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With revenue from papers down, AP signs new deal with Yahoo

By Michael Liedtke
Associated Press / February 2, 2010

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SAN FRANCISCO - The Associated Press has signed a licensing deal with Yahoo Inc. that gives the news cooperative a steady stream of revenue at a time less money is flowing in from newspapers and broadcasters.

The announcement by both companies yesterday didn’t disclose the financial terms of the agreement, which allows Yahoo to continue posting AP content on its site.

The AP says it is still negotiating to renew its online licensing agreements with two other companies with far deeper pockets, Google Inc. and Microsoft Corp. Google stopped posting fresh AP content on its website in late December.

Stung by the AP’s first downturn in revenue in years, AP’s management has said the cooperative needs to make more money from the online rights to its stories, photographs, and video as more people flock to the Web for information and entertainment.

It’s unclear whether the AP achieved its financial objectives in the Yahoo deal.

Yahoo, based in Sunnyvale, Calif., described the AP as an important part of its efforts to keep its nearly 600 million worldwide users informed. “We look forward to continuing our longstanding partnership with AP for many years to come,’’ the company said in a statement.

The duration of the contract wasn’t disclosed. Yahoo has been posting AP content on its site since 1998. Its site also relies on other services, including AP rival Reuters, as well as reporters that it employs.

The formula has worked well for Yahoo, even as it has struggled in other key areas, such as Internet search and social networking. Yahoo pulls in the biggest US Internet audiences in news, sports, and finance, according to the research firm comScore Inc.

The not-for-profit AP finds itself at a critical juncture in its 164-year history because the Internet’s popularity is draining advertising revenue from US print publications and broadcasters, which have been its traditional funding sources and still account for about 40 percent of the cooperative’s revenue combined.

The ad slump’s ripple effects have prompted the AP to reduce its fees from those outlets and cut its payroll costs by about 10 percent. The concessions to newspapers and broadcasters cost the AP $30 million in revenue last year and a projected $45 million this year.