Inside Word: Some Advice For Yahoo And AOL As They Double Down On The News Business

The Inside Word is a weekly feature that looks at compelling industry debates and discussions unfolding on the blogs of employees at digital-media companies.
Blogger: Tim Oren
Position: Managing director, Pacifica Fund
Blog name: Tim Oren’s Due Diligence: Letters From An Inhabited Dataspace
Backstory: Oren is a co-founder of Silicon Valley VC firm Pacifica Fund, which makes early-stage investments in information technology, energy and materials companies. He has also worked as the general manager of CompuServe’s internet division and at Apple (NSDQ: AAPL), where he led some of the company’s early forays in multimedia. He blogs on various interests, including occasionally the media business.
Blog post: In a recent blog post, Oren notes that both Yahoo (NSDQ: YHOO) and AOL (NYSE: TWX) are repositioning themselves as media companies, complete with staffs of reporters, many of them trained at old-line news organizations. He says that in some ways the strategy is smart since traditional print competition is now so weak: “They are going up against an industry whose print business lies in financial ruins, that is getting ready to drive away its internet readers with pay walls, and indulging in delusions that some form of DRM wrapper will let it start charging for goods that are no longer scarce.”
But Oren also questions whether both companies can succeed using traditional reporters. He says that traditional outlets have declined in part because of a lack of research and knowledge among beat reporters, along with sloppy editing. “AOL and Yahoo both propose to take on large numbers of employees and stringers who have grown up in that environment. Some number of them are on the streets because they and their organizations ceased adding value; their new employers are going to have to figure out how to organize and manage them so they don’t end up with similar product.”
Post-script: What does he suggest they do? Oren shared with us several directives that managers at AOL and Yahoo should make to their staffs. Among them he says managers need to insist that reporters have a deep understanding of the areas they cover. “Before the net, it was fairly easy for those in a complex professional domain to say ‘Well, this is hard, and you can’t expect too much’ without making the jump to question the media’s expertise and reliability more broadly. The Web in general and blogging in particular blew that up. Real practitioners across the spectrum from law to genetics to criminology to the military to whatever niche can have their own voices if they want to blow off steam or get their messages out unadulterated.
Both expert writers and committed readers are out there, and can now meet up. The comparison with the pablum handed out by the MSM has been stark. That’s the competition that has to be beat or co-opted to have any hope of extracting revenue, now that distribution control has been destroyed. Can’t be done without knowing the beat, because the purely process part of reporting is being incrementally replaced by Google (NSDQ: GOOG), RSS, Twitter — and that will only get worse as time goes on.”
Oren elaborates in a follow up post he wrote after our query.
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