Buzzword alert: De-portalization

Interesting post by Keith Teare on the how the Internet is moving away from mammoth, centralized portals. Traffic, he said, is moving out toward the edges of the network, flattening out as users move from habituating portals like Yahoo to a more distributed network of content and services. Keith has an agenda--his company, Edgeio (which he co-founded with TechCrunch's Mike Arrington), is built on the premise of organizing and distributing listings at the edge of the network.

Keith lists ten things to watch in the face of "de-portalization," suggesting that major destination sites should get off their mountain tops and find a way to prosper in the foothills, the vast edges of the Internet. Among the ten things Keith listed was the notion that "the dollar value of the traffic that is in the foothills will be (already is) vastly more than a generic ad platform like Google Adsense or Yahoo’s Panama can realize. Techcrunch ($180,000 last month according to the SF Chronicle) is an example of how much more money a publisher who sells advertising and listings to target advertisers can make than when in the hands of an advertiser focused middleman like Google." He concluded that the smartest companies will "(a) help content find traffic by enabling its distribution. (b) help users find content that is widely dispersed by providing great search (c) help the publishers in the rising foothills maximize the value of their publications."

I don't disagree with Keith's general premise--that lots of action exists in the foothills, the bushy tail of the Internet, but nor are mega-portals going away. Specific brands will rise and fall and the mountains owned an operated by the likes of Yahoo, Google, Microsoft, MySpace (News Corp), etc. will scale up and down depending on various market conditions and strategic moves. For example, if Yahoo buys Facebook, it's mountain potential scales up, and by opening up its technology platform, the foothills also grow. The mega-portals with ad platforms can also scrape very efficiently vast sums of money from the foothills. And, the vast majority of Web users are attracted to clean, well-lighted portals, like malls, even if they are walled gardens and not as innovative as what is emerging in the foothills.

Fred Wilson addresses Yahoo's current dilemma, exemplified by its latest reorganization, and de-portalization in a post, The De-Portalization of the Internet (aka What I Would Do If I Were Running Yahoo!):

So if you buy that the web has been de-portalized, what do you do if you run the largest portal in the world? I think its pretty simple actually. Yahoo! needs to offer its users and customers (advertisers) the ability to get the same experience they get on Yahoo! all over the web. They need to stop thinking about keeping their audience on Yahoo.com and start thinking about serving their audience wherever they are on the web. They need to stop thinking about selling ads on Yahoo.com and start thinking about selling ads all over the web.

Fred has several suggestions for Yahoo, including improving search; building properties outside of the Yahoo portal, such as Mixd; get the Yahoo Publisher Network in high gear; and allowing advertisers to reach users when they are not perusing Yahoo properties.