because they ARE NOT INTEGRATED WITH THE WEB!

What should they be doing? It is very simple- just go look at the success stories on the web and EMULATE! Every rights web site should be a syndication portal first and foremost. Give consumers and webmasters all the content they can possibly want- especially stats, images and short clips- to post anywhere they want any how they want. The goal of the syndication is eyeballs first, ad revenue second, right fees much later on, after the channels have been created (pull out the old playbook and follow the ESPN play!). After syndication is firmly in place, with broad distribution and availability of content, then you can return the focus to building nice proprietary web sites, the singular purpose strategy employed all these years!

When you have a treasure trove of content, you can analyze how to use it to meet all of your goals. The issue is understanding what those goals should be and being able to act in your own interest, something that the old guys in new media fail at every time because they are so locked into their application of TV strategies to the internet.