UPDATE The portal giant doesn’t want to be a porno giant.
An article in the Los Angeles Times on Wednesday pointed out various pornography offerings on Yahoo Shopping. Other news outlets picked up on the story. On Friday morning, Yahoo issued a press release saying that it would remove "adult-related products" from Yahoo Shopping and Yahoo Classifieds. The company also said that it would not sign up any new adult-related banner advertising.
"While Yahoo has offered controlled access to adult products available via the Internet since launching our commerce services more than two years ago, many of our users voiced concerns this week about some of the products sold by merchants on Yahoo shopping. We heard them and swiftly responded," Yahoo COO and President Jeff Mallett said in a statement.
Yahoo's contraction of its adult offerings was a quick reversal of its hard stance from a Tuesday statement and Wednesday interviews given by Mallett. "We're hard and fast on being the largest enabler of commerce on the Web," Reuters quoted Mallet as saying on Wednesday. "We have chosen to offer adult-oriented content as part of that."
Apparently, Yahoo was not as "hard and fast" as it let on.
Following Wednesday's news, the American Family Association, a right-leaning public interest group, drafted a letter to U.S. Attorney General John Ashcroft urging him to prosecute Yahoo "for its direct involvement in the sale and distribution of obscene material and child pornography," according to a release on the organization's Web site.
Friday's announcement of a new policy followed, and came on the heels of a lackluster earnings announcement from Yahoo on Wednesday evening. The company beat analyst estimates by posting pro forma net income of 1 cent per share on revenue of $180 million. However, it also said it would reduce its 3,510-person workforce by 12 percent. In addition, the company announced the departure of Heather Killen, its senior VP in charge of international operations. Yahoo pulled down the Yahoo Shopping link to its adult offerings Thursday night. However, its search engine, powered by Google, still returns pornographic links, and runs banner ads for sex sites on adult-related searches.
"Consumers are at the heart of all our decisions," said Yahoo spokeswoman Nicki Dugan. She acknowledges, however, that media attention "heightened awareness" of adult material on Yahoo Shopping, Auctions and Classifieds. Current auctions and classifieds in the offending categories will be allowed to run their course. Porn-related shopping links were pulled on Thursday night. Dugan said that there were no breaches of contracts as a result of those actions.
"Yahoo wouldn't have done it if there were any significant financial impact," said Rob Martin, an analyst at Friedman, Billings, Ramsey. Martin notes that Yahoo's decision was more of an attempt at improving public relations, as investors saw few reasons to sell the stock after the news of the decision broke. Shares closed Thursday at $16.96, up 14.4 percent for the week.
According to Dugan, contributions to revenue from adult-related merchandise and services are negligible. Yahoo Shopping collects a minimum of 2 percent of sales on each item, though rates vary by merchant. Yahoo's previous statements on its sale of adult material, Dugan said, were not in defense of the offerings, but mere acknowledgements.
In an interview Thursday, Mallett said that advertisers continue to seek Yahoo as a distribution partner. "It comes down to the largest and most connected audience," Mallet said. "That's really what our advertising and content partners are looking for."
Yahoo counts more than 190 million users, and 67 million registered users. It’s not clear how many of them utilize the site to find adult-related material.
The L.A. Times article by staff writer P.J. Huffstutter came out on Wednesday, just hours before Yahoo's first-quarter earnings announcement, and helped bring mainstream exposure to products that Yahoo says it has had available on or through its site for a while now. Huffstutter noted that Yahoo charges adult-oriented stores three times as much as
