Yahoo Positions Itself as Hollywood Player

Yahoo is an even more popular and profitable Web guide than Google, although it doesn't get as much recognition. The company has a presence on many cell phones, and now it's looking to become a major provider of entertainment on the Internet. NPR's Laura Sydell reports that Yahoo is establishing the necessary Hollywood ties to do so.

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RENEE MONTAGNE, host:

On Monday, our business report focuses on technology. Today, how Yahoo! hopes to move more heavily into the field of entertainment. It's been almost a year since Google went public, and ever since, it's been a Wall Street darling. There's another Silicon Valley search engine, of course, with two O's in its name. Yahoo! turns 10 this year, and it's actually more profitable than the more publicized Google. And as NPR's Laura Sydell reports, Yahoo! is positioning itself to become a major Hollywood player.

LAURA SYDELL reporting:

Yahoo!'s story is a familiar one in Silicon Valley. Two Stanford graduates ran an Internet guide of their favorite sites out of a trailer on campus. It grew increasingly popular, went public, then its stock tanked during the bust. Co-founder Jerry Yang admits the operations needed some rethinking.

Mr. JERRY YANG (Co-Founder, Yahoo!): The business part of the business was broken. It was not the right business model for what we were trying to do, and we knew it takes time to fix that. But as long as we felt that the users were still satisfied in getting a great service, well, we thought we had a great base to build from.

SYDELL: Yahoo! has used that base to build itself back up. Unlike Google, which at its core is an algorithmic search engine, Yahoo! has always had more of a human touch, an editorial take on interesting Web sites. For those who haven't visited the site lately, it looks nothing like the nearly blank search page of Google. The screen is cluttered with services and editors' picks. Yahoo!'s CEO Terry Semel.

Mr. TERRY SEMEL (CEO, Yahoo!): So if you think about the whole Yahoo! network, it's filled with content. Some of it may be auto. Some of it may be finance. Some of it may be music. So you look across Yahoo! and it is an aggregation or a licensing process of content throughout Yahoo!, always has been.

SYDELL: That content kept users coming to the site all through the company's doldrum days, and as advertisers returned to the Internet, they wanted to be seen by those users. Today, Yahoo! is the most popular Web portal. Last year, the company brought in almost 3.6 billion in revenues, nearly 400 million more than Google, but the future for Yahoo! may be outside Silicon Valley. The company wants to be a major player in Hollywood. The first episode of Showtime's "Fat Actress" got a Web premiere on Yahoo!

(Soundbite from "Fat Actress")

Ms. KIRSTIE ALLEY: Hello?

Mr. MICHAEL JAMES McDONALD: (As Sam) Kirstie, it's Sam. How's the diet going?

Ms. ALLEY: Really well. The pounds are just melting off.

Mr. McDONALD: (As Sam) Well, that's good news because I have an offer for you.

Ms. ALLEY: A job offer?

Mr. McDONALD: (As Sam) It's from Jenny Craig.

(Soundbite of Alley crying, dial tone)

SYDELL: Showtime, which is a premium channel, hopes to bring in new subscribers by letting a wide audience watch the first episode on Yahoo! for free. Rob Hayes is senior vice president for New Media at Showtime.

Mr. ROB HAYES (Showtime): We ended up being on that home page I think four times over a two-week period. It really provided the show incredible exposure and put it in front of people who normally may not have ever seen the show or wanted to find out more information about the show and didn't have that opportunity.

SYDELL: Hayes says they don't know whether the presence of "Fat Actress" brought in new subscribers to Showtime. However, they consider it a success because more than 1.2 million people took a look at it. Yahoo! has made other special television deals. For example, it broadcast segments of every episode of "The Apprentice." Yahoo! co-founder Jerry Yang believes that after many years of talk about the Internet becoming a major distributor of entertainment, the moment has finally arrived.

Mr. YANG: I think over 50 percent of the US households will have some form of broadband by the end of this year. The speeds are going up. If you look at affordability of devices and cost of broadband, that's all coming down very rapidly. And where Yahoo!'s very well-positioned to do is to deliver interactive services, interactive content to your mobile devices, to your home and your workplace.

SYDELL: Yahoo! recently started their own music service and the company is trying to make the much talked about personalization of entertainment and information on the Web a reality. So, for example, the main Web page can alert me to news headlines that interest me. Yahoo! radio can be programmed for my taste. I choose my favorite artist, and if I like, say, Bob Dylan, a pop-up question asks if I want to listen to more folk music or maybe hits from the 1960s.

(Soundbite of music)

Unidentified Singer: When the truth has come to be alive, you know the joy within you died, don't you want somebody to love you?

SYDELL: Yahoo! is certainly setting itself up to be a conduit to the Web for the entertainment world. CEO Terry Semel is former chair and co-CEO of Warner Bros. This year, Yahoo! expanded its offices in Los Angeles and is moving hundreds of staff members there. Gigi Johnson, executive director of the Entertainment and Media Management Institute at UCLA, believes Yahoo! has a leg-up in the entertainment business over many other browsers and search engines.

Ms. GIGI JOHNSON (UCLA): They have wonderful existing relationships with consumers who consider them a part of their everyday week. They're already a relationship that they go to for news and some forms of entertainment. As we go toward more broadband consumption, Yahoo! is in a great position to really expand further to take up more of your average person's day.

SYDELL: Besides working with traditional media and entertainment, Yahoo! is likely to be on the cutting edge of providing content shaped for new forms of media says Paul Saffo, a director of the Institute For The Future, a Silicon Valley think tank.

Mr. PAUL SAFFO (Director, Institute For The Future): The same way the VCR gave us the new video form of rock videos, the, you know, Cellywood, the small-screen world of cell phones is going to give us a new kind of video experience. And I'll bet Yahoo!'s in there first.

SYDELL: Yahoo! is already experimenting with forms that are uniquely suited for the Internet. It hired Web animation studio JibJab to produce short and perky animated songs.

(Soundbite from music)

Unidentified Singer: You've got a headache. Now I've got some strange disease. Don't worry about it. This pill will set your mind at ease. It's called Progenitorivox. It's made by SwabbMerlCo.

SYDELL: Time has shown that Yahoo! executives were right to stay the course during the dark days of the tech bust, but there's no way to know yet whether they'll be right again as they wager high stakes on their particular vision of the Internet's future.

Laura Sydell, NPR News, San Francisco.

MONTAGNE: And this is MORNING EDITION from NPR News. I'm Renee Montagne.

SUSAN STAMBERG (Host): And I'm Susan Stamberg.

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Correction July 20, 2005

In this segment, a song attributed to Jib Jab was, in fact, produced by Consumers Union, but appears on the Jib Jab Web site.

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