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Will an online movie-distribution business be next? So far, the studios "are terrified of the Internet," says John Battelle, former president of the dotcom bible Industry Standard. The video clips Yahoo! gets from the studios are still largely publicity reels for films about to be released in theaters. But Semel argues that the movie industry must move into the digital age. "We've all learned from the music business that staying still is not a good idea," he says.
Semel hopes his company's presence in Los Angeles will position Yahoo! to get the deals when they start flowing. Housed in the old Metro-Goldwyn-Mayer headquarters, the office has room for some 1,000 people--and by the end of the year Semel plans to move down Yahoo!'s finance, sports, news, health, kids and games sections, along with movies and TV. He believes that consumers will ultimately choose their own entertainment content, with the Internet as their programming tool, but acknowledges that he has no idea exactly how the transition will unfold. "To think there is some clear plan is to ignore how the Internet was built," notes Yahoo!'s chief operating officer, Dan Rosensweig. "The users will decide what they want--and what they don't want they'll delete." In the end, the question is whether Yahoo!'s content aspirations will meet the same fate as Den.com Broadcast.com DreamWorks' Pop.com--pioneers in that space that famously imploded. Naysayers are quick to note that we've heard those visions of grandeur before, but in Yahoo!'s case, Semel is hoping for a Hollywood ending. --With reporting by Laura A. Locke/ San Francisco and Jeffrey Ressner/Los Angeles