Yahoo News: Less Play For Pay

2003703177 profiles Scott Moore, who runs Yahoo’s important and profitable news group: Yahoo’s news, sports and finance offerings draw 50 million uniques a month, and do so with a tiny staff. Buried in the middle of the story is an important strategy shift for Yahoo: It is cutting fewer deals where publishers pay for placement on the site, and is instead just aggregating whatever it likes.

Moore’s licensing frenzy has subsided over the last year. Instead Yahoo! is “scraping” — snatching snippets of content from around the Web and linking those back to a headline. Moore contends scraping is a boon to users, who can now finely tune the news settings on a Yahoo! page to pull together familiar sources, such as local news headlines, together with other Yahoo!-provided content.

The strategy switch has had risks, however. By choosing not to licence and republish content, Yahoo! effectively sends visitor eyeballs — and thus their advertising dollars — away.

“It was an unnatural act because we weren’t getting paid,” says Moore. “We thought ‘What?! Why are we sending our audience to be monetized by somebody else?'” But even as Yahoo! sends 20 million clicks a month off its site, Moore contends that since rolling out the strategy, traffic has grown as people return, day after day, to the site.

Yahoo was always sending some visitors to other sites, of course, via links on content it hosted. That’s why publishers paid Yahoo to distribute their content, even though Yahoo got the primary pageviews (Yahoo imported third-party publishers’ content into its system).  Regardless, depending on how Yahoo’s existing deals are structured and how its new strategy plays out, the shift has important ramifications for both big publishers and little operations.

While it is fashionable to argue that Yahoo, as well as Time Warner’s AOL and Microsoft’s MSN, are dinosaurs that will be be replaced by verticals, ad networks, blogs etc., they still command a firehose of traffic. Until now they’ve directed a lot of that toward big partners that could pay for it. But if Yahoo really does move away from the licensing model, it may end up distributing its eyeballs much more broadly — to the benefit of bloggers and other small publishers. Forbes