Google News starts hosting wire stories - could cut traffic to newspaper sites

[Editor and Publisher]

Internet search leader Google Inc. on Friday began hosting material produced by The Associated Press and three other news services on its own Web site instead of only sending readers to other destinations.

The change affects hundreds of stories and photographs distributed each day by the AP, Agence France-Presse, The Press Association in the United Kingdom and The Canadian Press. It could diminish Internet traffic to newspaper and broadcast companies' Web sites where those stories and photos are also found – a development that could reduce those companies' revenue from online advertising.

Mountain View-based Google negotiated licensing deals with the services during the past two years to resolve disputes over whether the search engine had been infringing on their copyrights by displaying snippets of their content on its Web site.

The new approach won't change the look of Google News or affect the way the section handles material produced by other media. Google also said it isn't altering its formula for finding news, so the material from the AP and other services won't be elevated in the pecking order of its search results.

Although Google already had bought the right to display content produced by all four services affected by the change, the search engine's news section had continued to link to the sites of other Web publishers to read the stories and look at the photographs. For example, a Google News user who clicked on an AP story about the latest developments in Iraq would be steered to one of the hundreds of Web sites that also have the right to post the same article.

That helped drive more traffic to the Web sites of newspapers and broadcasters who pay annual fees to help finance the AP, a 161-year-old cooperative owned by news organizations.

Now, Google visitors interested in reading an AP story will remain on Google's Web site unless they click on a link that enables them to read the same story on other sites. Google doesn't have any immediate plans to run ads alongside the news stories or photographs hosted on its site, but company officials aren't ruling out the possibility in the future.

AP and the other news services already receive an unspecified amount of money from Google for the rights to their content. Google said it isn't paying anything extra to host the material.

Although the change might not even be noticed by many Google users, the decision to corral the content from the AP and other news services may irritate publishers and broadcasters if the move results in less traffic for them and more for Internet's most powerful company.

A diminished audience would likely translate into less online revenue, compounding the financial headaches of long-established media already scrambling to make up for the money that has been lost as more advertisers shift their spending to the Internet.

Google has been the trend's biggest beneficiary as its search engine emerged as hub of the Internet's largest advertising network. In the first half of this year, the 9-year-old company earned $1.9 billion on revenue of $7.5 billion.

Several other major Web sites, including Yahoo, Microsoft Corp.'s MSN and Time Warner Inc.'s AOL, have been featuring AP material for years within their sites. Google has an even larger potential audience because its search engine handles more than half of the online search requests in the United States.

However, despite Google's dominance in search, its news section lags behind the industry leaders. In July, Google News attracted 9.6 million visitors, trailing Yahoo News (33.8 million visitors), MSNBC (24.5 million), AOL News (23.9 million) and CNN (22.5 million), according to comScore Media Metrix.

Echoing a familiar refrain, Google believes its users will be better served if the content from the AP and other news service stays on its site.

With the new approach, Google reasons readers won't have to pore through search results listing the same story posted on different sites. That should in turn make it easier to discover other news stories at other Web sites that might previously have been buried, said Josh Cohen, the business product manager for Google News.

"This may result in certain publishers losing traffic for their news wire stories, but it will allow more room for their original content," Cohen said.

For its part, the AP intends to work with Google to ensure readers find their way to breaking news stories on its members' Web sites, said Jane Seagrave, the AP's vice president of new media markets.

In recognition of the challenges facing the media, the AP froze its basic rates for member newspapers and broadcasters this year and already has committed to keeping fees at the same level next year.

That concession has intensified the pressure on AP to plumb new revenue channels by selling its content to so-called "commercial" customers on the Web. Those efforts helped the not-for-profit AP boost its revenue by 4 percent last year to $680 million.

"AP relies on its commercial agreements to help pay the enormous costs of covering breaking news around the world, ranging from deadly hurricanes and tsunamis to conflicts like the war in Iraq," Seagrave said.

article originally published at http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=....

The media's job is to interest the public in the public interest. -John Dewey