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The Almighty Buck

The Problem With Portals 128

nickfarr writes: "This article about Yahoo from Sunday's NYT gives some pretty good arguments against the profitability of portals; or the idea that massive visibility translates into massive profit. It definitely presents a broad middle perspective between the .com naysayers and the irrational optimists." The financial news is full of such things, and this is better than most -- all that infrastucture is looking for some money to swallow before it starves.
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The Problem With Portals

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  • Let's be honest here. The idea of text-embedded hypertext links works only up to a point. There is a reason that pure search engines like google are needed.

    There is a need for 'link lists', however. Anime Web Turnpike, and Anime 'portal' of sorts is a good example of this:

    http://www.anipike.com

    Anipike neither charges nor rewards users for inclusion on its lists of Anime-related sites. It makes money by targeted advertising. The people who advertise on Anipike are online stores or websites that sell Anime related goods. (You never see a porn ad on Anipike unless it's for an ecchi game or something similiar.)

    Anipike also doesn't do anything to 'stick' a user to its pages like other portal sites. They count on the fact that they are such an invaluable resource to people trying to get a Dragonball or Tenchi fix that they will come back.

    They don't market their site, instead counting on word of mouth and thoughtshare to build a powerful presence. If you have an anime site and you're not trying to get it listed on Anipike.com, you don't care about getting your stuff seen.

    By taking this targeted, intelligent approach, Anipike is a pretty successful little portal. I just wish others would take their example.


  • I think yahoo's problem is not that you can't make money in portals, it's that all the tech companies have become bloated and lethargic, as happens in every economic boom. It's just time for them to trim the fat out of their organization. Companies becoming 'lean and mean' instead of the current fat-and-happy in this recession is what will lead to the next economic boom. It's just the nature of the business cycle.

    --Greg

  • TANSTAAFL = There Ain't No Such Thing As A Free Lunch. Read Robert A. Heinlein.
  • not adequately monetized

    frankly (that's a pun), improper use of the word "monetize": it does not mean "financed" or even "monied". It refers to cash money as opposed to money in other forms such as investment, savings and credit.

  • On that track....

    It always seems like the .coms going bust are the ones that got huge too fast. I guess you wave millions in VC money in front of people and you gotta spend it. Then if you seem successful, you gotta expand to 'grow' to please the investors, etc.

    Seems like many .coms doing OK are the ones that are a) living within their means and b) doing what they do best.

    /. is a prime example. They do what they do best - they aren't going nuts trying to expand into this or that - they are trying to improve what they currently do and grow within their means. Yes, /. isn't for profit per se, but they still need to 'survive' Yes they have a 'parent' providing them $$, bandwidth, etc. But I'm sure /. would sitll be alive today without Andover - cept the pages would probably load slower :)

    --

  • Stuff gets especially complicated when you have a simple concept that gets watered down by 10 marketroids with 'great ideas'. Yahoo as a search engine is not trivial, but it's maintainable by a very small team. Yahoo as a search engine, shopping mall, auction site, mapping program, bulletin board, IM client, toaster, washing machine, and pet defenestrator... well, that needs a whole lot of capital, and isn't terribly more useful than just the search engine.
  • When sites can provide their advertisers with target demographics and an equivilant to television ratings, the current web models will work. Just give them time.

    Dream on, marketroid. Hate to burst your bubble, but that is exactly what all of the major ad network players do, or at least purport to do. Companies like Accrue and NetGravity made millions of dollars selling ad-tracking, targeting and reporting software to various portals (now all dead or dying) in order to ensure the delivery of that information.

    Guess what? All the targeted demographic information in the world doesn't do a damn thing to change some very basic facts:

    1. Nobody (ie: not enough people to make it worth anybody's time in a sober business environment) was clicking on the damn ads.
    2. Nobody (ibid) was buying what the ads were selling.
    3. Most of the ads were being bought by over-capitalized dot-com startups which are now DOA. Minus that money, placement prices are finding their natural level: somewhere underneath newspaper classifieds.
    Add it all up and you have Game Over for the ad banner market. For now, and for the forseeable future. And I for one will not miss it at all. Bad people, bad money, good riddance.
  • Yeah, and these "television" and "radio" methods of distributing content will soon die fiery deaths because they cannot force joe sixpack to make micropayment or monthly subscription in order to watch NFL football.

    On the other hand, television and radio don't have the problem of their costs scaling with their popularity. If ten times the expected number of people tune in to the superbowl, the network will still turn a profit and will make a note to up their advertising rates next year. If ten times the expected number of people turn up at a portal, there's a good chance people'll be getting 503 errors left and right and all hell'll break lose.

  • That isn't true. Mayn people (myself included) like to have everything integrated. I can pop up my Yahoo Messgener, and message people, check my local weather, news, sports, stocks, and auctions all in one place. And, I have only ONE unified login for the entire area. I use Yahoo's services often because not only is there one login, but there's a single look/feel, and they also integrate my user information very well. I will NEVER have to enter my mailing address on any Yahoo page, EVER, because they already have it. No, the word 'bloat' doesn't apply to portals. Yahoo has the best in the business. Their problem is that they're still not operating like a traditional company: aggressively cutting costs, working to make their operations more profitable. Yahoo is still in the spend, spend, and spend some more mode. Until they grow up, they're going to be lackluster in the financialsm regardless of the eyeballs that they get.

  • by Xoro ( 201854 ) on Monday March 12, 2001 @09:47AM (#368875)

    It's funny. I worked at a bank that passed on the Yahoo IPO back in 199x. There was a lot of e-enthusiasm among the analysts, but it had not reached the flaming inferno of the past two years.

    The primary (overlapping) criticisms of the deal at the time were:

    • No customer lock-in
    • Dubious "eyeball-counting" methods
    • Doubtful per-eyeball valuations
    • Infinite potential for me-toos

    Time seems to have confirmed these worries, and it won't be long before we hear a chorus of "I told you so" from the despised minority of doubters. Incidentally, the ability to enumerate these points did NOT save my old co from its share of internet flameouts. I guess that's why they call it a mania.

    My own opinion is that the shakeout is a good thing. Most "e-tailers" are glorified catalog retailers, except that they lack basic business knowledge. Throwing people's savings at them is hardly a good thing. If other online cos that parted these fools with their money have to suffer some, that's good too. Let them shed the corporate massage parlor, or whatever other .com fat they've accumulated. Let them automate more, as computer businesses should, and return workers to the Pool of Useful People.

    The worst thing is the media trying to turn this into MY problem. I can't stand it when these business issues cause people (particularly the Times) to darkly hint at the impending death of free content. Don't they think some struggling free content provider might be happy with Yahoo's "80% discounted" ad placements? Might they not benefit some from the many skilled workers returning from their mad crusades?

    On a grander scale, follow the money upstream -- do they think when the tap runs dry, infrastructure and bandwidth providers will just pack up and go home? Nonsense. They'll do what the computer industry always does when faced with a glut -- increase capacity and lower costs until you find your market again. The only rational conclusion is that the removal of .com high-rollers from the marketplace is the best possible thing for the free and independent Internet.

    Sorry, I should've warned about rant mode, but it took me a while to get worked up.

  • Just read "The Moon is a Harsh Mistress" to find the origin of the term. While I like Heinlien's work, there's a lot of it to wade through for one acronym. Or just read the Jargon File.
  • Do these banner ads _really_ have smaller return on investment than many forms of "conventional" advertising, or is it simply that their ROI is easier to measure in the internet world?


    The NYT article points out that Yahoo charges *more* per view than the bus ad you mention. The question is whether that large premium is justified. No one is claiming that banner ads are useless compared to other ads, just that they might be worth no more per viewer than a highway billboard. And if they are worth only the price per view of a highway billboard, then Yahoo is in trouble.

  • Yeah, and I hereby declare the NY Mets to be the winners of the 2000 World Series, because they were at a disadvantage because of all that money that George Steinbrenner was paying to the Yankees. Sorry, but excuses are for the weak, not the winners.

    What difference does it make that Yahoo focuses the "main page" of its portal on its search engine? The tone of your post makes it sound like this is a good thing, although I'm not sure why it would be a positive or negative. Please explain.


    Cheers,

  • But if being just a web directory is a good thing, they still have that option, don't they?

    Not without significantly damaging their image/brand value, I don't think. And as far as I remember Yahoo became quite a name on the net before they got into all their side ventures, so you can't say that they would have lacked brand power without them.

    And much of the problem right now is that high traffic can be a liability if nobody is paying for advertising.

    Not as much of a liability as keeping more people on staff because of unprofitable ventures. A skilled programmer on staff can run as much as $90,000/year with all the benefits thrown in. At current prices, you could probably get quite a bit of hosting time with that chunk of change. Consider Yahoo's current staff size and the amount of people it would take to run a Directory only site. I think that the cost would be much greater than the decrease in revenue.

  • The CD, DVD, VHS stores make sense for Amazon. They have a huge amount of "shipwidth" (warehouses, etc.: the shipping and receiving equivalent of bandwidth) that's fixed cost. To add small things like that to the books adds almost no marginal shipping cost (the warehouses have to be staffed and have their power bill paid whether Amazon sells just 10,000 units a day or 100,000 units a day. It makes no sense to waste that bandwidth.

    It's the same reason that people hook up five computers to a DSL/Cable/personal T1 connection. With the exception of Napster and the like, there's no common use of the 'net that will actively flood a fat pipe like that. So you set up a computer in every room. It takes away relatively little bandwidth, and you get added convenience. The only barrier is the startup cost: even buying a $500 K6-2 box for every room gets expensive after a while.

    Perhaps what Amazon should do is extend the zShops concept and rent out their warehouse space and shipping services to smaller e-tailers. Amazon could charge $300/month and manage the store database, all the client has to do is ensure that Amazon is provided with sufficient inventories to ship.

  • Isn't this a bit like suggesting supermarkets couldn't succeed because people wouldn't want to buy meat, vegetables, and magazines from the same place?

    IMO, supermarkets succeed in the US because they offer convenience, transportation-wise. It is a hassle in our car culture to drive to and park at the produce stand, then the butcher, then the bakery, etc. We find it easier to drive to one place, park, and get all of our shopping done ONCE. Contrast this with many European cities, where the various speciality stores one might visit are densely located around your home. There is almost no cost to visiting the produce store, butcher's shop, and bakery separately when they're next door to one another. The web is like an urban shopping environment -- i can instantaneously switch between pages at different sites. There is almost no convenience associated with different pages being hosted at the same versus different sites.

    And just as there are advantages with shopping at different speciality stores -- there is a wider selection of better-prepared breads and pastries at a bakery versus a supermarket -- one tends to get better content in area A from a website devoted to domain A than one spread over A-Z. (For example, as a native of Chicago, I prefer to read the chicagosports.com to cnnsi.com and espn.com, let alone the stuff available at the more general portals.)
  • Advertising is killing itself by saturation. Advertisers consider any flat surface to be fair game. I realized this when the squeegee a gas station attendant[1] used to clean my windshield had advertising on its handle, meant to be read from the driver's seat.

    What the advertisers don't get is that it's having the effect you describe--it's so ubiquitous that nobody notices any of it any more (sort of like the 1-800-GAMBLER signs in the casinos).

    [1] There is no self-serve gas in NJ.
  • I think levik's post [slashdot.org] is right on the money. Yahoo has been stretched too thin acquiring much of the web - most noticable [to me] is Webring.org, which is now withering away with unmaintained and unsupported webrings.
    Yahoo is like the thermometer of the internet, because it's very survival relies on the wellness of other web-based companies and the general public at large. If companies aren't doing well enough to advertise on the Yahoo network, even in these times of dirt cheap advertising rates, Yahoo's bottom line will reflect it. Notice how many Yahoo banners are on Yahoo's own pages.
    Ditto for websurfers. If the consumer dosen't feel comfortable in this economic climate, they're less likely to click through Yahoo's many affiliate links and buy something, or use the Auction service for example. Bub-bye commissions and referral fees.

    As long as the net writhes with the dotcom flu, Yahoo itself will show signs of warning.

  • Hi NineNine, what do you think about a new GPL, the Girl's Public License for porn sites ? Don't you want to talk about it with RMS ? It really would be a nice contribution to the free software community, don't you think ?
  • To conclude: You bastards would have dismissed Television before the 1930s were up, wouldn't you?

    Look at what television has become today. Television is nothing more than a sequence of shiny pictures telling what we should buy. The television news media is bad, the programming is bad, the commercials are annoying as hell. There is absolutely no content left; it's all been marketed and advertised and sponsored away.

    I think we should be vigilant about keeping the Internet from digressing into the mind-numbing idiot box that television has become.

    Perhaps killing it off in the 1930's wouldn't have been such a bad idea.


  • Contrast this with many European cities, where the various speciality stores one might visit are densely located around your home

    You have never been there, have you?

    -m-

  • I have to say that while the idea of a profitable consumer portal is absurd in a way. The Corporate Portal market is wide open. I work for a company that has an out of the box portal product and we sell the thing at 400 bucks per seat and it is selling like hotcakes. If you want to see the company I work for go here. http://www.plumtree.com
  • Actually, most of the bibles you see placed in hotels are put there by the Gideons [gideons.org]. I have known a few people that were members of this organization.

    Although they are evangelists they are not, "rolling in billions of dollars." They are people that work like everyone else. They don't ask for handouts, although they do accept them. I don't know any of them that own gold thrones with velvet seats.

    As far as Bible publishing goes, it's the all-time best seller, bar none. It continues to generate top sales, almost seventeen hundred years after being canonized.

  • We have put such a huge value on being "visionary" that everyone wants to be the first on their block to declare "the death of XXX", because with enough pundits and enough instances of XXX, *someone* is bound to be right and look brilliant.
    Sure there are pundits out there, many of whom were essentially saying the opposite thing just months before. However, not everyone that says things are going one way or the other is a pundit.

    Plus, enough doomsayers create a self-fufilling prophecy. If enough people keep shouting that the current business models will never work, people will stop supporting them and Viola, they don't work
    Ok, so there may be some truth that that phemenon, but that doesn't mean that you shouldn't speak out against irrational behavior. Did you ever consider the side-effect of the DotCom hype? *Real people* put *real money* (or resources) into these firms. When that happens, a) Those people can (and have) lose a lot of money. b) That takes resources away from other ventures, particularly in technology.

    You can say Yahoo has a P/E ratio of whatever, but they're much better than most web properties who have a P/E ratio of undefined, because they have no E!
    And by the way, I don't know when you bought your stock, but you must be pretty damn lucky if selling now is going to make you any kind of money.
    So what? Ok, so Yahoo's financials may be a bit better than their competition. This doesn't mean it's a sane investment as 10 billion dollars. It doesn't even mean it can survive. Entire industries CAN (and have) effectively die. Anyways, I'm not a day trader. You want to see something interesting? Notice how quickly the institutional investors have been moving out of the DotComs.

    I think it's safe to say that Yahoo's stock will rise eventually, that's the way real investors play the market. Day-traders can die along with the pundits.
    What justifies this belief? How much income will they gross over the next 10 years (in your forcast) and when are you predicting it? What kind of margins? What does their overhead look like? Cash flows? These are the kinds of things that "real" investors look at, not just a vague assumption that because the idea sounds acceptable that a company in the industry must be acceptable, at any given market cap and/or PE.

    To conclude: You bastards would have dismissed Television before the 1930s were up, wouldn't you?
    That would have depended on the valuations and the companies.

    The web is what, 7 years old, commercially speaking. "ad-tracking, targeting and reporting software" is still not widespread, and has only been around for a few years.
    Take a chill pill already!
    As for the age, that's exactly my point. It is just 7 years old, an infant, yet you're effectively betting a large sum of money on it without considering the bigger picture. That as time goes on, the players can change. Or that, even if the portals turn out to be "good", that's not necessarily good enough to justify a valuation in the billions.

    That said, I *do* believe some people will make some respectable money using the internet overall. But, before that can happen, the industry and involved parties (i.e., the financial community) *needs* to *FULLY* come to its senses. As long as you have an insane valuations (which they still are), you're not going to find effective companies and you're going to have a hard time making a decent return on your investments over the long term (as opposed to, say, the venture capital/invetment banking community turning over DotComs to the ignorant public...and making a killing). This is not too unlike the BioTech crash in the early 90s. Many are starting to come back around now for IPOs and the like, the DotComs are not too disimilar.
  • Maybe the best way for portals to stay in business would be to follow the example of these folks [seethru.co.uk].

    The SeeThru website was originally launched to tie-in with a (rather crap) British TV drama called (wait for it) "Attachments", and set in the heady world of dot.com startups (or, seemingly synonomously, the heady world of Hoxton!). The attention to detail is rather touching, and it's fairly impressive that they've kept it running now that the program is no longer on the air.

    I believe Attachments is due for a second series in the spring, so presumably they'll just take up from where the website has currently got to in 'real life'.

    The whole thing is funded by World Productions [world-productions.com] I believe. I wonder if they do venture capital...?! :-)

  • Me: But if being just a web directory is a good thing, they still have that option, don't they?

    Not without significantly damaging their image/brand value, I don't think.

    Hmm. They can toss anything they want, just as long as it isn't stuff I use.

    And as far as I remember Yahoo became quite a name on the net before they got into all their side ventures, so you can't say that they would have lacked brand power without them.

    Perhaps. I would counter that without the appearance of growth, their early position would have faded over time. There were certainly a lot of Excite's out there gunning for Yahoo's place. Maybe they overextended, but I certainly couldn't have done as well as they did and I have a hard time believing that all the critics in this discussion could have done so either. Especially the, "Yahoo should be 4 or 5 coders and a web host" types.

    Consider Yahoo's current staff size and the amount of people it would take to run a Directory only site. I think that the cost would be much greater than the decrease in revenue.

    Interesting conjecture. What I would like to know is how many people use www.yahoo.com (i.e. Yahoo the Directory) as their homepage vs. the number who use my.yahoo.com (i.e. Yahoo the Customizable Portal).

    Anyway, Yahoo certainly has all the numbers they need to figure out what to keep and what to toss, and I think they still have maneuvering room.

  • Here are the economics of it, from deeper in the article:

    The problem is that five years of experience shows very limited value for the sort of ad that Yahoo and other sites sell most -- the ubiquitous rectangular banner. Those banners, it seems, are not as entertaining as TV, not as informative as print and not as personal as direct mail.

    "A banner is nothing more than a highway billboard, a reminder message," said R. V. Hopple, CEO of Unicast, an advertising technology firm. "We know what outdoor is worth -- $2 per thousand." By contrast, prime-time television advertising sells for $17 per thousand audience members, according to The Myers Report. Yahoo recently dropped its list price for general banner ads from $16 to $8 per thousand impressions, although ads in certain high-demand places can go for as much as $80 a thousand.

    The problem is that, when Banner ads were novelties, they had more value. Now they are common place, and their value is dropping. It will probably level out at the bill board level or slightly higher.

  • Heh, they should of quoted all of what I said, - if you go to my site, read the rant and you'll understand.

    I made it a point to say that portal sites who's site do not share a common theme are worthless, a supermarket shares the theme of 'food' - some portal sites have no theme at all, and thus - poor uniform demographics. -Largo

  • ...for example.

    But I think Yahoo! is far enough ahead in the portal game that it can afford to wait to see if a marriage like the one between Excite and @Home Networks actually works out. The verdict's still out.

    --
  • Everything you've said is very true, but you made some unfair assumptions about, or failed to read fully into what I was saying.
    The visionaries in the first paragraph you quoted, are the same types of visionairies and pundits who declared dotcoms to be "the next big thing." Everyone wanted to find the next Microsoft, and this lead to the gross overvaluations you describe.

    The concept of the internet land-grab is essentially the same scenario, and it worked (yes). Some people did get lucky, and many didn't. That's part of the game, and they willingly played it. But I challenge you to show me how Yahoo will not survive until the market shakes out, barring the kind of mass panic that the pundits seem hell-bent on creating. They have some of the best web properties, and I believe that the advertising models will work out just as they have for other media.

    Beyond that, I don't really care that much about defending Yahoo, particularly. I own no stock in them, and I couldn't care less about their market capitalization, stock prices, earnings, or any ratio thereof. And even if they and every single other dotcom did go under, do you really think the web would simply disappear?

    No, life would go on, there would still be jobs for coders (although maybe not as many for web designers... pity there :P), and I would still be able to use the internet for everything I use it for today. the late nineties would sinply be a page in the history books, that's all. Biotech didn't stop advancing because some stock-prices did. Oracle didn't die because their "network computer" failed to catch on. And it is well with my soul.

    If only the people shouting at the top of their lungs that the end is near (who were the same people who shouted how ecommerce was the ultimate answer to life, the universe, and everything) could just take some prozac and calm the fuck down, the world would be a much saner place.

  • Now I know that they get higher viewership/traffic but they are paying for that just the same as a smaller company would... probably even more. When you get a free geocities page or something then any advertising money you get you can keep. But yahoo and other such portals actually are paying a premium to get that kind of traffic to their site.
    It doesn't take a genius to know that as your traffic increases so does your cost... and your users arn't going to see more adds just because more other people are using it. You are still stuck with 2 very close linear functions.
  • It's called DNS, and it is fairly diffuse. A few root servers, but most ISPs have their own. And running a caching dns on your own box is dirt easy.
  • Newsflash - all of the principal investors in Yahoo made out like bandits. The returns for initial investors were way over 1000%.

    Your institution would have had at least two good years of yahoo stock sales to fill its coffers beyond your dreams...yes sir, you and your institution FUCKED UP MASSIVELY by passing on yahoo.

  • ps. see your comment here [slashdot.org]

    The pundits are at it again. They hype a technology that is the be-all and end-all of personal computing (but wait! the personal computer is dead! oh, different pundits? nevermind...), or it could be if you'd only give them a bunch of money. It's just insane, I probably should be worrying about it so much, but man, it bugs me.

  • by wunderhorn1 ( 114559 ) on Monday March 12, 2001 @08:54AM (#368900)
    Mr. Porter has just published an article in the Harvard Business Review that aims to challenge many new-economy tenets, including the theory, epitomized by Yahoo, that a site that attracts many "eyeballs" can profit by carrying advertising. Web sites, he argued, should find ways to charge subscription fees to users. But at Yahoo, he said, "now that their users have become accustomed to getting the service free, it's not clear that they will be able to charge real money for their product."

    Yeah, and these "television" and "radio" methods of distributing content will soon die fiery deaths because they cannot force joe sixpack to make micropayment or monthly subscription in order to watch NFL football.

    Don't sell your Yahoo stock yet; Net Advertising is still maturing. When sites can provide their advertisers with target demographics and an equivilant to television ratings, the current web models will work. Just give them time.

  • Sorry Largo, i was trying to "tease" them in, not take what you said out of context.

    you're absolutely right, btw.

  • billboards don't depend on users clicking them to be effective!

    but essentially I agree with you. don't give up on the advertising-revenue model yet. the thinkgeek ads are a perfect example of how banner ads do work. I've clicked a couple of them, but even if I couldn't click on them, I still remembered their site, bought a few christmas gifts there, and have been pndering one of those 20 gig mp3 players.

    don't believe the hype. ignore the pundits (maybe even think things through yourself..)

  • There are religious/bible publishers.

    Damn, but I can't remember any of them, it's been over 10 years since I worked in a bookstore. I do remember that there were 2 or 3 publishers that we got most of our bibles from. They published bibles, Christian self-help, and Christian fiction. Yes, they were specialty publishers, but larger than most.

    One minor fact that I always found interesting. When we did our physical inventory, and compared that with the inventory list on the computer we got a pretty good idea of what our "shrinkage" or loss was. Guess what section was hit the hardest? Bibles. The book itself says "Thou shalt not steal" (Well, if it's the KJV it does) so I know nobody would actually steal it. I guess they just walked out the door by themselves when we weren't looking.

  • by El Volio ( 40489 ) on Monday March 12, 2001 @08:58AM (#368904) Homepage
    ...some things on the Net are going to have to become for-pay. No, Yahoo!'s main directory will probably stay free, but some other services will probably have to start requiring a fee.

    The key to all of this is that Holy Grail of the Internet which *no one* has ever figured out: micropayments. Yahoo!, however, could actually make some money on a limited subscription model. There are a few services on Yahoo! that I'd be willing to pay for; I use them constantly. I pay $110+ for my Internet connection at home; if I needed to pay $5/month for all the services Yahoo! provides, then I'd probably be willing to do that.

    In the meantime, though, banner advertising won't pay all the bills. I work for Superpages.com, and a large portion of our income is actually from selling listings to the same folks who buy yellow pages advertising. Advertising will have to get smarter and leaner if it's going to continue to be a major Internet revenue stream. It'll have to be more than that, though. Look at the folks on the Net who really are making money hand over fist: porn sites. And while there's lots of free stuff out there, yes, quite a bit of it is for-pay. The trick is to have a service worth it, whether you're selling porn, yellow pages listings, or My Yahoo!.

    No, the Net will never become completely pay-as-you-go, thank goodness. But we're all going to have to learn a lesson we should have learned a long time ago: TANSTAAFL.

  • Is inside the organization. The money is in providing portals to an organization. A portal for an organization would have some combo of hotmail for mail, kuro5hin [kuro5hin.org] for news, and other apps running on zope. [zope.org] Those portals are a way of putting a front end on the organization's intranet.
  • Think of it like this. When you read a magazine, it's for the content. When you watch TV it's for the show. When you go to the movies it's for the feature (a few trailers the exception). The point is that the advertising in these mediums isn't designed to make you rush out and buy Product X there and then.

    The advertisers realise that they aren't going to force you out of your seat, instead they're playing the game of brand awareness. They raise the profile of the advertiser. Go to the store to buy shampoo, are you going to go for the one you've never heard of or the one advertised by the Friends star in 30 slots a night? Chances are the latter.

    Applying this to the net it seems that most advertisers are too keen to try and drag you off to another site. The click-thru is the online equivalent of getting you out of your seat and down to the mall. Thing is, you're comfortable in your seat, so why move? That's why click-thru rates are so poor.

    Advertisers would do well to treat their online advertising as they treat their conventional ads and focus on building their brands rather than the quick sale. The likes of Yahoo! can aid this by helping the advertisers get a better sense of the demographic they can bring to them. Maybe then the big bucks will start rolling again.
  • Ok, so I'm supposed to not sell my stock yet on a company with a market capitalization of 10 billion dollars or a P/E of 140 (still!) because the eyeball business method *might* still pay off and Yahoo just *might* be on top of it (as opposed to a better capitalized competitor? No matter what the ultimate position of the portals is, Yahoo is simply not worth that much today, and they certainly weren't months earlier when it was many multiples higher. If I had any shares in Yahoo, I would sell, and quickly!
  • Nor, however, to I pay any attention to ads on the sides of buses, the roofs of taxicabs, or on the sides of buildings here in New York City

    You're telling us you walk around blindfolded then? You can't escape these ads. You see them, read them, and maybe mentally tell yourself "I will not buy a foobar, I will not buy a foobar".
    But when you are hungry and maybe looking for something new to try, you'll RECOGNIZE that foobar amonst the dozens of other choices(from somewhere in the back of your mind) and BINGO they got you.

    Exactly as web-based ads should be considered. Branding...
  • Actually, I've read everything Heinlein ever wrote! TANSTAAFL didn't stick, I guess. Ah well, I must be getting old.
  • I agree with you that it's nice to be able to get all of Yahoo's features in one place, but I disagree on a couple of other points:

    1) Yahoo's features aren't well-integrated. Try using chat, email, and clubs at the same time without having to do multiple logins.

    2) Yahoo's features aren't best of breed. You get all the functionalities, but none of them are the best in their category. I think here the comparison to MS Office is apt - with Office you get everything bundled together, but to many people WordPerfect is a better WP app, 1-2-3 was a better spreadsheet, FileMaker is a better database, etc.

  • Netcraft shows:

    The site www.hotmail.com is running Microsoft-IIS/5.0 on Windows 2000.

    As far back as nov 2000(that's as far as it goes back).

    I do know what the original poster was talking about tho, as immediately after purchasing hotmail, MS tried to switch to IIS from BSD(?) unsuccessfully and had to switch back.

  • I've been reading for a while that the more popular home pages are the specialized ones, rather than the general Yahoos and AltaVistas. People who use the net a lot for sports will use a sports page for home. Doctors might prefer a medical site, etc. While specialized sites are preferred by users, I think many investors were looking for the Home Depot or Wal-mart of the internet, the big place where you can do everything. But, as usual, turns out the little guys can do a better job by specializing, keeping a more loyal user base.

    Of course, there's also many users who don't know how to change their default site for IE away from MSN.
  • This reminds me of the Disney story "The sorcerer's apprentice". Micky thought that he could use the sorcer's majic hat, and have all his work done with no effort. Instead, everything he did was perverted in some unforseable way because of his lack of understanding.

    Well, the sorceror has come home, and it is time for corporate america to give the hat back.

  • by Tony Shepps ( 333 ) on Monday March 12, 2001 @10:10AM (#368914) Homepage
    Amongst all the major operators, Yahoo has been the very essence of interoperability. Not once (er, that I'm aware of) has it locked anyone in, required a platform, used Javascript or even frames, etc. They led the boom and were the only ones to understand how important load times are.
  • Personalize the Yahoo portal with my.yahoo.com and you will probably find it a treasure trove of exactly the kind of information you want. Net-savvy users will have done this because my.yahoo.com is convenient and fast. Only Netscape's own personalized portal might be better (because it allows for the import of stuff from /. amongst others).
  • Given the sheer amount of electronic information resources out there, portals make it possible to navigate the web. However, the question is becoming who provides the service and what are their motivations to do so. Yahoo made a ton of money by creating valuable real estate, but there's a recession that's driving the value down--not to mention a shift in marketing philosophy. Meanwhile, ogranizations are making their own portals custom suited for their purposes. Infact, that's what I'm working on. My employer, a large university has a library that subscribes to an awesome array of electronic publications and services. Prior to installing and customizing, MyLibrary [ncsu.edu], no one on the user end had any idea what we had. With the portal, any student can get online and have access to primary resources, and invaluable tool for students at all levels. However, the university library regards this as valuable service for students, staff, and faculty. The revenue we generate from running a portal is, in essence, the increased productivity resulting from the portal.

    Let's take this a little further: Let's say that the banner ad market completely collapses and no new market for advertising revenue takes it place. Yahoo goes bye-bye. Suddenly, large organizations are going to need for their members, be they employees or whatever, to be able to find things on the Internet. That means each one will want to run their own search engine and indexing service. Or, given the current trend away from 'vertical integration' in buisiness, most organizations are going to want to outsource their portal work to avoid having to support an a web services infrastructure. That means, by default we will have a subscription base model for portals. Maybe Yahoo can survive this paradigm shift, but someone will almost certainly move into this service vacuum. To be sure, the bigger corps will want to create portals that only allow their members to see what the leadership wants them to see, but there is a need for totally open portals, especially in adcademia. I could even see a consortium of universities and colleges coming together to provide comprehensive and uncensored portal services for academics.

  • it's easy to make those kinds of sweeping generalizations, and to an extent I agree with you. but don't forget PBS, the discovery channel, cnn, etc.

    the difference between the internet and TV is that with TV there can only be so many channels in the spectrum the FCC has alotted, and there is a huge cost associated with starting up a broadcasting station, let alone a major network.
    The internet, on the other hand, lets any college kid with linux, apache, and a PC salvaged from spare parts (or simply a geocities account, to keep things yahoo-related) put his content out for everyone to see.

    personally, I'm not worrying about the future of the internet.

  • I dunno, sounded like you were declaring the winner to me. MSN wins in hits. You want Yahoo to win in something, there are plenty of other categories to choose from. For example, you could counter that Yahoo serves up the greatest number of ads. And then someone else would counter, well MSN actually makes more money from their ads because their clients are larger and pay more to have their ads shown. And someone else would counter, yeah, but AOL is by far the stickiest place on the net. And so on and so on.

    As far as portals go, it's like good art -- you can't really pin it down in so many words, but you know it when you see it. I don't know what Netscape looks like these days, but MSN and Yahoo just have their similarities in different places. www.msn.com == my.yahoo.com. www.yahoo.com == search.msn.com. A portal is just an aggregate of the most common things that web users do, located all in one place -- a jumping off point, hence the name.


    Cheers,

  • how is it that yahoo almost didn't turn a profit? Doesn't it seem like any of us could write yahoo, and nearly run it with 4 or 5 people? It seems a little strange to me that they would be out of money.
  • by Anonymous Coward on Monday March 12, 2001 @08:36AM (#368920)
    I think that one thing that the investors failed to understand during the Web boom of '99 was that people just don't care what the default site is set to in their Web browser. People connect to the internet exactly to escape being locked into one media/retail source. The connect because they want to have a choice, rather than being tied into one provider. The dot.com burst proved this.

    Just go to boo.com, the failed sports closing retailer. Millions of dollars were invested in this website, yet I get a blank page unless I turn on JavaScript. And if I turn on JavaScript, the code on the page proceeds to maximise my browser window in such a way that if I were a newbie, I wouldn't be able to access the close button for my browser. The people who made these dot.coms were for the mostpart tricksters and conmen, and they fully deserved the dot.com bust. For all our sakes, don't let them reflect on our great 'Net community.

  • Consumer portals are the ones with a troubled future, but I think there is a great future in intranet portals. Meaning, portals that let you organize your companies internal information. How many wasted minutes a year are spent by employees looking for the correct HR form, for example?

    Most companies have done a great job of web-ifying everything in their company, unfortunately, there are now too many web resources in a company. Portals can help organize that and show an employee only what is important to them.

    So, I think products like JetSpeed [apache.org] and the product I'm working on, Novell Portal Services [novell.com] have a bright future.

    People who just want a very simple web-experience are going to get AOL, which in effect is a web-portal for internet newbies. I also think that soon people will be able to build their own portal with a much simpler drag and drop metaphor that will be local to their machine or web-hosted in a very simple way. I don't think there is much money in doing that, but I think it will happen.

    - Twid
  • What advantage do I get from a portal that:

    google + bookmarks = "my portal"

    does not give me. Hell even the best portals I have seen are more like:

    (search engine + links + weather + SLOW web based email)* banner ads = "some dot com going bust"
  • Actually Yahoo's features are well-integrated. I use chat, email, and stocks all at the same time with a single account and password. In fact, the only reason I ever have to re-enter my password on Yahoo! is that I've explicitly told it to ask once a day.

    And as far as best-of-breed, well, all I can say is they do all I expect of them. If my expectations ever change, and Yahoo! doesn't keep up, I'll stop using them. But history has shown they generally fill my needs before I even notice I have them.
  • I think we all know portals COULD make money if they did it right. Here's the problems I hate about portals:

    1) The ones that try and change your homepage for your browser to go to their portals suck. It doesn't work, just makes me angry to have to change it back.

    2) They are going for too wide of an audience.

    and 3) banner ads just don't work, which is where the source of the money comes from.

  • You can login once at eBay - just go to "my eBay" and you can set the preferences so that once you login there you only have to login to enter new auctions, etc... I agree that the pricing delayed is annoying but this is a recent occurance (within the last 6-12 months). It probably has to do with server load. Hopefully they'll bring real time pricing back but it's doubtful (considering the benefits for them with the current system).
  • I had read an article on this now too long ago. Advertising doesn't really work anymore due to desensitised consumers.

    All they're doing now is making sure their brand name has "Mindshare". They firmly believe that if they stopped advertising, that people would stop buying their products.

    Would you stop buying "Coke" if they stopped advertising?

    In fact, I don't beleieve I've ever seen a banner ad for Coke. Does anyone know why?

    Later,
    ErikZ
  • The concept of the internet land-grab is essentially the same scenario, and it worked (yes). Some people did get lucky, and many didn't. That's part of the game, and they willingly played it.
    Well I agree and I disagree with this philosophy. On one hand I believe a lot of the "investors" knew better, or should have. On the other hand, most of these "profits" were made by the VCs, Investment bankers, and the few DotCom millionaires who clearly focused more on getting money from *other* investors than actually making it. I do have some moral issues with this kind of behavior. It's one thing as a supposed professional to say stock X has predicted earnings of Y and is risky, but it's another thing entirely to say stock X *is* (with little apparent doubt) going to be the next greatest thing since sliced bread and will make oodles of money, all the while simultaneously failing to do any real due dilligence and covering their collective asses. Put simply, it borders on the criminal.

    But I challenge you to show me how Yahoo will not survive until the market shakes out, barring the kind of mass panic that the pundits seem hell-bent on creating. They have some of the best web properties, and I believe that the advertising models will work out just as they have for other media.
    One of the things you must realize is that this hysteria essentially PRECLUDED the possibility of rational behavior on the part of management at the majority of these DotComs (assuming they were even included to do so). In other words, if you didn't play the "growth" game, venture capital wouldn't touch you. And if you didn't take the venture capital and like monies, you risk being drowned out by the cash rich competitors that essentially threw money at anything, no matter how much money they lost doing so. Put simply, it's an unhealthy market for stable competition. Though this was more true months earlier, it's not entirely false today (although they no longer have VC cash coming out the ass). Likewise, if Yahoo is still trying to maintain the illusion of being the next big thing, they can hardly pursue the more humble, but more sane, strategies that they probably should be following.

    Beyond that, I don't really care that much about defending Yahoo, particularly. I own no stock in them, and I couldn't care less about their market capitalization, stock prices, earnings, or any ratio thereof.
    Ok fine, but realize that if you're an investor, the question is not whether or not the internet, or even a business model survives, it's the return (or the loss) on your investment. If they're grossly overvalued, even if the company performs well, you could very well still lose your shirt when it falls back to the proper value. That's my point, and I believe Yahoo is still very well into the grossly overvalued territory.

    And even if they and every single other dotcom did go under, do you really think the web would simply disappear?
    Well yes and no. No, I don't believe the internet would disappear, but the tone and shape would change. You have to realize that a great deal of the services that Yahoo and others provided to the public were essentially subsized by outside investors, if Yahoo and others can't perform at par, all of that money will simply evaporate. In other words, those services would disappear, unless they can find viable alternative revenue sources, like charging fees. Now whatever you believe about the ultimate future of the online ad, it is hard to deny that they are currently pretty worthless as a source of revenue...to the extent that companies could go bankrupt before anything else materializes. This is just a reality of a any startup, cash flows are your life line, but it's aggrivated by ignorant management at the DotComs that never has really dealt with it.
  • by wunderhorn1 ( 114559 ) on Monday March 12, 2001 @08:41AM (#368928)

    Largo's "Monetize" rant today at MegaTokyo.com [megatokyo.com] on why portals (and ad networks) suck.

    to quote:

    Portal sites, I don't believe there is any future in a portal site concept, people do not go to a website because it is part of a network of non-related sites, the idea that you can cross-market a webcomic with the selling of a vacuum cleaner is not going to cut it.

  • >And if I turn on JavaScript, the code on the page
    >proceeds to maximise my browser window in such a
    >way that if I were a newbie, I wouldn't be able
    >to access the close button for my browser

    I went to boo.com now with JavaScript enabled, and nothing of the sort happened.

    >The people who made these dot.coms were for the
    >mostpart tricksters and conmen

    Clueless web designers, quite possibly. Tricksters and conmen is being a bit harsh, don't you think?
  • by levik ( 52444 ) on Monday March 12, 2001 @08:41AM (#368930) Homepage
    ...is trying to grow too big. Yahoo has it's hands in everything right now, portals, search engine, web mail, shopping, auctions - you name it.

    If they stayed in the web directory business which started them off (and which is something they are good at) they may not have needed to hire 10,000 people or have huge overhead operating costs, while they would still get much of the traffic and advertisement revenue they do now.

    I think it's their greed that got them into the current mess. Low overhead high traffic sites is the way it should to go. How long would "Slashdot free internet" service last i wonder? Stick to what you know.

  • This article [salon.com] in Salon [salon.com] gives some pretty good rebuttals to the recent "Yahoo" bashing.

    For example, Yahoo does turn a profit(unlike most online ventures), and remember - all those nay-sayers are the same analysts who steered you wrong a year ago.

    -wetwire
  • That Yahoo stock IPO'd at 13 bucks and has split four times since then. At $16 today, it's still worth about 16 times the IPO price. If his bank wanted to sell the stock sooner, December 1999 would've been a good time for it, when the stock was over 100 times the IPO price. The only thing I'm not understanding is why the original poster is actually sounding proud about his bank's horrible, horrible decision.


    Cheers,

  • With $1.7 billiion in the bank, they're hardly "out of money". And I'm guessing that when you talk about 4-5 people "writing Yahoo" you're probably thinking about their directory (http://www.yahoo.com/) and neglecting the nearly 100 other properties they operate, including their finance, personals, sports, and news sites, which are consistently best-in-class (though, unfortunately, not adequately monetized).
  • First: advertising is plain useless, unless it's for things that are actually worth buying. Even then, mostly people ignore it. There is no way around that - becoming more obnoxious just annoys the customers. This is especially true where competitors and comparison sites are only a click away. Most advertising is for cruft; therefore most advertisers will run out of money. As will anyone who leans on them to pay the bills.

    Second: these portal sites try to be the middle men of the internet. Duh? Come again? The one medium where you don't need a middleman, and someone thinks you can make money off that?

    Third: yes, you can get stupid users to browse from and around one site. Perhaps, you can shift them off MSN, AOL, and Netscape automatic home pages. But you can't make money off them - stupid people don't get rich.

    Fourth: give away the razors, give away the blades, and what were you planning on making money from? Adverts on the packets?

    Fifth: production costs for information providers on the internet are higher. You've got the whole damn world to stay current with, and people will dump you without mercy if you don't keep up. Keep up meaning: if they can click to your competitor and read a thirty minutes newer story, you're toast.
  • I think the biggest problem with something like Yahoo is that its not tied to an ISP service. Anyone here actually USED AOL. It's very portal like, except better managed and easier to follow than Yahoo. AOL gets money from profitable websites for linking to them on thier "front page". Everytime someone logs into AOL, there it is. It's to the point now that many people think AOL IS the internet. Yahoo has no such advantage. I think eventually, the "portals" will be swallowed up by big ISPs to provide a "service" to their customers.
  • I think web-based mail, IM, chatting, bookmarks, aggregation/summarization, and specialized web publishing like photos should really be provided by the ISP you already pay for, in addition to their current services. In fact, ISPs are trying. To make this more attractive, they need to become interoperable.

    But I think there is a reasonable chance that Yahoo! may be able to charge for their services as an "ISP add-on". However, for that to be really attractive, they have to revamp their site to be less advertising oriented and even more oriented to satisfying exactly and only the needs of their (then) paying customers.

  • I think anyone who uses the web frequently enough knows that banner ads are a joke, and meant to be ignored. So, we continue to ignore them until the company that uses them as income starts to choke. What do we do next? Just jump to the next best company that isn't choking... yet.

    Sadly, this will continue until the Internet community realizes it cannot jump around to 'the next newest site' forever, since the service has begun to degrade to the point of uselessness... When that day comes, people will be more open to the idea of paying a few bucks a year to keep some 'core' Internet sites (like Yahoo!, CNN, CNet, NYTimes, Slashdot, etc..) open.

    Of course, the challenge will be to have people voluntarily pay, so that everyone can view it for free. (after all, we're looking for educational/informational access to the masses).

    Inevitable, I suppose, but when I think of local public broadcasting stations and their endless fund-raiser drives, it does make me cringe...
  • If they stayed in the web directory business which started them off (and which is something they are good at) they may not have needed to hire 10,000 people or have huge overhead operating costs, while they would still get much of the traffic and advertisement revenue they do now.

    Rubbish. Yahoo wouldn't have a fraction of the traffic it has now if it stuck solely to the web directory business.

    How many people who use Yahoo use it solely for its directory/search service?

    But don't take my word for it. Look at the media metrix rankings [mediametrix.com]. The top web sites are portals. How many pure search engines are there on the list?

  • OTOH, the money they pay is _our_ money.
    The hard-discount shops base most of their business on selling products which carry little or no ads-induced overprice. And it works - up to a point.

    IMO ads are important when you launch a new product (truly new, not like 'our new soap formula will make your linen ever whiter'). Once you have your customer base, they becomes only a reminder, for not loosing customers on new alternative products. But too much reminding can be annoying and it can generates the opposite effect (speaking for myself, there are many products I don't buy because of obnoxious and annoying ads everywhere ).

  • The problem with portals is that a long time ago, someone, somewhere, said, "Hey, this new Portals thing is The Wave Of The Future! You'll make money hand over fist, and make it almost completely automated! A few Perl scripts and a static IP address, and you've got a money machine in your basement..."

    Now there are a jillion useless portals, centered not around useful information or services, but Eyeballs (that magic number that brings in money) and Content (that junk you put between the ads to get the Eyeballs). To maximize the income per Eyeball, too many portals consist of nothing but useless paid-placement links...and find out that people tend not to stick around for that crap. Leading, of course, to mousetrapping (a.k.a. "circle-jerking"), home page hijacking [cexx.org], and the ever-popular "Browser Enhancement" [cexx.org] that will change your homepage, Search, email signature, etc., and prevent you from changing it back.

    It's a shame that the more 'upstanding' portals had to be hit by the portal-potty-itis aftershocks...
    --

  • Largo says:

    Portal sites, I don't believe there is any future in a portal site concept, people do not go to a website because it is part of a network of non-related sites, the idea that you can cross-market a webcomic with the selling of a vacuum cleaner is not going to cut it.

    Isn't this a bit like suggesting supermarkets couldn't succeed because people wouldn't want to buy meat, vegetables, and magazines from the same place?

  • I think it's relatively safe to say that even today it's not necessarily for popular portals (ala Yahoo!) to actively seek out links to add to their directory. It's all incoming. Moreover, they have complete editorial control and hand-pick which get in and which do not.

    Given the exponentionally growing amount of data out there.. Popular portals have a signifigant amount of power over what gets seen and what does not. Granted, people will currently still fall back on search engines if a directory or portal doesn't give them what they need, but the portal usually comes first.

    Now. Is it crazy to believe that some day portals might use this power as a cash-making-scheme? A scenario where you can wait forever to get editorial review or you can pay up front and be guaranteed an immiedate spot on the portal. (Where depends on how much..) This way portals still offer links to quality content (editorial poriton), but still rake in the cash from people who don't quality content but still want to be seen.

    If enough advancement of information glut takes place, space on a popular portal could be almost as valuable as air time on primetime network TV.

    --Sven
  • Certainly Yahoo today is not worth 10 billion dollars, and was never worth 150. Yet when compared to how Amazon and most of the rest of the web industry is doing, isn't Yahoo's profitable status proof enough that people visit portals, and that ad revenue when mixed with online sales can be sufficient to fund a portal? For all the doom and gloom around them the fact that they are breaking even is amazing, and should be applauded.

    Besides, no one here was foolish enough to believe a portal could be worth 150 billion dollars, right?
  • The people who made these dot.coms were for the mostpart tricksters and conmen[...]

    Don't attribute to malice what can easily be blamed on stupidity.


    --
  • I don't doubt that they do an excellent job of providing these additional services. I just think that Yahoo should have remained in the web-directory business, and then if they wanted to do a classifieds site, they should have made that a separate venture.

    A directory site requires little in the way of backend programming/resources. Or at least less than a classifieds engine. But because they're both "Yahoo", people expect the same pay structure - free.

    So they have put themselves in a position where they have all these (arguably excellent) additions to their core service, but which can no longer be supported by the pure banners because of their increased overhead costs. And noone is ever going to pay for anything with the Yahoo brand, simply because it would seem like a rip off. After all, we're used to Yahoo being all about free goodies.

  • No, the original poster has a point, one which you have chosen to distort. The point is that people are likelier to care about links on pages they've chosen than they are on default pages. I don't know if it's true, but it's certainly plausible, which is better than I can say for your reasoning. The original poster made a testable assertion; there's nothing testable or interesting in your post.

    --
  • This is exactly what I mean when I say "kill all pundits" (not physical death, mind you, just an end to the punditry):
    We have put such a huge value on being "visionary" that everyone wants to be the first on their block to declare "the death of XXX", because with enough pundits and enough instances of XXX, *someone* is bound to be right and look brilliant. Plus, enough doomsayers create a self-fufilling prophecy. If enough people keep shouting that the current business models will never work, people will stop supporting them and Viola, they don't work!

    Now:
    You can say Yahoo has a P/E ratio of whatever, but they're much better than most web properties who have a P/E ratio of undefined, because they have no E!
    And by the way, I don't know when you bought your stock, but you must be pretty damn lucky if selling now is going to make you any kind of money. I think it's safe to say that Yahoo's stock will rise eventually, that's the way real investors play the market. Day-traders can die along with the pundits.

    Click-throughs: are not how ads worked before the net, and it may or may not work. You can't click-through billboards or radio-ads (though interactive TV is coming...), but yet advertisers still plunk down the money. Why?
    I'll leave you to ponder that one...

    As for the "503 errors", well, the infrastructure is still going into place. See akamai, et. al. The "Slashdot Effect" is not a major problem for most commercial sites now.

    To conclude: You bastards would have dismissed Television before the 1930s were up, wouldn't you?
    The web is what, 7 years old, commercially speaking. "ad-tracking, targeting and reporting software" is still not widespread, and has only been around for a few years.
    Take a chill pill already!

  • I'm pretty sure that Amazon's ever-increasing girth is due to the fact that they're

    a) trying to make a profit, and do it through volume
    b) trying to grow as fast as possible so as to keep out competition. If they didn't sell garden stuff, someone else would.

    Amazon is trying to create the infrastructure to become the online version of Target and the other large, general purpose stores.

  • Yep, advertising doesn't work. That's why companies spend millions and millions on it.
    ---
  • by revbob ( 155074 ) on Monday March 12, 2001 @10:39AM (#368956) Homepage Journal
    The closing paragraph in the article is revelatory:

    "At some point, if content on the Internet isn't worth paying for," Mr. Kenney said, "it is going to have trouble surviving."

    I just adore this point of view, and encourage Mr. Kenney and his ilk to get out now, while the getting's good. Don't let the door....

    Eva Schindler-Rainman, one of the people I admire inordinately for her work on voluntarism, and who I got to meet, said "if you need money, money is always available. Worry about making a good case, and you can find the money."

    Maybe some of today's ad-subsidized websites will be tomorrow's foundation-subsidized websites. Maybe there'll be government grants (I'm surprised the UK hasn't already gone for this) that reward people for putting up information and supporting dialogue.

    And while there are funding sources that love to do pilot projects and move on, other sources (a bit harder to find, but they're there) are interested in sustaining existing efforts past the pilot project stage.

    People think that an order of magnitude decrease in the cash that's going into the net would be disastrous. I think that's nonsense. If we don't have Wal-Mart on the Web any more, exactly what do we lose?

  • "You've obviously never been to a warez site."

    Whether I have been to one or not is irrelevant. It's whether most users do. Most users do not get their apps from warez sites, particularly business users wary of getting sued. They may copy, and use the same license on several machines, but warez is for hackers and gamers, not for Joan Q. Public.

  • Thanks, Rain, for the sanity check.

    I wasn't making excuses for the fact that Yahoo is "losing", I was merely qustioning the methods we use to evaluate "win" or "loss".

    The style of Yahoo's main page could be positive or negative, I wasn't speculating initially. However if you compare the 3 portals we were discussing, MSN.com seems to be devoted to media, netscape.com seems to be devoted to news, and Yahoo.com still features its search engine and web directory, which is what it has been doing all along.

    There comes my questioning of the term "portal"--we have three sites with diverse content, yet we lump them under the same category.
    Are there enough similarities, or are we comparing apples to oranges?

  • But Yahoo doesn't have a lock on Web users the way Microsoft does with Office for desktop users. You can't just click a link to use Word Perfect rather than Word. But you certainly can leave Yahoo to use another site.

    Actually, Yahoo's abundance of well integrated features is one of the reasons cited for their trouble with online advertising. People do everything at their site, and don't bother clicking any of the banners.

    <RANT>I, for one, like integration, as long as it I'm not pressured into it, and don't have to use it. Get this... I like it when the site remembers who I am and acts accordingly. I add my work office to my address book, and it carries over into the Yellow Pages. If I want to look up the closest Chinese place next to the office, I don't have to type in the address again. And believe me, I'm very much a privacy freak. I would probably stand out even in the Slashdot crowd. I'd rather have one company know the info instead of twenty.</RANT>

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  • by azephrahel ( 193559 ) on Monday March 12, 2001 @08:46AM (#368966)
    Net savvy users just don't use many portals. Right now the only thing that portals offer most users is e-mail. Chat rooms, news services and search engines? There are many better places than yahoo.com and the like, to get these things.

    The real reason portal sites die, is that there useless. Everyone loves simple specific information and news pages, lets say a page on electric cars. However when a portal gobbles it up for their, "electric car", section, they break everything to make it fit into their own arcatexture, and in the end aliante their origonal audience by being overbearing, and often demanding a login to use.

    The worst part is portals keep on gobbling up smaller services. Geocities used to have a pretty good free webhosting service, then yahoo gobbled it up. Hotmail was the defacto web based e-mail page. Untill MSN gobbled it up (and unsucsessfully tried to move it over to NT i might add). Now? Hotmail is crap. Yahoo's e-mail service, and even the home grown web-mail services many universities offer their students, beat it out hands down. Why did it happen? Because MSN demanded that hotmail fit into their own portal structure, and work with every little trinket and gadget built into their portal.

    Lets face it, net savy users use very little to none of a portals services, because thats the only part of them that are ever good.

  • by wunderhorn1 ( 114559 ) on Monday March 12, 2001 @08:47AM (#368968)

    In January, Yahoo slipped from second to third in the monthly ratings by Media Metrix, a research concern that tracks the popularity of Web sites in the United States, behind AOL Time Warner and Microsoft's MSN.

    However, both these companies have the advantage of owning the top two browsers, which when loaded default to the respective companies' portals.
    Yahoo has no such way to leverage its content into people's browsers. Thus, I would say that Yahoo is still winning, based on the fact that everyone that sees the front page actually wants to be there.
    Also, when you look at different portals (how the hell do you define "portal", anyway?), Yahoo is the only one that still focuses it "main page" on the search engine.

  • by Infonaut ( 96956 ) <infonaut@gmail.com> on Monday March 12, 2001 @09:11AM (#368969) Homepage Journal
    Microsoft can write bloated code and include more features in an app like Office than anyone will ever use, because they have a deathgrip of the office app market.

    Yahoo and other portals have tried to follow suit, doing all things for all potential users, and in the process spending lavisly to acquire niche competitors.

    But Yahoo doesn't have a lock on Web users the way Microsoft does with Office for desktop users. You can't just click a link to use Word Perfect rather than Word. But you certainly can leave Yahoo to use another site.

    Sites that stay focused on what they do well tend to survive. It's the UNIX mantra - small, sharp tools that get the job done. I was a religious eGroups user until they got swallowed by Yahoo. Now the interface sucks and I'll probably start looking for a replacement.

    Portals by definition are not lean and mean. You might even say that they are counter to the spirit of the Web. Things are *supposed* to be distributed, and users of the Web understand this better than all the industry pundits. They also have shown again and again that brand loyalty on the Web doesn't amount to squat.

  • I like their classifieds. I'm looking for a cabriolet/convertible of a particular make and being able to search through hundreds of ads for my state/area is invaluable. Cars.com just doesn't cut it and their java thing has bugs. Don't need java for something like this, just plain and simple, the way Yahoo has it implemented works great.

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  • by Odinson ( 4523 ) on Monday March 12, 2001 @10:41AM (#368975) Homepage Journal
    Hello

    Allow me to quote...

    "A banner is nothing more than a highway billboard, a reminder message," said Richard V. Hopple, a former ad agency executive and now chief executive of Unicast, an advertising technology firm. "We know what outdoor is worth ? $2 per thousand."

    Has anyone noticed the context of web ads suck? When I read an interesting/daring/important article/story I try to click on the banner add to make the author some money. Somtimes, even though the article is blatently for geeky type people the add is for somthing totally uninteresting to geeks. To examine the opposing situation, has anyone noticed the coolness of the ThinkGeek Ads here?

    So what is the going rate for banner adds? And how much is context taken into account. It seems to me Ebay will get more clicks because people there are in the mood to shop. People at Yahoo are their to check their stock or the game or the weather, not to buy a couch.

    It's gotta be more than 2 dollars per thousand, but how much more?

  • The common thread I keep seeing lately is that the Web economy was built on nutty ideas. Consider that traditional print advertising was sold on the basis of $X for Y inches of ad space. The X was largely dependent on the volume and demographic of the circulation. Broadcast ads were on basically the same system.

    Along came the Internet, and a bunch of people (geeks like us) who weren't familiar with the adverstising world started trying to sell ads. Since they didn't know the ropes they accepted crazy deals that were based on the number of responses to the ads. The economics of that scheme are almost equivalent to taking a piece of the net profit on a movie (never do that). This was a terrific deal for the advertisers. Really sucked for the ad space providers.

    Now, wonder of wonders, the people who sold ads based on impressions or click-throughs are getting zero bucks while the advertisers get exactly the same value they always got from print or broadcast ads. Every time the banners come up they are putting their brand in front of a consumer although they almost never have to pay.

    Next time we geeks decide to create a new business world we should probably hire some marketdroids up front to protect us from ourselves.

  • The real reason portal sites die, is that there useless.
    I think the fundamental problem for portal sites is that they try to be all things to everyone and that's simply not possible. If I want to search I go to Google [google.com]. If I want news I come here, or if I want something more general I go to NewsHub [newshub.com]. If I want stock quotes I go to Nasdaq [nasdaq.com]. I don't understand why portal operators think I would want it all on one page.

    ... arcatexture ...
    That's got to be the most impressive misspelling of architecture that I've ever seen.
  • It always seems that easy. And, of course, one of the greatest things about the internet is that at bottom it is ip, tcp and http...or about a quarters worth of study at community college.

    But then, of course there is Murphy's Law...hardware breaks, constantly debugging scripts, adding new pages, crazy Discordian programmers smoking weed in the bathrooms, climate controlled server rooms, bandwidth, advertising departments. Stuff gets complicated like that.

    Maybe if instead of being ran by a central source, the de facto web directory was just run by a diffuse organization connecting one page to another, then it would take little money and few employees to link the web together, but then "coonecting one page to another" is kind of what the web is about anyway, right?

  • by GrievousAngel ( 220826 ) on Monday March 12, 2001 @08:50AM (#368989) Homepage
    Everyone now seems to be coming to the realization that banner ads simply don't work. Well, that's probably true. From personal experience I know I never click on them. Nor, however, to I pay any attention to ads on the sides of buses, the roofs of taxicabs, or on the sides of buildings here in New York City.

    Do these banner ads _really_ have smaller return on investment than many forms of "conventional" advertising, or is it simply that their ROI is easier to measure in the internet world?

  • Remember when Amazon was JUST a online book store? Now what does it sell? Toys, DVDs, lawn furniture, cooking stuff, music cds, cell phones, electronics, games, cars and God knows what else. I seriously doubt the Car department of Amazon is very profittable, or the lawn furniture one either. Maybe their problem is they are trying to be the uber-end-all-do-all-sell-everything online store. Perhaps they've become too broad for their own good What does this have to do with Yahoo? Well, remember what Yaho did in the beginning? It was a search engine. Now it's a chat service, email service, new service, personals listing, an instand messaging program, weather forecasting, auctioning, and God knows what else site. the problem is that yahoo makes a lot of revenue from advertising, but, ads to be sucessful need to target an audiance. Yahoo is trying to attract EVERYONE, therefore targetted ads are near not as effective. Perhaps Yahoo's biggest mistake was trying to be the uber-end-all-do-all-everything-is-here website they are trying to be today... -Henry
  • You raise a good point. Ideally, MediaMetrix would be able to distinguish these "default" home pages accesses from "accesses of choice."

    I wonder what audience reach numbers would look like if you limited the sample to users who typed, clicked, or chose a bookmark to get to a portal.

  • Net savvy users are building their own portals [katchomko.com]. Which means the portals out there have to duke it out over the people who don't understand what a start page is, let alone how to change it. The whole fallacy of eyeballs=dollars is, IMHO, the most celebrated casualty of the dot.boom. All the visitors in the world only means that you need to build capacity into your system. As a simple analogy, a brick store can have fantastic location and a huge selection, but if their customers only wander around, they're not making any money. They're just wasting space on big aisles.

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