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Thursday, April 19, 2001 By David Radin
It may have been one of the quickest turnarounds on record. At the beginning of last week, Yahoo! announced that it was going to put together a special effort to sell "adult" material. Read that -- business is bad; smut sells well; we'll sell smut to make more money.
Bad move. Some parts of the public thought that Yahoo! was about to bring down the net by selling pornography -- putting our children at risk. So there was the usual outcry that accompanies such announcements. By the end of the week, Yahoo! had announced that it would remove adult-related merchandise.
Would it surprise you that Yahoo! has been offering adult-related merchandise for years? It would surprise most of us because the company has done such a good job of keeping it fenced off -- where it won't offend the masses. It's probably been a good seller at Yahoo! -- in their classifieds, auctions and shopping areas. Plus, Yahoo! has in the past accepted adult-related advertising but has relegated it to areas in which it deemed it appropriate. So now all that stuff has to go.
As a parent, I'm concerned that my children can be exposed to objectionable material on the Net. But my wife and I try to keep careful tabs on our children's use of the Net. And to my knowledge they have never been exposed to porn via Yahoo!. For that matter, I don't remember ever seeing an adult-related ad there. So I guess Yahoo! has been doing a pretty good job keeping it from the masses. However, this latest announcement to remove all vestiges of adult material is overreaction by the company. After all, the public didn't seem to care until the company announced that it would take fuller advantage of adult items. If Yahoo! hadn't made the first announcement, they'd probably be providing a marketplace for the stuff for another century.
But these are hard times for Internet companies and executives. And in hard times, people do stupid things that they wouldn't ordinarily do when things are not so rough. Yahoo!'s earnings are down. Ad revenue is sinking. Dot.coms are dropping off left and right. And the company's stock is down dramatically, reflecting the new, less optimistic view of investors. So Yahoo!'s executives decided to try to buoy their business model by going further into porn. Dumb move! It's one of those moves that the executives probably would not have considered when times were better. In a more heady business environment, the company would have continued to let its vendors and customers sell and trade adult materials without restraints, while the company put its formal emphasis on more dignified businesses. Now they lose an entire revenue stream forced by public reaction to their ill-conceived announcement.
Have a question for David Radin? Contact him at his Web site
In a harsh business environment, it's often tough to tell whether a decision is good or bad. Yahoo! is in the enviable position of being an industry leader with significant resources. Other companies aren't so lucky. Sometimes they make their decisions simply to survive. In essence, they're choosing the best of several options -- even though none of the options are good. This makes management look stupid because the decisions look stupid even when they're smart.
In this case, Yahoo! created its own problem with an ill-advised business tactic and announcement. But the executives acted swiftly to mitigate the damages of their decision.
Expect more stupid-looking moves as both naive and savvy executives throughout the industry try to cope with a recession-like environment. The savvy execs will react quickly and with precision when mistakes are made. The rest will provoke further wrath from the market.
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