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April 14, 2001 08:23am
Yahoo says will pull porn after protests
Source: Reuters/Variety
by: Kevin Krolicki

(LOS ANGELES, CA) -- Internet media giant Yahoo Inc. reversed course in the face of a barrage of customer criticism on Friday, pledging to remove all pornography from its shopping and auction channels and reject requests for related advertising.

Yahoo, which triggered the criticism by at first defending its expanded sale of pornography, said the changes would be carried out over the next few weeks for its flagship U.S. site, although porn could still be for sale on Yahoo portals in other parts of the world.

``Many of our users voiced concerns this week about some of the products sold by merchants on Yahoo Shopping,'' Yahoo President and Chief Operating Officer Jeff Mallett said. ``We heard them and swiftly responded.''

Under pressure to find new sources of revenues amid a slump in online advertising, Yahoo confirmed earlier this week that it was offering a broad selection of adult material, including hard-core porn videos and DVDs through its popular shopping service.

In an interview with Reuters on Wednesday, Mallett initially defended the company's decision to include porn along with items such as computers and children's toys as part of Yahoo's strategy to be the largest commerce site on the Internet.

But a ``significant'' number of users contacted Yahoo to protest the policy, prompting the quick reversal, the company said Friday. It declined to say how many complaints it had received.

The flap over pornography came as Yahoo faces increasing financial strains and searches for a number of key executives, including a new CEO.

Yahoo, which has 192 million registered users, said Wednesday that it was laying off staff for the first time, cutting 12 percent of its work force after reporting a sharp drop in operating profits.

The decision to drop pornography from the network will not hurt earnings, Yahoo spokeswoman Nicki Dugan said Friday. ``It was an infinitesimal portion of our revenues,'' she said.

Safa Rashtchy, an analyst at U.S. Bancorp Piper Jaffray, agreed the decision was more important for the public perception of Yahoo than for financial implications.

Analysts on average expect Yahoo to post revenues of just over $750 million in 2001, according to Thomson Financial/First Call. Revenues from pornography would have probably accounted for between $7 million to $10 million of that total, Rashtchy said, not enough to worry most investors.

Even so, the negative public response to the media attention on pornography underscored the pressure on Yahoo to reconsider its strategy of being all things to all people, he said.

``Yahoo wants to be a facilitator and aggregator so this was perfectly aligned with their strategy,'' Rashtcy said. ``By contrast AOL was always a kind of walled garden.''

Yahoo spokeswoman Dugan said the portal would ``continue to re-evaluate our policy with regard to what kinds of products and services we're making accessible.''

Yahoo said it would remove adult materials from the shopping, auction and classified areas of its site. Auctions already running will be carried to completion but no further sales will be accepted.

A conservative California lobbying group that had called for a boycott of Yahoo earlier this week issued a statement Friday praising the company for its change of policy.

``It takes a lot for a company like Yahoo Inc to take a pro-family position and we thank them for doing so,'' said Natalie Williams, executive director of Capitol Resource.

Yahoo had offered pornography through affiliated merchants as part of its shopping channel since the launch of that service in 1999.

In a bid to control access to the material and make sure access was blocked to minors, Yahoo created a separate category pooling all such videos and DVDs in December, Dugan said.

In addition to its U.S.-based portal, Yahoo operates 23 other international sites. Those sites will continue to set their own policies on carrying pornography, Dugan said.

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