As Yahoo Inc. editors plan updates this week to their popular online news service, a computer program at Google Inc. tirelessly scours the Web for items to display on the company’s competing news site.
Few endeavors highlight the differences between Yahoo and Google -- two of the most popular destinations on the Internet -- more than their approach to news.
Although Yahoo News is the most visited news site by U.S. Web surfers, Google News is one of the fastest growing, setting the stage for the Digital Age equivalent of an old-fashioned newspaper war.
At stake are potentially billions of dollars in advertising revenue as the rivals race to add services to their core search engines to keep visitors clicking on their sites.
Yahoo, Google and other online “news aggregators” are “both threat and opportunity,” said Gordon Borrell, president of Borrell Associates, a news industry consulting firm. “They’re a threat to the current news franchise, and they also have a very interesting and popular way of doing business.”
The redesigned version of Yahoo News will let users conduct Internet searches by clicking on words in a story and send articles to friends via Yahoo Messenger. It will also allow people to subscribe to regular updates, known as RSS feeds, from websites that offer them and to browse more quickly through headlines from the big news agencies that partner with Yahoo. The goal is to showcase the stories that Yahoo editors have selected from its partners, a Yahoo executive said.
Google takes a different approach, one that has drawn applause from some media firms but criticism -- and a lawsuit -- from others. Unlike Yahoo News, America Online Inc.'s AOL News and most other news aggregators, Google doesn’t strike deals to run news material on its website. Instead, its software scours more than 4,500 sites -- selected by Google employees -- for photos, headlines and stories, then posts them in categories on Google News.
Google News doesn’t include ads yet, and it’s still in “beta” mode, which is geek-speak meaning it’s not ready for prime time. But the Internet giant brags that its computers make editorial decisions long made by humans.
The Google method has drawbacks. Websites promoting white supremacy and anti-Semitism have slipped into news results, drawing criticism before Google removed them. And some media companies have objected to Google’s use of their material.
Agence France-Presse sued Google last month, alleging that Google’s inclusion of AFP photos, headlines and first paragraphs of stories constituted copyright infringement.
Courts have established that search engines can legally link to other websites. But AFP objected to Google’s collecting and presenting what are arguably the three most important elements of news. The Paris-based news service asked for at least $17.5 million in damages, and Google immediately started removing AFP material from Google News.
Google “is using AFP’s photographs in the exact same manner that its subscribers, other news aggregators and news publications, who actually pay for AFP’s photographs, use them,” the news agency argued in its lawsuit, filed in federal court in Washington.
Executives from Associated Press are also concerned about Google and other news aggregators that pluck stories from the Web instead of paying for them. They have not sued Google or asked Google to remove AP stories from the news service but said they were in negotiations, trying to persuade the Internet company to buy a license.
“We believe AP content has value online, and we expect to be compensated for it,” said Jane Seagrave, director of new media at AP.
A Google spokesman declined to comment on negotiations with the wire service. In a statement, the company said it removed materials from Google News upon request from publishers but that most want their stories included.
Count Reuters among the news companies that appreciate Google. The service licenses stories to newspapers, television networks and other subscribers, but it also runs a website with ads alongside the story.
“We’re very much trying to drive traffic to our sites,” said Reuters spokeswoman Susan Allsopp. “There’s no question that Google and the other [news aggregator] sites are incredibly important.”
News aggregators are among the most visited media sites on the Web. Yahoo News leads the pack with 24.6 million visitors in February, and AOL News is third with 21.2 million visitors, according to ComScore Media Metrix. Other top news sites include MSNBC and CNN.com.
Google is 10th, but it’s growing fast; 5.9 million people visited Google News, up 90% from February 2004.
Yahoo News collects news from smaller sites by crawling the Web but relies on partnerships for news from more than 100 bigger news agencies. Neil Budde, Yahoo’s director of news, said the Yahoo approach of licensing stories from AFP and others improved its credibility and helped it post breaking news stories faster than Google’s service, which has to wait until other sites post stories and its Web-crawling software finds them.
When Pope John Paul II died, “It was 45 to 50 minutes before the pope was dead on Google News,” Budde said. “It was that long before it bubbled up to the top story.”
A Google spokesman disputed Budde’s claim, saying news of the pope’s death appeared on the service within minutes.
Neither Google, based in Mountain View, Calif., nor Yahoo, in Sunnyvale, Calif., has its own news-gathering staff. Instead, the two rely on traditional media companies to report and write the stories they link to. For those media companies, the Internet has created opportunities as well as headaches.
The pain is especially acute for newspapers, which have seen the Internet siphon away advertising dollars from classified advertising, local business listings and help-wanted ads.
“The newspaper industry, looking at the Internet, is beginning to feel like it’s being nibbled to death by ducks,” said Borrell, the consultant. “It continually pecks away at what the local newspaper has been able to provide the local community.”
Newspapers’ online operations generated $1.2 billion last year, or about 3% of the industry’s overall revenue, according to a survey published last month by Borrell Associates, which is based in Portsmouth, Va. Though offline dollars still dwarf online dollars, the study found that the Internet accounted for nearly 45% of the industry’s growth last year.
Most newspapers have bulked up their own websites with advertising, including small text ads generated by Google. Trying to counteract a shrinking subscription base and print advertising sales, major newspapers have initiated a flurry of acquisitions in recent months. Washington Post Co. acquired the online magazine Slate for an undisclosed amount in January. A few weeks later Dow Jones & Co. completed a $528-million purchase of MarketWatch, an online financial news service. New York Times Co. acquired About.com, a consumer website, for $410 million in February.
Gannett Co., Knight-Ridder Inc. and Tribune Co., the parent company of the Los Angeles Times, last month took a 75% stake in Topix.net, a Palo Alto-based start-up that uses software programs to find stories on news sites and Web logs and place them into 300,000 topics that people can subscribe to. The New York Times also struck a deal with Topix.net to have its headlines displayed more prominently, so more people click through to its stories -- and ads.
“If you’ve got a functioning online business model, more traffic is going to mean more money for you,” said Topix.net Chief Executive Rich Skrenta.