Yahoo still in porn business overseas

Although Yahoo has limited risqué advertising and sales of pornographic products on its U.S.-based site, such ads and products are only a click away on some of Yahoo's international sites. Yahoo's German Web site, for instance, features ads containing pictures of nude women and touting "live" sex and "hardcore" photos.

The issue highlights the difficulty of creating a corporate-image policy for global online businesses, and has led some critics to say Yahoo appears to be backtracking on promises to clean up its site.

"We are disappointed because Yahoo has the opportunity here to step up to the plate and be one of the good guys. They have the opportunity to be on the forefront of this issue," said Steve Aiken, a spokesman for the Traditional Values Coalition. "It looks like they are trying to have it both ways by 'back-dooring' the issue. It's not going to work."

Criticism over Yahoo's policy coincides with the company's attempts to bolster flagging revenues during a harsh online advertising downturn. It also underscores some of the potential pitfalls for global businesses on the Internet.

While many companies have differing standards for their overseas units--Blockbuster in the United States won't rent porn, for example, but allows overseas stores to set their own rules--critics say there is a fundamental difference with online sites. A person in the United States can't "see" what's being sold or rented in an overseas store, but they can "click" to an overseas site from their den or office. Additionally, the fact that the site may be in a foreign language isn't an issue when it is an image that may be found objectionable.

As a result, analysts said, companies such as Yahoo may have to pay a steeper price than their offline counterparts in dictating local standards.

"On the Internet, it's only a click away," said Pam Kline, a partner with corporate consulting firm The McKenna Group.

Yahoo already faced an international dustup when a French court ruled it must block French citizens' access to online auctions of Nazi items on its U.S.-based site. In response, Yahoo removed Nazi items from its entire system but has asked a federal court in San Jose, Calif., to declare French laws unenforceable in the United States.

Yahoo says the overseas adult material is consistent with its statement in April, when the company announced it was banning adult-related merchandise from its "network." A representative said that the company only intended to bar the material on the U.S. site.

"We removed adult-related products and categories from Yahoo Shopping, Yahoo Auctions and Yahoo Classifieds on the U.S. site," Yahoo spokeswoman Nicki Dugan said in a statement. "Each international Yahoo affiliate strives to honor the laws and the values of its host country and evaluates its approach to determine what is appropriate in that country."

The April statement said the banned products "include adult-related videos and DVDs available through sellers on Yahoo's network. Additionally, Yahoo will no longer enter into new contracts for adult-related banner advertisements on the Yahoo network. The implementation of these changes in the United States will take place over the next few weeks."

Dugan said that while the April statement may have been "unclear," it was never intended to cover the international sites.

Still, Yahoo may find it difficult to draw neat geographical boundaries around its sites when it comes to shaping its global corporate image, according to some analysts, where decisions made for one geographical area can ripple back to related sites. For example, McKenna Group's Kline said Yahoo's policy of permitting pornographic ads and products in one market while forbidding them in others could make mainstream advertisers think twice about using Yahoo.

"If I'm a Proctor and Gamble (ad) buyer, do I really want to put an ad on Yahoo if I don't do anything on a site that has porn?" Kline said. "It delays my decision, if (it) doesn't stop it."

It was a response to declining ad revenue that promted Yahoo to consider increasing the promotion of adult-themed products, according to a report in the Los Angeles Times in April. Athough the company beat Wall Street's earnings expectations in recent quarters, its revenue and earnings have been down significantly from last year.

Although Yahoo had permitted the sale of adult videos, DVDs and magazines by independent sellers through its auctions and storefronts for years, the company expanded its shopping area for adult-themed products earlier this year and was talking with adult content companies about expanding their presence on Yahoo, the Times reported.

In the United States, Yahoo's auctions and stores are mostly clear of pornographic materials. A search for "sex" on the U.S. site yields banners advertising debt consolidators, credit card companies and an online casino, not adult sites.

But overseas is a different story. A link to Yahoo's German site--featured on the bottom of the site's home page in the U.S.--and a search for the word "sex" turns up racy ads promoting adult Web sites and links to sex-related categories on Yahoo and outside Web sites. Yahoo displays the banner ads within several subcategories of its categories concerning sex and erotica.

Searches for "sex" on Yahoo's French, Italian and Norwegian Web sites turn up similar banner ads, some with graphic depictions of sexual acts.

The decision to use such "porn" advertising has been seen at U.S. sites as a means to bolster revenue during an overall economic downturn and during a time when ad sales have fallen off from the Internet's heyday. Web businesses have turned to adult entertainment and casinos for ad revenue largely because those industries continue to thrive. However, such advertising is seen as "low end" by ad buyers, who say that brand image and advertising environment are critical elements to deciding where to place ads for a traditional brand marketer.

Such ads can quash a deal with a major brand, ad executives say. But Yahoo is also careful to restrict such advertising to select areas, maintaining the quality of its finance site, for example.

Industry analysts say that one reason that adult advertising works for Yahoo on its international sites is because the cultures may be more accepting of the ads, compared with more conservative values in the United States.

Additionally, several adult-themed videos, DVDs and CD-ROM's are available through Yahoo's auction sites in Denmark, France and Germany.

Yahoo is not the only U.S.-based online company that has followed different standards abroad than they do at home. On the home page of its German site this week, Amazon.com promoted its "lust and love" store. The area, which includes a picture of a nude woman atop every page, offers books of erotic photographs, Playboy DVDs and racy comics.

Amazon does not offer "x-rated" material on any of its sites, company spokeswoman Margaret Dawson said. Although the products offered on Amazon's German site are similar to those offered on Amazon's U.S. site, Dawson acknowledged that the company would not promote such products as prominently on its U.S. site.

"Basically we adhere to basic norms and sensitivities," Dawson said. "German cultural sensitivities are a little less than we have in the United States. It's appropriate for the country in which it's marketed."

Some brick-and-mortar stores also change their policies when they reach the border. 7-Eleven bans the sale of pornographic magazines in its company-owned stores in the United States but permits them in independently owned franchises in the United States and abroad.

Similarly, Blockbuster does not permit its U.S. stores to carry any movies with ratings higher than "R" or any video games with ratings higher than "M." But the video store giant permits its overseas stores to set their own rules on what movies they will carry on a country-by-country basis.

"Our customers are telling us what they want," said Blockbuster spokeswoman Liz Greene. Offering adult-themed movies is "commonly accepted in Denmark. It works there, but it may not work in the U.K. You can't sort of rubber stamp each market."

The differing policies illustrate the hazards of being an international online business, Forrester Research advertising analyst Jim Nail said. Companies such as Yahoo have to balance a desire to cater to local tastes and mores with the risk of offending or alienating their core customers back home, Nail said. In this case, Yahoo seems to be taking a "calculated risk," he said.

"Could some anti-pornography activist make a lot of trouble for Yahoo about this? Probably," Nail said. "I'm sure some calculation was made, and doing this in Germany and having someone stumble on it from the U.S.--they don't perceive it as a big risk."

Removing adult-themed products and advertisements on its U.S. site, but not on its international sites, "fits a pattern" that Yahoo continues to repeat, said Patrick Trueman, legal counsel for the American Family Association, a conservative lobbying group. Trueman and his organization have been pressuring Yahoo to remove online clubs that his group says promote child pornography and rape.

"Yahoo will only go as far as they are pushed publicly," Trueman said. "What I don't understand is why a mainstream company like Yahoo would stay in the business of pornography."