'We're not a one-trick pony'

No longer just a search engine, Yahoo can offer video on demand, news and even its own TV show, says CEO Terry Semel

Owen Gibson
Monday January 30, 2006
The Guardian


Yahoo chairman and chief executive Terry Semel is battling his way through the crowds in the Las Vegas sunshine to his company's stand at the mammoth Consumer Electronics Show (CES). He is in a hurry because he has a rendezvous with his pal Tom Cruise, the movie star roped in to lend his keynote address a bit of Hollywood stardust.
The Mission: Impossible actor is already in place, pregnant partner Katie Holmes in tow, feigning interest in the "home of the future" that Yahoo has erected to show how its content and services are migrating from PC to mobile phone, TV and elsewhere. Ellen DeGeneres, the US comedian who was also handed a starring role in the Semel address, is milling around and waiting to interview the pair for her hit daytime chatshow. You do not get this at the Westminster Media Forum.

The diminutive Semel, who for 24 years was at the heart of the Hollywood power elite as he rose to the top of Warner Brothers, is waxing lyrical about the promise of the second wave of internet expansion, fuelled by broadband takeup and the convergence of home entertainment devices. "Three or four years ago, people would say to me, 'How will Yahoo survive? These other portals are much larger, much heavier financed, they've got more of this and more of that,'" he says. "You know what? We not only survived, to a large degree we've overtaken them because we just focused on great products and services."

'Basket case'

Back in May 2001, he provoked raised eyebrows and some stifled chuckles when he moved to Yahoo in the wake of the dotcom crash. The one-time Wall Street darling was widely thought to be a basket case, as the received wisdom was that do-it-all portals were dead. His former colleagues in the world of old media are no longer laughing, as he successfully turned the company round. Now Yahoo and a handful of its rivals are jostling for position to act as the middlemen between the big content providers and the technology giants. "When you wake up in the morning, you are always going to have competition. That's good. It makes you step up every day and continue to strive," Semel says.

Like most media executives of a certain age, he looks to his kids for inspiration. In his speech, mainly concerned with plugging a new service called Yahoo to Go that works seamlessly across a variety of devices including mobile phones and TVs, he points to the way his teenage daughter will juggle three mobile devices to stay in touch with friends, listen to music and contribute to communities on the move.

"The overall audience of Yahoo is over 400 million. Those numbers say: this is real," he says. "This is very large and is more and more part of the mindset of entire generations that have been growing up with it over the last 10 years."

If there is one message from the internet giants that dominated CES it was that 2006 is going to be the year when the long- predicted convergence of entertainment devices finally happens. Every speaker trotted out the same mantra, promising that users would be able to access content any time, any place on any device. Google's Larry Page unveiled its video download service and Microsoft's Bill Gates trumpeted a tie-up with Sky that would allow its new internet video-on- demand services to be delivered to his Media Centre home entertainment systems. Yahoo's strategy is to provide a platform via which users can access all of their content - whether music tracks, emails, user generated content, downloads of Lost or their own blog - on any device at any time.

"I might capture all this on my mobile device but want to view it on my big screen TV," explains Marco Boerries, head of Yahoo's Connected Life division and one of a number of bright thinkers who have joined the company in recent years as a result of their own firms being acquired.

"The important thing that the internet brought about is that we're becoming our own programmers - we get what we want. We're taking that paradigm shift and putting it on the TV or on the mobile device. That's very powerful," he says.

Semel, too, is excited about the possibilities for video. Combined with its community features, he sees video putting Yahoo at the centre of the emerging on-demand world. Yahoo recently announced plans for an online reality show, The Wow House, and has recruited its own war correspondent and adventure writer, sealed exclusive deals to show extra footage from programmes such as The Apprentice online, introduced a weekly American football show and offers a library of music videos.

All of this activity has unsettled some of its media partners by suggesting a move into their territory. But Semel is impossible to ruffle, possessing the rhino hide and smooth patter of the US corporate veteran. He insists Yahoo's foray into content is a small-scale experiment to point the way for others: "We've been doing a little bit of original content. It's about us experimenting and putting things in front of our users - like the live video stream of a Nasa launch."

Nor are there plans to buy a traditional media company or independent production outfit, a move which could compromise one of Yahoo's strengths. "One of the strong suits of Yahoo is its desire and capability to partner with people," he says. Instead, it will concentrate on integrating its content with its burgeoning community features and glueing the whole lot together with a much-improved search engine.

The increasing overlap between the worlds of traditional media and the internet was highlighted again last week when former Channel 4 chief executive Michael Jackson agreed to join Barry Diller's US firm InterActive Corp, owner of a string of sites including Ticketmaster and Ask Jeeves, as president of programming. In contrast to the headlong rush to new media in 1998, the rise of broadband and video content has given an editorial imperative to such high-profile moves.

Crossing borders

Meanwhile, Google's "don't be evil" mantra was under scrutiny after it launched a Chinese version of its search engine and agreed to cooperate with the government on censorship. Yahoo faced a similar situation last year, when it handed over the details of a journalist who was later jailed. Semel maintains that the company will comply with the national laws of each country in which it operates. But given his rhetoric over the democratic, empowering qualities of the internet, Yahoo will find it difficult to reconcile its words with its actions.

He is more forthcoming when it comes to what marks Yahoo out from the competition - globally comprising AOL, Google, MSN and the emerging threat from News Corp, but also including local giants in each market from China to Germany. "You don't look to Yahoo for one thing. Fundamentally, whether they're sharing photos or listening to music or using our mail and messaging products, our users have multiple things they come to Yahoo for," he enthuses.

"Not all of our competitors have all those pieces, certainly not on a global basis. As new generations continue to become more dependent on the internet and put more of their personalised needs on Yahoo, I think the relationship becomes better and better. We're not a one-trick pony."

The more of their own content, from photos to TV shows to emails, that users store on Yahoo, the more advertising they view and the less promiscuous they become. Given that Yahoo is, according to Semel, so well placed to benefit from the changing media landscape, it must rankle that so much attention gets lavished on Google. While it could be argued that Yahoo is ahead in integrating its various services, its Californian neighbour is seen as more thrusting, more innovative and a better bet for investors. In contrast, Yahoo shares slumped by 13% last week after fourth quarter earnings figures failed to meet escalating analyst expectations.

"Google does a good job but when I think about email I think about the fact that 250 million people in the world currently use Yahoo email. And hundreds of millions of people are using Yahoo's IM. Nothing rankles me," he insists.

Semel's PR minders are making frantic hand signals. In corporate America, chief executives are almost as protected as the talent. Somthing else, perhaps, for him to talk to Cruise about.