Yahoo! Runs Headlong Into Newspaper Business

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While everyone else is running away from the newspaper business, Yahoo! is running straight at it. According to an interesting profile that the AFP has up today, Yahoo! is planning to lean on its huge global audience of over 500 million people to build out its own original news reporting arm.

The site has already landed some huge interviews — including one with South Korean president Lee Myung-bak, US president George W. Bush’s first online interview, and one with US Secretary of State Condoleezza Rice. “We get these interviews because we have this global audience of 500 million viewers,” Jessica Barron, the site’s director of editorial programming, told the AFP.

Yahoo!’s Sports section has long had a full reporting staff and a production studio that produces original daily video reports. The company has a dozen reporters on the ground in Beijing for the Olympics. The AFP notes that Yahoo!’s push to become a full digital news agency dates to 2005 when it sent reporter Kevin Sites, who previously reported for CNN and NBC, into dangerous conflict areas to blog and post video reports.

So why does Yahoo! want to become the “number one independent news source on the Internet,” as Barron says?

Part of the reason is that even though newspapers are struggling to sell ads, those ads sales are shifting online in a big way. eMarketer predicts that web ad sales will hit $59 billion by 2013, up from $21 billion last year. An analysis by Henry Blodgett (who incidentally hosts a business news show for Yahoo!), predicts that 70% of lost newspaper ad revenue will find its way online, with 83% of that going to non-newspaper sites like Yahoo! and Google. Blodgett says that’s a $25 billion piece of the old newspaper ad spending pie up for grabs.

And Yahoo! has a lot of experience selling ads against online newspaper content. Their Newspaper Consortium now has over 800 local papers and has generated 100 million unique visits since 2006. According to the DallasNews.com — a member of the newspaper group at Yahoo! — on some days a headline on Yahoo! News can account for the two thirds of the site’s traffic. In other words, Yahoo! still has tremendous clout.

Dead-tree newspapers may be failing, but online there are still big bucks to be had and Yahoo! wants to take the lead and fill that niche. We noted yesterday that casual web users still look to mainstream newspaper sites before any other site to get their news.

“Yahoo News is a news organization,” said Barron to the AFP. “We have been doing a lot of original reporting and we are going to be doing a lot more.”

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