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Yahoo's growing pains
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July 2, 1999: 12:45 p.m. ET
Once small net companies face challenges as they grow larger
By Staff Writer Randall J. Schultz
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NEW YORK (CNNfn) - Yahoo! continues to face defecting GeoCities members upset about its rules in an example of how the corporate interests of Internet firms can grate against the freedom-conscious attitudes of Web users.
Yahoo picked up GeoCities in a deal announced in January. Earlier this week, it began a process that would fully integrate GeoCities members under the Yahoo umbrella.
The move may have appeared a formality to Yahoo (YHOO), but it turned into anything but routine. When GeoCities members tried to update their pages or reach their GeoCities e-mail accounts, they were presented with a new terms of service agreement from Yahoo.
If a user wanted to make any Web page changes, they'd have to agree to the new rules, which stated:
"...you automatically [grant] Yahoo the royalty-free, perpetual, irrevocable, non-exclusive and fully sublicensable right and license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such [GeoCities] Content ..."
Some users who bothered to read the fine print objected. One San Diego webmaster, Jim Townsend, decided to launch a boycott of Yahoo/GeoCities, calling for Yahoo to change the rules and urging members to move their sites elsewhere.
But even moving has its problems, according to GeoCities user Mike Savad.
"I can't break out of it," said Savad.
"I can't even delete it without agreeing to those terms. I can't even update my page telling people where the new address is. In order to do that I need to enter my new Yahoo I.D. In order to get that I.D., I have to agree to those terms. Now they have me."
When small sites get big
Yahoo, which just five years ago was a way for founders David Filo and Jerry Yang to keep track of their favorite Web sites, found itself of being accused of Big Brother tactics.
Internet companies, at least the successful ones, are increasingly finding themselves in a position perhaps unthinkable to them before - that of large corporations garnering the suspicion of corporation-wary Internet users.
Despite Yahoo's humble beginnings, the fact of the matter is it now has a market capitalization of $39 billion.
Yahoo sought to reassure GeoCities members in a statement Friday that it was still a small company at heart.
"Starting in the early days of the Web with the Yahoo! directory, we've always made it our job to respond to your needs. We understand that we owe any success to you. We have no intention of violating the trust that we've built with you over the years," the company said.
Few should view Yahoo as the evil empire, though, according to Dawn Simon, Internet analyst at Brown Brothers Harriman & Co.
"Yahoo has always made it clear they care about their consumers," said Simon. "Any online service has to create a trust with the community."
Still, Internet companies do face some challenges as they grow and Web commerce becomes larger and more widespread. Part of the difficulty is the Internet's origins, created on a model of open communication and based on the assumed integrity of those who were using it.
While Yahoo may have a general idea about some aspects of its Internet business model, other parts of it may be struggling to deal with its increasing demands.
"The legal community does not quite have a handle on some of the legal issues," said Simon. "What's happening out there may be a little ahead of the legal field."
Legal wrangles
Legalese is exactly what raised the ire of Yahoo/GeoCities members in the first place.
The wording of the Yahoo terms of service was designed to allow the company to post GeoCities content on "mirror" sites. These mirror sites essentially set up duplicate versions of content around the world, enabling users to download the content from closer, and thus faster, servers.
In order to post to a mirror site, the company has to create a duplicate of the content, leading to the language allowing Yahoo to "reproduce" the content.
The copyright terms triggered unease among members, who envisioned their original material being sold on T-shirts or being auctioned off for movie and book rights.
Yahoo stated it was merely protecting its ability to offer users' Web pages but Yahoo boycott leader Townsend said they went about it all wrong.
"The thing is, they could have protected those same interests and not stepped all over their members in the way they did," said Townsend.
Competitors have not been above pointing out their own less restrictive terms of service. Tripod General Manager Jim Zereski said he has seen a surge in people signing up for Tripod's Web hosting services since the Yahoo flap began.
Zereski said the way an Internet company approaches more corporate matters is key and pointed out to a challenge faced by his own company.
"Instituting advertisements on member pages wasn't popular but we explained to them why it was necessary and that we provide them a valuable service," said Zereski.
During that process, he said, Tripod worked hard to communicate with its members, gather their input and assure them the ads were necessary so Tripod could continue offering free Web page hosting.
While GeoCities members may move on to other free Web page hosting services, it may be a situation where both Yahoo and its members lose something.
GeoCities user Mike Savad has run a stained glass site for three years. During that time he has arranged for search engines to pull up his site if "stained glass" is typed in.
"That took a lot of time to set up, entering my address into countless search engines, and I have no idea how many other places my site is linked to," said Savad. "Now I have to find a new place and re-advertise." 
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