I attended the session where Tim O'Reilly interviewed Terry Semel, who is the chairman and CEO of Yahoo! Inc. I was very impressed with Terry Semel's talk and it very much cemented for me that Yahoo! will be a company to watch over the next few years. I hope my notes do his words justice.
Terry joined Yahoo! after spending years in Hollywood because he wanted a change and saw the immense opportunity for advertising on the Web. Tim O'Reilly pointed out that some members of the mainstream media have been worried about some of Yahoo!'s media moves such as the recent hiring of Lloyd Braun, former Chairman of ABC Entertainment Television Group, to run Yahoo!'s Media Group. Tim asked if Terry was trying to turn Yahoo! into the interactive studio of the future.
Terry said he isn't sure what exactly Tim meant by an "interactive studio". Terry pointed out that when he was in Hollywood, they cared about two things; content and distribution. Technology wasn't a big deal, it was something that changed every decade or so that the studios could take advantage of. In the 21st century, Terry believes there are now three pillars of media; content, distribution and technology. Yahoo! is in distribution since it reaches over 400 million people. Yahoo! delivers content. Yahoo! is a technology company. Yahoo! is a 21st century technology company that drives great media.
Tim then asked whether the fact that Yahoo! hires reporters to doesn't put them in conflict with traditional news organizations like CNN or the LA Times. Terry responded that Yahoo! is all about content. Sometimes it is user generated content. Sometimes it is licensed content from a media company. And finally sometimes it is content created by Yahoo! as they experiment with discovering the future of content generation. Yahoo! wants to take a leadership role in redefining the nature of content generation. Terry gave the example of travel reviews and how often it is more authentic to obtain user generated content and photos about a trip than a professional travel reporters opinion. Yahoo! is trying to enable all those scenarios with their various offerings.
Tim then asked how Yahoo! can reconcile the difference between their role as a service provider with being a news organization. Tim brought up the recent incident where Yahoo! turned over information about a Chinese dissident which led to him being jailed. Tim argued that traditional news organizations would not have given up the information. Terry began by clarifying that 99% or more of Yahoo!'s news content is syndicated from other sources and they aren't a news organization. Secondly, any organization that operates in China has to observe the riles and regulations of the land. This doesn't just apply to China but for any country a company does business in from the EU to the United States. Although some of these laws may be unsettling to him, the fact is that there are the laws in those lands and everyone who lives in and/or operates a business in these countries knows the law. Terry also does not agree with the opinion that Western companies shouldn't do business with China. Exposing Chinese audiences to Western cultures is much better than a policy of isolation. After all, who would have thought that the Berlin Wall and the Iron Curtain would fall?
Tim asked what Terry thought about Google. Terry gave Google credit for doing great work in search. Yahoo! just got into it 18 months ago, and other companies such as Microsoft are coming along as well. If he were Google he would worry about the fact that only 5% of page views on the Web are from search yet the account for about 40% of the revenue generated on the Web. Google realizes that they have to diversify and become a portal which is why they now have offerings like maps, shopping, email, customizable homepages, etc. However since they are becoming a portal one should rate them as a portal and not just as a search engine. And as a portal, they would probably rank fourth behind portals such as Yahoo! and MSN. Yahoo! has a number of superior offerings from shopping to mail. Yahoo!'s revamped email offering was rated as superior to GMail by the Wall Street Journal and Yahoo! Mail has 10 times the user base of GMail.
The fact is that people spend 40% of their time online consuming content and another 40% in communications programs. There seems to be a great opportunity to monetize this time Web user's spend online that hasn't been seized yet. Yahoo! plans to seize this opportunity
Tim asked what Terry thought about the fact that the stock market is rating Google higher than Yahoo! when it comes to market capitalization. Terry stated that the market is currently focused on search and the revenue from search but there are avenues for deeper engagement with end users with richer opportunities when it comes to communications and content.
Tim then asked if Terry would consider giving Google access to the information in HotJobs if they launched jobs.google.com? Terry responded that Yahoo! is more of an open platform company than Google and has deeply embraced syndication technologies like RSS.
There was a brief Q & A after the interview.
I asked Terry what he felt was Yahoo's biggest strength and Google's biggest weakness. I also pointed out that I agreed with his statement that as portals go Google is #4 which prompted him to ask if I worked at Yahoo!, when I responded that I worked at MSN, this seemed to make the audience laugh. Terry responded that he doesn't talk about the weaknesses of his competitors in public BUT he would say that Yahoo's strength is that they have assets that encourage deep consumer engagement but with regards to communication and content.
Another audience member asked whether Yahoo! considered user generated content to be important. Terry stated that they did which is why they have offerings that enable people to share their experiences with others such as Flickr and Yahoo! 360o. Terry stated that people tend to polarise discussions such as when they ask whether to bet on branded advertising or sponsored ads in search? It isn't an either-or situation. It's like asking a parent to pick which of their genius kids is the favorite. Can't they love both? If sponsored search ads are huge then Yahoo! benefits. If branded advertising becomes huge then Yahoo! benefits as well.