Will Hollywood Yahoo?

The company that has been asking the world "Do you Yahoo?" is in the throes of a strategy change. Since May, when Terry Semel joined Yahoo Inc. as its new chief executive officer after two decades running the Warner Bros. studio, the company has been repositioning itself as a full-fledged online marketing partner rather than a neutral advertising vehicle for entertainment and media companies.

The pitch: We can provide you with the Web heft and savvy that behemoths like AOL Time Warner Inc. and Microsoft Corp. get from their own giant online networks.

Industry watchers point to several examples of the new Yahoo. The Sunnyvale, Calif., company's broad-ranging pact with Sony Corp. for a joint Web destination is one. Online marketing campaigns for Walt Disney Co.'s "Pearl Harbor" and other films are another, officials say. And rather than just posting banner ads for summer blockbusters, Yahoo is offering Hollywood everything from research drawn from its huge audience to Web-building services that can provide a broad online identity for a film or TV show.

The marketing deals fit in with another Yahoo goal: building up its own entertainment offerings, eventually into paid services. The company expects to roll out audio and video subscription services around the end of the year, says David Mandelbrot, Yahoo's vice president and general manager of entertainment.

Toward that end, Yahoo has already bought Launch Media Inc., a music site based in Santa Monica, Calif., that claims to have the largest collection of music videos on the Web. Launch will retain its own sales staff and its own brand--a definite change for Yahoo, which has tended to absorb acquired units into its Silicon Valley headquarters and culture. "If you're going to be in the music space, and be a media company focused on music, you need to be in one of the media capitals, Los Angeles or New York," says Launch chief executive Dave Goldberg.

Mandelbrot declines to detail the content of Yahoo's planned subscription services but says the company is talking to producers of past television shows that haven't been syndicated, among others. And Yahoo has signaled that its new direction in entertainment is likely just the first sign of what it plans to do in other areas, including finance, communications and sports.

Will users pay?
Analysts are divided on the changing direction of Yahoo, which last month reported a second-quarter loss of $48.5 million. Some applaud the new approach, noting that the company doesn't itself produce content so needs to hook up with those who do. Others question whether this strategy will pay off monetarily in the short term, or ever. Even if Yahoo signs up partners and delivers great new content, few Internet companies have succeeded in getting people to subscribe. SG Cowen analyst Scott Reamer says he will be surprised if more than 5 percent to 10 percent of Yahoo's users will pay for content.

Finding content providers wouldn't seem to be a problem. Vivendi Universal SA Chairman Jean-Marie Messier, for one, has spoken of his desire for a "close and beneficial" partnership between his company and Semel's, one that would encompass movies and other properties. It has already been decided that Yahoo will carry pressplay, the music service of Sony and Vivendi Universal, helping to balance rival MusicNet's position on AOL.

Yahoo acknowledges that the growing power of AOL Time Warner and Microsoft has played to its advantage. "The AOL Time Warner merger has been a big benefit to us," Mandelbrot says. "One of the concerns [of content companies] is Time Warner will have guaranteed distribution on the AOL network." Likewise, he says, content companies worried about Microsoft's control of the personal computer are looking to level the playing field "so Microsoft isn't the sole arbiter of what people are watching or listening to."

Mandelbrot now travels down to Los Angeles every other week to meet with entertainment executives. As a result, he says, "more entertainment companies are coming to Yahoo to make sure their content is distributed" before Yahoo's audience of 200 million, he said. "We've become more of a marketing partner rather than a company that takes dollars for our advertising."

To emphasize the company's commitment to building relationships, Semel and co-founder Jerry Yang, along with others, have hit the road, say technology and media executives who have met with them. Howard Stringer, Sony's chief executive officer in the U.S., credits Semel with helping the companies strike a deal, after two years of talks. "Terry picked up those conversations and reached a conclusion," Stringer said last month.

Entertainment marketing
Yahoo also is selling its integrated marketing programs more aggressively to entertainment companies. For instance, to promote movies, Yahoo now posts show times, local movie venues and advertisements. It also runs video or animated commercials on its games site and annotates its users' Web calendars with the date of a movie opening--Disney's "Pearl Harbor," being one example.

Yahoo plans to start selling movie tickets online later this quarter to prove to entertainment partners that "advertising online is the reason butts are landing in seats," Mandelbrot says.

On the music front, Yahoo started a new "Artist of the Month" area in May. The alternative-rock band Radiohead was featured in June. The company worked with EMI Group PLC's Capitol Records to craft a package that promoted the band across many of the portal's properties. Yahoo broadcast Radiohead's "Amnesiac" album and several of its videos on the Web. It promoted the band in its broadcast area and ran a charity sale of Radiohead concert tickets in its auctions area.

The marketing "has definitely been much more integrated," says Robin Bechtel, head of new media for Capitol Records. "It's not just being promoted on the music page."

The company that has been asking the world "Do you Yahoo?" is in the throes of a strategy change. Since May, when Terry Semel joined Yahoo Inc. as its new chief executive officer after two decades running the Warner Bros. studio, the company has been repositioning itself as a full-fledged online marketing partner rather than a neutral advertising vehicle for entertainment and media companies.

The pitch: We can provide you with the Web heft and savvy that behemoths like AOL Time Warner Inc. and Microsoft Corp. get from their own giant online networks.

Industry watchers point to several examples of the new Yahoo. The Sunnyvale, Calif., company's broad-ranging pact with Sony Corp. for a joint Web destination is one. Online marketing campaigns for Walt Disney Co.'s "Pearl Harbor" and other films are another, officials say. And rather than just posting banner ads for summer blockbusters, Yahoo is offering Hollywood everything from research drawn from its huge audience to Web-building services that can provide a broad online identity for a film or TV show.

The marketing deals fit in with another Yahoo goal: building up its own entertainment offerings, eventually into paid services. The company expects to roll out audio and video subscription services around the end of the year, says David Mandelbrot, Yahoo's vice president and general manager of entertainment.

Toward that end, Yahoo has already bought Launch Media Inc., a music site based in Santa Monica, Calif., that claims to have the largest collection of music videos on the Web. Launch will retain its own sales staff and its own brand--a definite change for Yahoo, which has tended to absorb acquired units into its Silicon Valley headquarters and culture. "If you're going to be in the music space, and be a media company focused on music, you need to be in one of the media capitals, Los Angeles or New York," says Launch chief executive Dave Goldberg.

Mandelbrot declines to detail the content of Yahoo's planned subscription services but says the company is talking to producers of past television shows that haven't been syndicated, among others. And Yahoo has signaled that its new direction in entertainment is likely just the first sign of what it plans to do in other areas, including finance, communications and sports.

Will users pay?
Analysts are divided on the changing direction of Yahoo, which last month reported a second-quarter loss of $48.5 million. Some applaud the new approach, noting that the company doesn't itself produce content so needs to hook up with those who do. Others question whether this strategy will pay off monetarily in the short term, or ever. Even if Yahoo signs up partners and delivers great new content, few Internet companies have succeeded in getting people to subscribe. SG Cowen analyst Scott Reamer says he will be surprised if more than 5 percent to 10 percent of Yahoo's users will pay for content.

Finding content providers wouldn't seem to be a problem. Vivendi Universal SA Chairman Jean-Marie Messier, for one, has spoken of his desire for a "close and beneficial" partnership between his company and Semel's, one that would encompass movies and other properties. It has already been decided that Yahoo will carry pressplay, the music service of Sony and Vivendi Universal, helping to balance rival MusicNet's position on AOL.

Yahoo acknowledges that the growing power of AOL Time Warner and Microsoft has played to its advantage. "The AOL Time Warner merger has been a big benefit to us," Mandelbrot says. "One of the concerns [of content companies] is Time Warner will have guaranteed distribution on the AOL network." Likewise, he says, content companies worried about Microsoft's control of the personal computer are looking to level the playing field "so Microsoft isn't the sole arbiter of what people are watching or listening to."

Mandelbrot now travels down to Los Angeles every other week to meet with entertainment executives. As a result, he says, "more entertainment companies are coming to Yahoo to make sure their content is distributed" before Yahoo's audience of 200 million, he said. "We've become more of a marketing partner rather than a company that takes dollars for our advertising."

To emphasize the company's commitment to building relationships, Semel and co-founder Jerry Yang, along with others, have hit the road, say technology and media executives who have met with them. Howard Stringer, Sony's chief executive officer in the U.S., credits Semel with helping the companies strike a deal, after two years of talks. "Terry picked up those conversations and reached a conclusion," Stringer said last month.

Entertainment marketing
Yahoo also is selling its integrated marketing programs more aggressively to entertainment companies. For instance, to promote movies, Yahoo now posts show times, local movie venues and advertisements. It also runs video or animated commercials on its games site and annotates its users' Web calendars with the date of a movie opening--Disney's "Pearl Harbor," being one example.

Yahoo plans to start selling movie tickets online later this quarter to prove to entertainment partners that "advertising online is the reason butts are landing in seats," Mandelbrot says.

On the music front, Yahoo started a new "Artist of the Month" area in May. The alternative-rock band Radiohead was featured in June. The company worked with EMI Group PLC's Capitol Records to craft a package that promoted the band across many of the portal's properties. Yahoo broadcast Radiohead's "Amnesiac" album and several of its videos on the Web. It promoted the band in its broadcast area and ran a charity sale of Radiohead concert tickets in its auctions area.

The marketing "has definitely been much more integrated," says Robin Bechtel, head of new media for Capitol Records. "It's not just being promoted on the music page."