I ran across a business news story about Yahoo’s impending layoffs today, and if you’re a deep-into-the-internet person like me, it certainly comes as no surprise to read yet again that Yahoo is on the skids. In fact, you’re more likely to be surprised to learn that Yahoo has more than 14,000 employees and made something like $6 billion in revenue last year. Yahoo ceased to be relevant a long time ago, and even the Yahoo services that still get some love, like Flickr, seem to be tainted by association. But the question I asked myself when I read the article was, “why didn’t Yahoo become a technology leader?”If you look back to 1999, Yahoo was the world’s homepage. They could make or break a new search engine, because lots of people still went to Yahoo first to find things, and rather than develop their own search, they partnered up with others. Their deep pockets enabled them to gobble up promising startups and integrate their products into their growing quiver. Yahoo was in a position to be the Google of its day, so why didn’t it? I suppose that the main reason was that Yahoo was never a technology company. Its original mandate was to be an organized directory of the internet. It evolved into a “portal” when portals were all the rage, and what that meant was adding services on to make sure that people stayed on Yahoo as much as possible.
The reason why Yahoo is irrelevant today is the same reason why it’s still a major moneymaker. The logical transition from being a portal was to become a “media company.” How to do make money from all the people coming to your web site? You produce or license more and more content to make your footprint larger and larger, and build a massive advertising sales organization to make money from sponsorships, on the old media model. And it’s way easier and cheaper to just add some more gardening chat rooms and movie reviews than it is to drive major technological innovations. But in a way, Yahoo was always a media company that just wore a tech hat from time to time. Same as AOL.
So is there a cautionary tale in there somewhere, other than the fact that the media landscape has changed so much that one of the pioneers of the new media is now being pushed aside by the newer media?