Within a few years of its launch in the early 1990s, Yahoo had already lost much of its technological reason for being. Although it had won the first round of the search engine wars (or portal wars against Excite, Lycos, and others), it lost the more important showdown to Google, and, in fact, shortly hired Google to provide its central search function (now provided by Microsoft). Nor was Yahoo able to compete in the new ad network and search-word bidding systems in which Google was the leader (here, too, it tried to outsource to Google).
Still, its early dominant Web position left it, even now, as one of the five busiest sites on the Web.
The good news, it had an audience. Yahoo was an early demonstration of Web traffic as a structural condition—once the Web beats a path to your door, people keep taking it. The bad news, other than offering specific functionality (e-mail, chat, stock quotes), which other sites were doing as well or better, it had nothing to give its audience. It was quite a bad dream scenario: an audience, a stage, and only a tongue-tied techie on it.
With no products to sell, and no hope of charging for memberships or subscriptions, Yahoo had only ad revenue as a viable source of income.
Yahoo’s desperate search for more eyeballs became the first leap by a technology company—an enterprise dedicated to executing specific functions—into the new notion of monetizing an audience by any means possible. Media by any other name, but in a sense even more basic. After all, most media begins with an idea, a genre, a point of view, a talent, a conceit about what an audience might find compelling. (Movies and radio began with a compelling technology, but immediately adapted it to traditional dramatic storytelling; television followed this model.) Yahoo had only an audience.
It was, therefore, in some sense a pure test kitchen. What will people eat?
Beyond basic functionality, what can the Web offer a mass audience that will sustain interest on an ever-returning basis, and that will create an environment and relationship that advertisers will profitably pay for?
The failure to achieve something unique, something that would have ever-growing value, was not just the fault of technologists without narrative and emotional acumen. The technologists were still there, arguing for new efforts at useful functionality. But, as part of the objective test, senior-most media people were recruited to the company—again, a first for the Web—to turn Web formats into media formats (to be distinguished from media companies’ trying to turn media formats into Web formats).
In 2001, Terry Semel, the former chief executive of Warner Bros., and arguably one of the most successful entertainment executives of all time, became Yahoo’s CEO—commuting in his private plane, to deafening murmurs of resentment, from Los Angeles to Sunnyvale.
Semel wasn’t the only commuter. More than any other native Web platform, Yahoo would become the redoubt of a wide range of media executives, some on voluntary or forced hiatus from traditional media, some looking for a way into what seemed like lucrative new media, some part of a new bureaucracy of crossover media-tech executives. At the same time, one can hardly blame the results on the limited tech skill sets of the media types, as might be the case with sites launched by magazines and newspapers with only catch-as-catch-can technical support. Yahoo was as well resourced from a technical point of view as all but a handful of Web companies. What’s more, leadership in the coming years would shift back and forth between the technology and media sides—no, the talent resources were not to blame. (Of course, not surprisingly, and complicating the game, the two sides mostly hated each other.)
A reasonable conclusion was that it was the form itself—the Web as smorgasbord of entertainment, information, and functionality choices—that was troubled. Yahoo may be the most prominent example of the form, but it was imitated (or it imitated) other well-financed rivals, most notably AOL and MSN, which had even less success (and, in its next-gen iteration, The Huffington Post and BuzzFeed).
Curiously, what these large aggregating sites came to resemble is the form the digital world most derided: newspapers. Not just newspapers, but the anodyne, saccharine, supplement-weighted newspapers that would come to take over much of the middle market (most memorably mocked in National Lampoon’s 1978 parody The Dacron Republican-Democrat). The media portals offered generic wire-service news amped up by heartfelt or what-the-heck human interest stories and then section after section of advertising-driven content, such that it would be impossible for any user to actually offer a specific thought about the sensibility or identity of any of these mishmash sites. They existed only because they existed—in each case more by happenstance than by design.
But that is not to say they were failures either. In a way, it was something worse. It was, for all of these sites, a purgatory of ever-increasing traffic as a function of rising Web use and of ever-finer traffic aggregation methods (many of them having no relationship to user satisfaction or even active user choice), hence raising revenues and lowering user interest, loyalty, and value. As a brand concept, each of these heavily trafficked, aggregated sites became broad jokes, synonymous with failure and cultural detritus. And yet, given that each of the sites did continue to have the wherewithal to generate traffic, with its inherent commodity value, they continued to live, albeit embarrassingly and, arguably, uselessly.
A decade ago, Yahoo made a series of outside investments, of low-level value and interest at the time, in the Chinese e-commerce start-up Alibaba, and in Yahoo Japan (a separately traded public company created through a joint venture with Japanese tech giant SoftBank). Alibaba, a site that generates most of its revenue from selling things, not advertising, had a growing value that, by 2011, had come to pretty much equal Yahoo’s share price. That is, Yahoo the site had no value (or even negative value).
At some point, too, Yahoo and the other traffic portals came in this sense of pointlessness to resemble media companies at their most hyperbolic worst—television at its emptiest—turning into parodies of hierarchical corporate pass-the-buck protect-your-ass bureaucracies. The open Web had become its opposite, with behavior, values, and levels of deadwood and phony-baloney jobs—and corporate-speak so deep and intense that outsiders doubled over in laughter—resembling nothing so much as the kind of companies that were regularly assaulted for being brain-dead in the 1980s and taken over by opportunistic raiders.
In 2012, the raider—or “activist investor”—Dan Loeb took a stake in Yahoo, and, with hardly any resistance, gained a dominant voice on the Yahoo board. Old-line software executive Carol Bartz, appointed Yahoo’s chief in 2009, was dismissed in 2011 and replaced by Scott Thompson, who after Loeb accused him of fabricating details on his résumé was fired a few months later. Thompson was in turn replaced by the company’s number two, Ross Levinsohn, an advertising and media executive (Saatchi & Saatchi, HBO) who had become a leading media-tech crossover executive. Levinsohn, as president of Fox Interactive Media and a key executive in News Corp’s acquisition of Myspace, was like most other such crossover executives a long way from having found himself a clear success. Levinsohn was installed as CEO on an interim basis and most everyone, including Levinsohn, assumed he would be given the permanent job. His pitch to the Loeb-controlled board reflected his own experience in digital media: drastically downsize the business in an acknowledgment that traffic has, in essence, only a commodity value. Spending more money on it doesn’t make it more valuable, therefore, with some clear logic, spend less. Trade ambition, or grandiosity, or panicked disarray, for cost effectiveness.
Unbeknownst to Levinsohn, Loeb was courting Google executive Marissa Mayer, who offered a general plan or at least possibility of returning the company to its technology roots—that is, to make it more Google-like, even though Google had long made Yahoo an irrelevant technology player.
With the company’s shares buoyed by its skyrocketing Alibaba investment, and with Yahoo effectively acting as a tracking stock for Alibaba, still a private company, Mayer enjoyed a honeymoo
n period, ending only with the prospect of Alibaba’s own public offering.
At this point, finding herself with a media product with little technological wherewithal or advantage, she became something of a deer in the headlights. Peculiarly, and as though in some weird admission of digital media’s intrinsic problems, she gave an interview suggesting that magazines were significantly more effective media, with a strong connection to users, clear brand identity, and a focused purpose—and that Yahoo should be more like them.
Still, stuck with the imperative of holding and raising her yet gargantuan traffic base, she seemed to continue to pedal furiously to try to remain all things to all people with an ongoing series of banal initiatives—many of them theoretically magazine-like, or supplement-like, but in no way having the depth, skills, or style of a successful magazine. What’s more, to hold the mass-market base, she was, while unable to make one successful “magazine,” suddenly having to make many of them, each targeted to a different user and, more important, advertiser segment. (The entirety of Yahoo’s operating revenues come from advertising, and yet at two major 2014 advertising gatherings—the Cannes Lions Festival in France in June, and Advertising Week in New York in October—Mayer’s strange combination of terror and somnolence, including famously sleeping through a key meeting, became the main gossip, if not drama, of the events.) But magazines turned out to be something of another stopgap.
The premium plan was in fact television. Mayer hired network morning star and news anchor Katie Couric to become, Mayer hoped, a similar face and draw at Yahoo, without, of course, any piece of the complex attributes and casting dynamics that actually make Katie Couric Katie Couric (there is, for instance, hardly Katie Couric without her Today Show cohost, Matt Lauer).
Also, in 2014, Yahoo is reported by Nicholas Carlson, who wrote a book about the company, to have begun talks with Scripps Networks to buy its Food Network cable channel, and then to consider buying the $10 billion cable company and its entire collection of cable properties, including, in addition to the Food Network, HGTV, DIY Network, Cooking Channel, Travel Channel, and Great American Country. Carlson also reports that Yahoo considered buying CNN. In early 2015, it was among the digital platforms, including Hulu and Amazon, bidding for the digital rerun rights to Seinfeld.
Yahoo is just one digital media company interested in what is hoped to be the next big turn of the traffic-chasing wheel: premium video.
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WHY DIGITAL IS SO SURE ABOUT THE FUTURE . . . THE MILLENNIALS!
BuzzFeed, one of the high peaks of millennial media, claimed an audience in 2013–14 greater than the Super Bowl’s, but with only a scintilla of the Super Bowl’s revenues. Instead of that being a crisis, a stark indicator of a valueless or hopelessly commodified audience, it suggested, in a sleight of hand, certain opportunity. It had the numbers, hence, of course, it would get the advertisers. No? The future only goes in one direction. (At the same time that BuzzFeed was making this argument, its editor, Ben Smith, was acknowledging that it probably wouldn’t be around in three years, or would have transformed into something else.)
It’s the twenty-year promise: we’ll eat television’s lunch because, tautologically, we are the future.
As per Marc Andreessen, it’s zero-sum. Brand advertising is not going to increase to support both television and digital media; therefore, one lives at the other’s expense.
Because digital media is overwhelmingly ad supported, whereas half of television’s income comes from other sources, brand advertising is a particularly pressing issue for the digital business. Television’s largely imperturbable dominance ought to play against digital’s argument. And yet it does not. History, we believe, is on the side of the rebels (although, in fact, that is hardly true at all, and it becomes more confusing when the rebels turn into the establishment).
The real narrative remains black and white. Over twenty years, television advertising has remained largely stable. Only a small number of big brand advertisers have moved substantial parts of their budgets into digital media, with the experience often being a negative or equivocal one. SNL Kagan, the television business monitoring group, lays out an extraordinary twenty-year upswing for television, from $2 billion in profits (inflation adjusted) to $20 billion in profits, with margins rising to 41 percent.
And yet digital media in that time has also, from a practically zero base, gathered, in addition to a virtually immeasurable audience, vast amounts of direct-response advertising, making it in real and extraordinary ways the other, parallel, medium and advertising destination.
But the failure to intersect becomes among the most defining features of the two mediums. In this, digital media has truly replaced newspapers’ disposable, largely low-level content and cheap advertising, and television has remained . . . television.
Digital media’s value, however, its yet unnatural multiples, is vastly greater than a collective newspaper. This is in part because it foresees some ultimate, monetizable, place for itself in the consumer funnel—some data-oriented, transactional, cash-register-moving result in which it might someday and somehow participate. But it is also because it continues to make the argument, in essence a demographic one, of an inevitable victory over television and usurpation of television advertising revenues.
A dip in television ad spending in late 2014 and a summer ratings drop was, again, a certain harbinger of . . . a shift.
It is the binary argument: a loss for one must be a stampede to the other.
As it happens, not only has that shift in fact yet to occur on a structural level, but when a shift does happen it tends not so much to be a shift as a downgrade, as high-margin brand advertising transforms into low-margin direct response. In this, television might lose, but likewise, digital media does not advance.
Analyst Michael Nathanson, part of a group of media analysts who have largely made their reputations by being available to the media as experts on media disruption—being press ready is the currency—argues otherwise.
In Nathanson’s view—in an interview given to Deadline Hollywood, itself positioned as an old media disrupter, in late 2014—digital media is an unstoppable predator instilling fear in the television industry “that this is the beginning of the end of growth for television advertising. Over the past decade you’ve seen online [content providers] take market share from print. The worry is that there’s not that much print market share to take any more. The next thing they’re going to go after is television’s share of advertising.”
The debate, says Nathanson, reframing digital media’s twenty-year wishful view of television, “is the speed of that decline [for TV]. It could be only 1% of market share or it could be 3%.”
This is in juxtaposition to what he labels as conventional wisdom (although his own perspective represents quite the conventional view):
The mistake the analyst community is making is thinking that the share of TV [advertising] going to the Internet is just going to online video. What about social? What about mobile? What about more search spending? Look at the growth rates at Facebook or Twitter or Google. Or my friends at Iconic TV which has a JV with Jay-Z. They’re getting branded entertainment dollars. They’re not getting billions of dollars. But they’re getting dollars. It’s way too easy to say ads can’t all be going to YouTube because Coke and Pepsi don’t want to be surrounded by kids with skateboards going down staircases.
In other words, advertisers are getting ready to put their top-dollar campaigns into social and search, an overwhelmingly direct-response environment filled with massive click fraud. And Iconic TV? Iconic TV? His friend? Sheesh. Iconic TV is a struggling YouTube production house.
No matter, we know millennial media habits are changing!
That’s the argument that underpins much of marketing’s new uncertainty and sophistry and goes in essence like this: millennials are different because they are the first generation to be raised with di
gital tools and digital media as commonplace; therefore, they will, ipso facto, behave differently. Or, to cast it in a longer-term marketing view, a new generation—as though never to join and become an older generation—is always an excuse to assume that behavior will change and that marketing dollars will have to adjust. It is rather safe to say things sometimes change a lot—even though, mostly, they don’t change so much.
For sixty years, television, given massive generational, behavioral, and technological shifts, has managed to change . . . not so much (the world still sits in front of a television). And yet it is always, no matter its continued success, ubiquity, and cultural centrality, about to be swept away.
In the view of The New York Times’s style section:
The television has always been more than just an appliance. For decades, going back to the days when a single family on a block might have a color TV that the neighbors were invited in to watch, it has been a portal to a dreamscape, a status symbol, a trusted late-night companion.
Back in the Norman Rockwell days of one-career households and family dinners, that trusted cathode box was not only the centerpiece of most living rooms, it also served as a form of emotional glue for the family. Through it, the shared experiences—the Beatles on “Ed Sullivan,” the Miracle on Ice—would define a generation.
But mention that experience to someone like Abigail McFee, a sophomore at Tufts University, and she may look at you with a gaze of penetrating puzzlement. She recently dropped by a friend’s room on campus and beheld the most incongruous sight: a small television perched on a dresser.
Such is the soft hogwash of soft-trend reporting. Even to the extent that it is naming a real change (young people watch television less conventionally), it mixes up “TV” as a business model with “TV” as a distribution channel. TV the business model derives revenue from content pushed through a distribution network also called “TV.” The health of the distribution channel is a vastly different issue from the health of the businesses using it.
Television Is the New Television Page 2