Looks like Yahoo!'s revenue strategy has been receiving some attention...(so that's what the name means!).....
sns.chicagotribune.com
From the Los Angeles Times
Yahoo! gets into porn business
By P.J. Huffstutter
Times Staff Writer
April 11 2001, 8:14 AM CDT
Yahoo Inc., struggling for profit amid a shaky dot-com marketplace, has become the first top-tier Internet company to embrace the porn industry, opening an online store stocked with thousands of hard-core DVDs and videotapes.
The marriage between porn and technology is one of the few profitable online business models, but no Internet titan has jumped into bed with the adult-entertainment industry.
Because of Yahoo's dominant online presence, the company immediately emerges as a behemoth in the online pornography business, industry experts say. An estimated 185 million people worldwide access Yahoo each month.
"In the online sex market, size does matter," said Dan Lavin, a principal with the high-tech market analysis firm International Venture Research. "There's no one bigger than Yahoo."
The push into porn is a departure for Yahoo, which has long cultivated a Main Street reputation in its bid to become the Web portal for the world. Consumers have always been able to find racy material through the company's Web directory, but Yahoo served as only a pointer -- not a promoter -- of such X-rated products.
Yahoo's decision to become porn's online middleman reflects the desperation of Internet companies to find new sources of revenue amid a slowing economy.
Yahoo officials declined to discuss the erotic-video outlet, or to say why they are expanding its offerings. The "adult and erotica" store, connected to Yahoo's main shopping channel, was quietly expanded and relaunched in recent weeks as part of a companywide effort to offset a sharp drop in advertising sales.
In a written statement issued late Tuesday, company officials said that "under stringent control, adult products have been available through Yahoo Shopping for more than two years."
Despite the potential lucre, other leading online companies are squeamish at the thought of embracing porn.
America Online does not allow sale of adult material on its service and "that is not going to change," a company official said. Amazon.com Inc. stocks "some" adult-video titles, but shoppers can locate them only by searching for specific titles, officials said.
Microsoft Corp. allows outside merchants to sell "sensual" products such as relationship books and massage oil through its eShops on the Microsoft Network. But X-rated DVDs are verboten because "we believe there's a difference between healthy sensuality ... and products that simply exploit sexuality," according to a company spokesman.
Even Blockbuster Inc., the Dallas-based video retailer, doesn't sell porn.
"We have one of the top (corporate) brands in the United States. You don't mess with that," said Karen Raskopf, senior vice president of corporate communications for Blockbuster. "This is not a morality statement. We just don't need to sell adult product to make money."
Yahoo's rush for revenue is a gamble and could easily backfire by alienating advertisers, traditionally its main source of revenue, analysts said.
"This is a company that has posted losses because ad sales are down," said Van Baker, vice president of the e-business group at research firm Dataquest. "This won't hurt them with advertisers in the young-male demographic. But to everybody else -- and certainly anyone's who's advertising to the Christian or kids market -- this is going to be shocking."
As it does with its other online stores, Yahoo will receive a percentage of each sale made in its porn store, according to merchants that are working with Yahoo.
Company officials decline to discuss revenue and profit scenarios.
In addition to the video shop, Yahoo also is building a series of customized stores for adult-entertainment production companies that are planning to use the sites to sell a variety of intimate products.
Shoppers at Yahoo's new porn store must register an e-mail address and enter a credit-card number, which is cross-checked with the issuer to verify the cardholder's age.
Once cleared, shoppers can purchase titles aimed at either straight and gay audiences and from a variety of categories: explicitly hard-core to animated features or fetish titles.
After selecting a film, shoppers can tap into Yahoo's comparison-shopping program to find the cheapest price being offered by various affiliated porn merchants.
Yahoo's online store
stocks films from 36 adult-oriented studios. The selection ranges from smaller fringe companies such as Androgeny Productions to mainstream outlets such as Hustler and Playboy.
"I'm a bit surprised that Yahoo's doing this, to be honest," said Larry Lux, president of Playboy.com, a unit of Chicago-based Playboy Enterprises. "Clearly, having a Yahoo in this space furthers the trend of mainstream acceptance of adult content."
Yahoo has long accepted banner ads for adult-oriented Web sites, and the company's prominence makes it an attractive target for adult-site operators looking to place ads to draw traffic.
Ads alone, however, are not enough to bolster the company's bottom line. Around the beginning of the year, Yahoo began charging online commerce sites a fee if they wanted to be listed in its directory. Mainstream shops pay $200. Adult-oriented sites fork out $600.
Company officials insist their new shop "is just like any other we have on our site."
But critics note that Yahoo, which is expected to report its second consecutive quarterly loss Wednesday, has not avidly promoted the porn venture.
"This is the opposite of what Yahoo is about, of chat and community and all the news you can get," said John H. Corcoran, executive director for the Internet and new media group at CIBC World Markets. "This is all about dollars."
Nobody knows exactly how many porn DVD or VHS titles were sold last year, but industry watchers peg the U.S. market at several billion dollars.
"Yahoo understands that these slopes are slippery," said CIBC's Corcoran. "They also know that sex, sports and stocks are the power of three that drove the Internet in the past. ... Yahoo can put a bit of a filter up, put their hand out and take the money."
Copyright © 2001, The Los Angeles Times |
