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Publishers React to Yahoo! Revenue Cuts

In the wake of Yahoo!'s grim announcement last week, other top Web publishers are saying they've learned what Yahoo! is just now coming to understand -- that online advertising alone won't pay the bills.

On Wednesday, the online giant announced that it likely would post $170 million to $180 million in quarterly revenues, the vast majority of which come from selling ads. That reduced total is close to half of the $320 million it previously anticipated at the beginning of the year. And with as-yet-undelivered ad agreements accounting for all but $63 million of the new revenue estimates, Yahoo!'s future as an online ad medium looks uncertain, at least in the near term.

And if one listens to other Web publishers, a large part of Yahoo!'s troubles stem from its historic focus on remaining independent.

While the other portals either began as an offshoot of another business -- like MSN -- or were acquired by other firms -- like Terra Lycos, Excite@Home, and About, Inc. -- Yahoo! doesn't seem keen on following suit, having said often and loudly that it plans to remain independent. Earlier this month, the company braced itself against possible hostile takeovers by adopting a so-called "shareholder rights plan." And at an appearance at MSNBC's "Silicon Summit II" Sunday night, Yahoo! co-founder Jerry Yang reiterated the site's intention to remain independent.

Instead, to combat the difficult ad sales market, Yahoo! said it would be increasing its focus on its other revenue streams -- subscription-based premium services and corporate portal development.

Interestingly, those diversified revenue streams now approximate the ways competitors are propping up their online media. Terra Lycos sees about 76 percent of its revenue from media, with the balance coming from its ISP business and its subscription-based sites, quote.com and matchmaker.com.

Spokespeople from Terra Lycos declined to talk about their projected revenue for the quarter, although they did say that the company has "been pursuing a very diverse revenue streams for quite a while."

Online content site About, Inc. recently completed a merger with offline trade and special-interest magazine publisher Primedia, and says it's well-positioned to ride out the downturn on ad revenue alone -- thanks to help from its new corporate parent.

"We're seeing an uptick in non-dot-com advertisers using the About platform to reach their targeted audiences," said About president John Caplan. "The About-Primedia partnership sets us up to reach 60 thousand Primedia-endemic advertisers where the Primedia publications and the sister About Web sites are the two most targeted, most popular sources for that advertiser to get leads."

Caplan also added that income from About's pay-for-performance search engine, Sprinks, has been "flourishing," though he declined to comment on specifics.

"What the publishers, and us, are working on is innovative ad formats ... new research, and new abilities for advertisers to leverage Primedia assets and well as About assets."

Caplan said that in addition to launching new ad sizes -- including "tower" banners, About would continue to consider new ad spaces and packages. He declined to give specifics, or to comment on whether About would be accepting the Internet Advertising Bureau's recently announced standards for larger online ads, but rather said that About is in "constant pursuit of new ways of advertisers to reach their audiences."

Excite@Home, whose primary business focus is consumer and business broadband services, said its portal is similarly insulated, thanks to its parent's ISP-related businesses.

"Excite@Home has multiple revenue streams, not just media and advertising, and this diversity helps protect us form the softness in online ad market," said spokeswoman Londonne Corder.

The Redwood City, Calif.-based company says its online ad products reflect a "broadband adver