Media Industry Sends Wrong Messages to Wall St. and Madison Ave.

Now that Carl Icahn has commandeered board influence in Yahoo's business decisions, don't expect the "external swirls" (as Yahoo president Sue Decker referred to them) that have buffeted the company to subside. The Microsoft/Yahoo! confrontation has been unhealthy for the media and advertising business and has been unproductive for both companies, as stock fluctuations have testified.

Microsoft clearly envisions itself as a media powerhouse and it has the opportunity to be one. But first Microsoft will need to establish a core central strategy beyond technological leadership and audience aggregation. These are old – and outdated -- media models. If Microsoft had successfully put forth a transformative strategy that would have moved the combined companies into a true leadership position – rather than simply a more competitive one in a heavily commoditized transactional business – investors might have more eagerly embraced it. Yahoo! and Microsoft have yet to define how they are differentiated from Google, AOL and myriad ad networks that sell cheap ad impressions – and their stock will continue to struggle and fluctuate until they refocus beyond advertising arbitrage strategies.

The Viacom vs. Google copyright lawsuit is going to gain momentum as a central industry issue, although its outcome is likely to have little long term impact. The issues of content ownership will ultimately be resolved through commerce rather than the courts. A strategy that values content based on legal definitions and limitations sends the wrong message to Wall Street about the core value of branded media content. Although media distribution realities are diminishing the value of powerful content brands, content will still ultimately win out over technology among both investors and advertisers. The value of content depends more on the speed with which management can develop new business models, and less on court decisions that protect the old ones. Legal battles to protect content copyrights – no matter how justified and even when they are successful – are not the only answer to the media industry's Wall Street woes.

The media and advertising communities need to present a single voice of forward-thinking strategic growth models to investors, including both Wall Street and Madison Avenue investors. Marketers' confidence in traditional advertising methods is flagging, just as a lack of confidence among financial investors is holding down stock prices for almost all leading media companies.

About Jack Myers: For more than two decades, Jack Myers has been the media industry's leading analyst, researcher and advisor on relationships among marketers, agencies and media sellers, providing business development services and custom insights on relationship best practices to more than 200 marketers, agencies, media companies and industry service providers. Jack can be reached at jm@jackmyers.com