Online Newsroom Investment - 2006 Annual Report

Google News and Yahoo News are currently two of the most popular online news sites, according to data from Nielsen//Net Ratings. While both are often lumped together as the two most successful online only ventures, they have taken different approaches to their news operations. Perhaps the differing strategies reflect how each company sees itself: one a technology company and the other a media company. We decided to examine each company’s approach to newsroom investment.

Google News

Before September 11, Google did not see itself as anything more than the world’s dominant search engine. In the immediate aftermath of the attacks, however, millions of Americans went online for more information but were unable to access traditional news sites like cnn.com and abcnews.com because of the overwhelming surge in traffic.5 Many turned to Google as an alternative. While at the time it did not have a “Google News” page, it did offer links to major online news sites such as the Washington Post and BBC. It also linked to cached versions of earlier reports done by major online news organizations — its first attempt at producing an editorial product.6 Shortly after seeing the value in those links during the 9/11 news frenzy, Google added a separate “News and Resources” link to its homepage. And by 2002, Google News became part of the online news experience for an increasing number of Americans and others around the globe.7

Google News does not use human editors but rather an algorithm that crawls over 4,500 news sources from around the world and then ranks them based on many factors, including how often they appear in other places on the Internet. And although Google News promotes itself as a non-subjective news aggregator, it is still relying on the editorial judgment of other online news organizations to rank the world’s most popular pages.8

To succeed as online news aggregator, Google relies on its enormous bandwidth, which of course was a vital asset after 9/11. According to John Battelle, author of “The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture,” Google’s search engine is powered by over 175,000 computers — more than all that existed on the entire planet in the 1970s.9

In its drive to continuously add news sites to its crawl, Google must expand its bandwidth. Expanding and maintaining such enormous bandwidth requires an army of engineers — engineering being the academic background of the company’s two founders — and technology consultants, and the most sophisticated software to keep the engine humming rather than reporters to produce original news. And this lies at the heart of Google’s news investment: software, hardware and engineering personnel to keep driving the search engine that publishes other news’ organizations stories rather than an investment in reporters and editors to produce the news.10

Yahoo News

Like Google News, Yahoo News largely aggregates material from other news organizations, such as the Associated Press, Reuters and the Los Angeles Times. And while Yahoo News relies on a small number of human editors — rather than a computer algorithm like Google — to publish the news on the site, it has not traditionally published its own unique news content. But that began to change in 2005.

As a whole, Yahoo does not see itself exclusively as a technology company, which Google is often considered. According to some analysts, Yahoo wants to become the first and last stop for the online visitor. As reported in the New York Times in September 2005, Yahoo’s new strategy is to see itself as an online version of Time Warner that mixes both original content and distribution. This strategy, the Times reported, is built around four “pillars”:

• Improving its search engine capabilities.
• Creating a community of bloggers and civic reporters who can post their own musing and photographs.
• Producing its own original content, including news coverage.
• Developing personalization technology that allows users to sift through the seemingly endless number of choices available in the online universe, including video, where Yahoo is trying to compete with Google and Microsoft.11

Many in the industry are watching to see whether Lloyd Braun can get Yahoo to where it wants to be. In November 2004, Yahoo hired Braun to head its Media Group. Braun had previously served as the chairman of ABC’s Entertainment Television Group. During his tenure at ABC, Braun initiated and oversaw the development of such hit television series as “Alias,” “Lost,” and “Desperate Housewives.” His role at Yahoo has been to oversee all business and creative aspects of Yahoo’s content properties, including news.12

Braun’s first original news project was to hire Kevin Sites, a veteran television reporter, to report on different wars spanning the globe. Sites’s blog embraces the multimedia quality of the Web: blogging, video, audio commentary, online chats, and photo essays. Sites, moreover, said he saw the site as an opportunity to embrace transparency, long championed as an asset for online journalism. Sites’s program was launched in September, 2005.13

Yahoo also added exclusive sports commentary and in September, it began offering original columns to its financial news page, including one from the popular financial author Suze Orman, who regularly appears on CNBC. And in late October, Yahoo announced it had signed an original content deal with The Week, a weekly news magazine, and would begin publishing a daily digest of print and online business news on Yahoo’s Finance page.

Though Yahoo has taken only the first steps toward publishing its own original news content, it will be interesting to see how this mixed identity plays out in 2006 and beyond. Will consumers turn to Yahoo for original reporting in place of more longstanding providers? Will Yahoo succeed in a mixed brand or will it, in the end, fail to reach expertise on either front? Will it inspire others to do the same, hiring real reporters who can publish their own unique, tech-savvy journalism? Those areas are worth watching in 2006.