That paradox is Web branding. An enormous and incalculable portion of Yahoo!'s market cap derives from the belief that, on the Internet, brand conquers all. In an infinite universe, consumers will need an anchor for their travels, and (so goes the belief) that anchor will be the branded portal, which will derive immense profits by selling advertising against, taking sales commissions off, and proffering subscription offerings to this captive, mass audience.
Setting aside the obvious tautology -- if the brand becomes the anchor, and the anchor becomes the brand, what comes first? -- there's a dangerously flawed a-historicism here. Virtually all enduring top brands, in whatever the category, achieved that status by capturing a significant share of a distribution oligopoly. Whether Budweiser in beer, Tide in detergent or Morton in salt, such positions are hard to shake loose -- as long as the distribution shelf space is limited and the oligopoly remains intact. Even losers generally don't fall far from No. 1, as Maxwell House showed when it slipped from first to second against Folger's in the coffee category in the 1980s and '90s.
Media brands, too, have benefited from these distribution oligopolies. Look at the three original broadcast networks, still riding high after a 20-year explosion of new competitors. Or look at the battles that still rage in the magazine industry over supermarket checkout counters. In these ultimate forms of push marketing, media companies have profited simply by the ability to crowd rivals off a fairly narrow shelf.
Now look at the Web. There's no such thing as a distribution oligopoly. It is, bandwidth not-withstanding, infinite. And if you go back to that elementary school math you once found so confounding, infinity is still infinite even if you take a billion parts away from it. That fundamental equation hobbles all Web media business models.
I'm fully aware of the many tactics and tricks and subterfuges major interactive media operations are trying to use to override the math. America Online, once a die hard champion of open access to cable systems for Internet service providers, has grown much more circumspect since it announced its takeover of Time Warner, the nation's no. 2 cable system owner. AOL reasons -- as does AT&T, the No. 1 cable provider -- that by controlling cable systems (still a discrete oligopoly) it will control viewers' home pages and, by extension, the lions' share of their attention. Yahoo!, lacking a broadband distribution partner, is banking on the deals it's striking with companies around the world to assume control of their Intranets; becoming the de facto home page for tens of millions of employees will, Yahoo! figures, lock in these users as assuredly as the technological distribution oligopoly the broadcast networks used to have, or the raw-space oligopoly the Unilevers and P&Gs share inside the supermarket.
But that damned math gets in the way again. In the old oligopolies, consumers had no choices beyond those offered on the dial or at the grocery. On the Web, even if users are locked into a provided home page, one click can move them to any one of 70 million pages. And rest assured, they are clicking their ways to places that branded portals and their advertisers do not like. Declining banner-ad click-through rates are evidence; now as low as 0.5%, the click-through rates show that advertising's vaunted "power" to build brands was probably nothing but the spillover effect from the mass media's distribution lock.
In other words, the more choices, the more erosion -- as the broadcast networks have learned. (Even the newly deified "Survivor" drew only a fraction of the audience share "The Beverly Hillbillies" used to garner for CBS each week in the '60s.) Eventually, the leaders' shares will erode to the point where they can no longer claim a premium for gathering a "mass" audience. That's not only Yahoo!'s problem -- it's yours, too.
Mr. Rothenberg can be reached at email@example.com.