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Old Media Profiting From Google, Yahoo

By: David Utter

Online news portals from prominent Internet names have been increasing the amounts they pay to the news gathering organizations whose content fills their sites.

Old Media Profiting From Google, YahooThe issue of paying for content that is reposted to a popular online portal had been a silent issue for many years. It took place behind the scenes, before the Internet became more of a utility than a curiosity.

Yahoo (YHOO) and AOL (TWX) have been making these deals for a long time, the Mercury News noted in a report. It seems likely those deals have become more lucrative with the expansion of the number of people who regularly use the Internet and visit those high-profile portals.

Google's (GOOG) entry into the online news portal arena with Google News happened at a time when news organizations were becoming more aware of the value of their products. Associated Press CEO Tom Curley said in the report that his organization has over 50 deals in place with various sites now:

"The AP and others in the industry early on did not appreciate the value of the content and understand the economics of the marketplace as we do today," Curley said in an interview. "There's been an evolution in our thinking."

That can probably be translated as, How much are Google and Yahoo taking in on the revenue side of online advertising? Billions? With our content?

Some of Google's interactions with those agencies, like Agence France-Presse, have been more notable for the lawsuits Google has been hit with for indexing and serving their content. It's an area that the company has tried to redress, as CEO Eric Schmidt observed in the report:

"The people who own the content did a lot of work to generate the content," Google Chief Executive Eric Schmidt said in an interview with the Mercury News. "We want them to get the majority of the revenue from advertising."

The numbers in Google last earnings announcement bear that out:

Google's partner sites generated revenues, through programs, of $997 million, or 41% of total revenues.

Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $785 million in the second quarter.

Deals between old and new media look likely to continue. For all of its brand recognition, Google depends on others for content and fuel for its search advertising business. They and other online companies need good relationships so their profitable state of affairs can continue.

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