Web Giants Go With Different Angles in Competition for News Audience

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.