Both of Semel's new emphases -- paid listings and Internet access -- require that Yahoo depart from what has been its core strategy since the Web site was founded in 1994 by two Stanford graduate students, Jerry Yang and David Filo. They created Yahoo as a neutral compilation of information accessible to all Web users, regardless of Internet service provider. But under the new approach, SBC customers, for example, will get more and better services than other Yahoo users.
And soon Yahoo will no longer provide a directory of all the sites on the Web. Rather, any company that wants its site listed on Yahoo will need to pay an annual fee.
Yahoo is the last major search engine to devise a way to charge companies to be listed in search results. Most, including America Online's search service and parts of MSN, have cut deals with Overture, which auctions off the right to be listed high up in search results.
Semel announced in November that Yahoo, too, would display Overture's listings and receive a cut of its fees. But that is only a stopgap until Yahoo builds its own sales force and systems to sell its own listings.
Analysts say the deal with Overture, which is just the sort of arrangement that the company would have spurned in the past, is just the sort of shock that Yahoo needed.
"You weren't going to change Yahoo in an important way unless you get the culture and the people to reassess some of the fundamental tenants of Yahooism," said Lanny Baker, an analyst for Salomon Smith Barney. "Yahoo needs to make a credible and concerted effort to be more of a destination than a pass-through."
Semel refuses to criticize Yahoo's past policies, but he says he insisted on a change because the company had become too insular.
"I think, generally speaking, we needed to be more competitive," he said. "We needed to maintain the quality of our service and the integrity of our service. But as the world changed, some of the things that we were hanging onto had to change."
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