Recently, I twittered about a post from @Todd_Harrison on Minyanville.com "Banks Next Headache is Big Media. I guess if I were an investor in a big media company, the last thing I want to hear about is shifting from advertising to paid business models. Even though paid is a more sustainable model in the long haul, it will take time. What investors need right now is some good old fashioned blockbuster lightening in a bottle.
I suspect that's why Yahoo!, whose stock plummeted in July when they announced they'd finally negotiated a deal with Microsoft to use Bing as Yahoo's search technology, has had to do something more attention-getting. So the FT announced that Yahoo! is shifting some of their successful paid products to free even though "Since dropping charges, user numbers have risen sharply, but that alone will not be enough to offset lost subscriptions, he (Pitaro) admits. 'We're clearly not going to make it up in year one..'"
But wait there's more! AND Yahoo! has relaunched their portal with a $100 Million advertising campaign.
And guess what? Its worked! Bernstein and Bank of America analysts raised their Yahoo! recommendation to outperform the market and Yahoo stock went up so much that it raised Nasdaq. (by the way, I did a #what-the? twitter wondering why the article does not disclose these analysts' interest in Yahoo! And since the analysts recos were in advance of the FT article about shifting from paid to free and the ad campaign, I suspect they knew what was coming.)
In a continuation of the Yahoo! PR campaign, James Pitaro (yes the same Pitaro who is quoted in the FT article above ) says in Paidcontent.org: "Enough Already About Charging For Content: How To Make The Free Model Work" (Can't you just hear those Bernstein and Bank of America analysts on the phone cheering Pitaro on - "Take that Murdoch! Go ahead and charge, make my day!").
The comments are worth reading on the post because they represent a cross section of points of view. Here's what I said . . .
This discussion is great!
I think Pitaro and Carol Bartz are trying the only strategy available to them. I suspect they have their hands tied by investors who want the stock price to go up NOW. There is no way they can make that happen with a paid model because it takes time. The fastest way is novelty, curiosity, driving people to the site and hope advertisers will pay. (i.e., catch lightening in a bottle) Good luck!
Personally, I would rather be working on a more sustainable business model. If I were Pitaro and Bartz I would be investing half of that $100 Million ad budget on Plan B. Because cutting that budget in half isn’t going to change anything but frequency on the people reached.
But of course, Yahoo! investors are also invested in the ad agency holding companies and traditional media companies who will benefit from the $100 Million infusion into the market. So it’s a good hedge for them. At least those stocks will go up even if Yahoo! doesn’t.
Ah the webs we weave.
