Do you Yahoo? You're definitely not alone

As more and more people use the internet for their main source of news, the big players on the web are giving more traditional news providers a run for their money. Ian Burrell reports

A quiet revolution is taking place in the way we read or watch the news, although it is happening at a noticeably greater speed in other parts of Europe than it is in the UK.

New research commissioned from Comscore by Yahoo! shows that 41 per cent of people in Germany, 38 per cent in Spain and 37 per cent in Italy now use the internet as their primary source of news. In the UK, the trend is far less pronounced, at 18 per cent, reflecting the robust nature of the British press and the strength of BBC and independent television and radio news.

Even so, with 85 per cent of Europeans now using the internet as a " main news source" (if not their primary one), only a traditional news executive with the mentality of an ostrich would refuse to take note.

Few people are better placed in observing such developments than Jon Gisby, a former BBC executive who is now Yahoo!'s managing director for the UK and Ireland. "A very dramatic change in the course of not a very long time in the evolution of the media industry" is how he describes the findings from the poll of 3,000 Europeans.

Gisby, who leads Yahoo's European strategy, acknowledges that the picture in the UK is different because "the BBC is a very strong and a unique competitor across Europe and then there is the strength of the UK daily press as well". Nevertheless the battle lines are drawn. "All of us in the media business are fundamentally competing for 24 hours in the day, " says Gisby.

The fluidity and immediacy of the internet gives well-resourced online news services considerable advantages over traditional news providers that are tied to publishing or broadcasting at fixed points in the day. "Big players such as Yahoo! are able to serve people's media consumption needs in different ways at different times of the day at the expense of other media," says Gisby, pointing out that his brand stretches well beyond the confines of news and entertainment. "We actually have a part in people's lives throughout the day, for a variety of different tasks, be it search or email or shopping." In terms of news, Yahoo! scores over rivals, he claims, because it offers "access to multiple news sources" and " currency".

Yahoo! News, which includes content from the BBC, Reuters and The Independent online among others, is second only to the BBC's own site as a source of online news. It also incorporates video footage from ITN News and Reuters. The company is establishing itself as a portal of news content through the My Yahoo! facility, which enables users to format their own home page from a choice of four million global sources, whether they be political, financial or offering the latest snippets about the user's favourite music artist or sports team.

Gisby says: "What we are effectively doing is providing a service to our consumers, making their media consumption as easy as possible, trying to give people the technology to become their own editor or scheduler."

Across the five European countries in which it operates (the UK, France, Germany, Italy and Spain), Yahoo! is the market leader in the categories of news, finance, games and sport. It is second only to AOL in music and behind only the Internet Movie Database (IMDB) in film.

Music is an area in which Gisby wants to expand, increasing the five million European monthly users who choose from an online library of 6,000 music videos, and are able to compile their own schedules.

Gisby works out of Yahoo!'s European headquarters, in a tall block in London's theatreland, where the walls are coloured a modish mauve and the doors are marked up with signs saying such things as "Muhammad Ali Suite " and "Gandhi Room".

Yahoo!, says Gisby, is trying to exploit the "long tail" theory whereby it caters not only for those at the head of the animal (those who use the web for email, news, sport, finance, games etc) but also those at the narrow end of the tail who publish their own material or communicate in special interest chat rooms. He adds: "The amount of stuff that people can consume is only going to grow. That's going to be stuff provided by media companies but also by people in their front rooms who are little media companies in their own right. It's going to get bigger. The challenge is how do you make technology that can make sense of this proliferation of information."

Yahoo!'s presence in Europe is so strong because it works in the languages of the various countries in which it operates, forging relationships with the market leaders in providing content in those territories. "What we can do," says Gisby, "is combine the depth of being in an individual market and working with the content leaders in that market, with the advantages that scale brings."

Building a product such as Yahoo! music, where users are informed by the selections of other users with similar tastes, requires a global audience in order to work at its best. Yahoo!, which was set up in 1994 by Stanford University PhD students David Filo and Jerry Yang, had 411 million unique users by the end of September 2005, up 26 per cent year on year. In the UK, where Yahoo! is competing mainly with MSN, Google and AOL, the company has a deal to provide services and content to all BT broadband customers.

Yahoo!'s revenue comes from advertising, much of it generated by its search facility. "[The internet] is becoming a mainstream advertising medium and the growth, I believe, will continue. You just have to look at what people are doing with the 24 hours in their day. The mismatch between the share of the advertising market vs the share of consumption time is enormous, " he says, adding that companies will be happy to book online advertising space not just to sell product but simply to promote their brand.

Gisby is excited by the potential of the new Yahoo! acquisition Flickr.com, a picture based site that caters for 1.5 million users who have posted 16 million photos, all "clustered" according to subject matter. " It's a phenomenon. People are uploading photos to show the world," he says.

And Gisby has another trump card: Yahoo! is Fifa's official online partner for the World Cup in Germany. "I would be astonished if that is not the most trafficked sports site in the world in 2006."