Yahoo Tech and Bloggingstocks: Web 2.0 Takes On The Incumbents (CNET, TSCM, TWX, YHOO)

I have frequently blogged on Web 2.0 business models and the distributed nature of content creation in web 2.0. Interestingly, two gorillas of Web 1.0 have rolled out semi-Web 2.0 offerings targeting Web 1.0 incumbents. Got that?

Yahoo launched its Yahoo Tech offering this week, putting CNET (CNET) (a Web 1.0 incumbent) square in its crosshairs. The Yahoo model is a Web 1.0/2.0 hybrid with paid writers, editors and user generated content.

Over the last year, CNET has made timid steps to embrace some Web 2.0 themes by incorporating blogs and other user personalization features and certainly has mindshare leadership. That said, Wall Street certainly perceives Yahoo as a real threat to CNET, taking about 20% off of CNET's stock price in the last week.

While Yahoo certainly has a large user base, CNET's audience is the tech-savvy crowd and I think it will take Yahoo time to attract that following. Advertisers are after the tech-savvy crowd because they convert at a much higher rate than general web surfers (see Om Malik's post). This was also PriceGrabber's strategy when they competed with one of my portfolio companies, Shopping.com. PriceGrabber targeted the tech crowd which had better conversion rates and led to higher profits. Long term, Yahoo will get this right and get that demographic, but I think it will take some time. This may have a negative long term effect on CNET's stock price.

The second Web 1.0 incumbent is much-maligned AOL (TWX). Jason Calacanis' impact is being felt with the launch of bloggingstocks.com this week. Jason is clearly after the web 1.0 finance incumbents The Motley Fool and TheStreet.com (TSCM), whose stock has had a big run in the last 6 months. Both of these businesses have been struggling with their subscription business models anyway, and AOL clearly senses an opportunity to corner them by offering free content on stocks.

I trust this is just an opening act for AOL because the bloggingstocks site is very thin, covering only 8 stocks and with scant analysis (see Paul Kedrosky's take).

The other interesting element is that Calacanis is employing what is basically a newspaper model, having 1 or 2 analysts covering each stock on the blog. It does not appear that he is leveraging user generated content in true Web 2.0 form. This is consistent with Calacanis' approach generally in Weblogs Inc. (now owned by AOL), in which each blog has a distinct writer and voice for each blog. If that is truly the future, it is simply a blog format re-run of TSCM and Fool.com but without the subscription model.

AOL is also not known for its finance savvy audience and it will take time for advertisers to feel comfortable with AOL's demographic converting into brokerage accounts and the like. Saying 'I have a bigger audience than you do', as Jason said, is not compelling.

What I find most ironic is that the Web 1.0 incumbents (YHOO and AOL) have launched Web portal 1.0/2.0 assaults on the Web 1.0 vertical incumbents (TSCM, Fool.com, CNET) without going to the full Web 2.0 extreme. Even more strange, though, is the categories they have chosen to go after. Yahoo, which has a strong Yahoo finance following, decided to get after its weakest audience first (tech) and AOL, which has a big teen and mom-at-home following, went after finance first.

This Web 2.0 world really is topsy turvy.