Yahoo Dirt

Yahoo Dirt

Yahoo Dirt

Moneybox
Commentary about business and finance.
April 12 2001 11:30 PM

Yahoo Dirt

A comparatively minor, but still entertaining, sideshow to Yahoo's earnings announcement yesterday was the reaction to an earlier report in the Los Angeles Times that Yahoo has "jumped into bed with the adult entertainment industry" by way of an "adult and erotica" section in its DVD/video shopping area.

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Does it matter? The Wall Street Journal's Yahoo earnings story today suggests the answer in this interestingly worded sentence: "Some analysts suggested that wide discussion of the store's existence could tarnish the company's vaunted 'family friendly' image."

Like most heavy Internet users, I use Yahoo content and services all the time, and it had never occurred to me to think of the company's image as "family friendly," but put that aside. What matters is not whether Yahoo takes a cut from the sales of adult videos bought from e-tailers linked to Yahoo's shopping section. What matters is whether this fact becomes the subject of "wide discussion." This is why Yahoo's response was a classic move from the PR handbook: The company offered no particular rationale or explanation; it simply shrugged that adult content had been available for sale via Yahoo for two years. This is the "old news" defense: Avoid any right-or-wrong debates and just hope that the story will fade away.

There's a pretty good chance this will work. Various Yahoo competitors have taken advantage of the opportunity to assert that they would never stoop to peddling porn, lending credence to the spin that Yahoo's move is unique among big Internet companies. On the other hand, AT&T's cable arm had a brush with porno-taint last year on news of a pay-per-view relationship with a hard-core porn provider. Two points follow from that fading memory. One is that if you put Yahoo in the context of media companies, you'll find that plenty of, for instance, cable operators are pocketing bucks spent on "adult" entertainment. (The Journal last November reported that the Hot Network's offerings are available through five of the eight largest cable providers in the United States) The other is that AT&T's porn woes blew over in relatively short order.

Of course, one reason for that is that AT&T has continued to have plenty of other woes that are of far greater interest to far more shareholders. It would seem that lately the same has been true of Yahoo; after all, the thrust of its announcement yesterday was a second straight unprofitable quarter and a substantial round of layoffs. The good news is that these issues seem a bit more likely than adult DVD sales to tarnish Yahoo's brand. Or rather, maybe that's the bad news.