Newspapers Turn to Yahoo, Google

Yahoo and Google are officially in the newspaper business, and not a moment too soon. The business of running newspapers is brutal. Tiny shifts in the price of ink and paper--which can turn on a dime--cut into razor-thin margins, which makes publishers loath to spend money on "potential" windfalls.

For years, newspapers have watched as their classified-advertising business--long the staple of their ad sales market--was gobbled up by Craigslist and a host of other websites. Now, though, print papers are turning to the very beast that appeared ready to eat them: Yahoo and Google.

On Monday, Yahoo announced a partnership with 150 newspapers in a deal that enables the search and portal company to mine for online ads for the beleaguered print industry. (Earlier, Google announced an offline partnership with 50 newspapers.)

From the Associated Press:

Under the deal announced Monday, seven companies that collectively publish daily papers in 38 states are betting Yahoo's technological prowess and huge Internet audience will help them turn online advertising into a lucrative opportunity instead of a dire financial threat.

While the partnership will initially focus on raising online ad revenues for the papers, the folks at the Motley Fool see this as a potential boon for print publications. From the Motley Fool commentary:

For instance, let's take a look at Flickr, Yahoo!'s hip photo-sharing site. Can it become the first major digital snapshot site to prosper at the local level? Newspapers wouldn't mind user-contributed photography of area sights and local events. What about del.icio.us? Yahoo! recently acquired the edgy shared-memory site, and that's another area just begging for local exploitation.

Want more? The localized job listings that will be powered by the HotJobs engine aren't much of a stretch from having Yahoo!'s dating personals make a splash in area meet markets.

This isn't a charity buy for Yahoo, though. The company is dangerously close to being drowned by Google's gigantic pocketbooks and endless reach. Partnering with newspapers gives Yahoo access to the type of localized information that it has long sought, which, over the next five years, should lead to a spate of new revenues, according to Business Week.

The company sees revenue potential in both areas, pointing out that U.S. online classifieds are growing at a rate of 30 percent a year and that local online advertising is expected to grow from $3.4 billion this year to $12.4 billion by 2010. Yahoo and newspaper executives said they will explore such possibilities.