Yahoo! released decent earnings but guided revenue forecasts lower. The fixation of the markets on the death of dot com advertising should abate later in the year, both as this advertising changes shape and/or rebounds, and as companies like Yahoo! proceed with plans to increase the percentage of revenues which are "fee-based." One bold analyst offered a view that fee-based revenues will account for 20-25% of Yahoo!'s overall revenue within a year (or was it two?).

It will be interesting to see how far Yahoo! goes with its Corporate Yahoo! initiative. This week, they announced an upgrade to its Yahoo! Portal Builder and several new corporate customers including McDonald's. Deriving revenue from high-end services, if you can do it ($50,000+ at a time plus ongoing maintenance), seems a lot easier than trying to eke out half a cent every time you force surfers to look ad a big ad banner they don't want to see. At the same time, Yahoo! is muscling in on others' territory, so they had better come well-armed.

As for charging ordinary users fees: Yahoo! can and probably should, in addition to offering a myriad of specific fee-based services, bundle up a bunch of premium services (some of which may not yet be available) and sell them on a subscription basis (as Premium Yahoo!) while keeping Free Yahoo! around more or less untouched. But they may pursue an a la carte approach instead.

So what about the lowly customer in the wake of ongoing industry consolidation and restructuring of business models? Fee-supported or ad-supported, do these portal services actually offer something to us? Is one better than the other? It used to be the case, when there were twelve viable portal competitors, that products like web-based email or calendars were pretty much the same from one portal to another. That's definitely no longer the case. How, one wonders, can anyone take Lycos seriously as a portal company when its email is so lame when compared with the leaders, Yahoo! Mail and MSN Hotmail? The demands of customers do change as they become more comfortable with operating in an online environment, and only those who can work steadily on product improvement (and Lycos does in SOME areas) can stay fresh and interesting. Let's put it this way: when you want to search for something, do you type www.hotbot.com into your browser? How about www.excite.com? Didn't think so. That's what happens when formerly vibrant technologies are set adrift.

This does leave one wondering about a portal like iWon, which has cleverly outsourced the development of various aspects of its portal and garnered a big following by giving away millions of dollars. Yet the giveaways and the TV advertising are a cost to parent company CBS. Eventually there is going to have to be a return on the investment, no matter how you do or don't account for it. I don't see iWon maintaining its momentum. I don't believe that long-term, users will stick with a "reasonable facsimile of a portal" just because they give away money. That would be like driving a golf cart instead of a car because the golf cart maker gives away money.

Even more so than iWon, I am sceptical about the viability of NBC Internet. The case for NBCi is that putting together Xoom, Snap, and so forth allowed them to "leverage the NBC brand.". But leverage it for what? Snap and Xoom actually had rapid growth and a certain cachet amongst their online user bases. NBC has a peacock. Don't most people just enjoy their favorite TV shows irrespective of which major network is airing them, anyway?

Remember also that Disney all but gave up on their Go.com portal (they aren't admitting it, of course), and went back to emphasizing the strengths of its existing brand names like ESPN(.com), ABCnews(.com), etc. I've actually bookmarked parts of the ESPN site. However, I can't really think of a reason to type http://www.go.com. Maybe it's just the generic-sounding name that bugs me. Yes, it's been explained to me that Go.com is now a premier entertainment-oriented portal. It's just that after slaving in front of a hot computer all day, my primary entertainment-oriented portal is operated with languid clicks of a device called the "remote." This "high bandwidth research" requires little patience or effort, and the results are conveniently displayed on a nice BIG screen. This is referred to as "channel surfing."

For awhile, conglomerates will no doubt continue to use their heavyweight marketing capability to "drive traffic to the Go.com portal," and so forth, but where it will all lead is a mystery. Driving traffic through the real life Disneyland is probably much more of a business. Have you seen how much they charge families to get into these theme parks nowadays?

Maybe the point here is that the extent of the "portal shakeout" should not be underestimated. Some of the also-ran portal web sites still get a lot of traffic, but a lot of it is background noise and is accomplished by hidden spending (promotions via the marketing channels of huge media companies). Why would an entertainment giant continue to spend its advertising budget on inducing people to come to an online property which offers a second-rate user experience (as compared with the best portals), and which has an actual BURN RATE, as opposed to focusing on driving them through (profitable) movie showings, theme parks, stores selling toys and merchandise, TV shows, cable subscriptions, magazines, etc.? Am I being too extreme about this? Is there something really neat on NBCi or Go.com that has escaped me?

In a recent article in Red Herring magazine, the boss of the parent of NBCi's parent, outgoing GE CEO Jack Welch, was recently scoffing about these "dumb dot coms" and how the real companies like GE are now going to unleash their R&D onto the Internet for serious purposes and blow these dot com people out of the water. You have to wonder how these old-school big-old-economy bosses are going to treat their dot com white elephants. It seems as if they'll be left to wither on the vine, for the most part.

The fact that entertainment conglomerates have generally failed to do justice to the online companies they've acquired is probably not lost on the management of Yahoo!. So expect yet another Yahoo! merger rumor - this time raising the possibility of a takeover by Viacom - to fade away.

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An earlier version of this commentary appeared in the Traffick Weekly newsletter on January 13. To subscribe, send a blank email to traffickweekly-subscribe@topica.com .