After heralding an agreement with CNN.com on the advertising side of its business last week, Google quietly struck deals with four news services that will change the way it serves up content on Google News.
On Friday, Google began hosting content from the Associated Press (AP), the Agence France-Presse, the Press Association of Britain, and the Canadian Press. Until now, Google was sending readers to other Web sites to read the stories, view the images, or listen to the audio files.
Some are saying the move could hurt newspapers and other content portals that rely on Google sending traffic their way. Traffic losses could have a ripple effect, reducing online ad revenue for these destinations. So what might be good for consumers, good for Google, and good for the news services might pose new challenges to newspapers.
But it's not all doom and gloom for newspapers. Google will continue to stick to business as usual on Google News and will continue to link to other news sources. Google said it does not plan to give its new content partners preferential placement in Google News search results.
According to comScore, Google News posted 9.6 million unique users in July. That's far less than major news sites and portals. ComScore reports nearly 34 million unique visitors for Yahoo News, 24.5 million for MSNBC.com, and 23.9 million for AOL News.
"Although these new agreements have the potential to improve the delivery performance of streaming content, I don't see it as a huge consumer advantage," said Mike Goodman, an analyst at Yankee Group. The greater advantages lie with Google and the AP, he added, both of which might have had a financial incentive to ink the deal.
Could Google be angling for a piece of the content-distribution market? Or could Google be preparing to throw down the gauntlet and declare war against the Akamais and Limelights of the Internet world? It's possible, Goodman said.
Under the Surface
Akamai is a leading provider for content distribution. The company recently introduced technology to enhance the user experience for large file downloads. Limelight, meanwhile, offers its own high-performance network for digital-media distribution.
The market in which Akamai and Limelight operate might be attractive to the search king. According to Frost & Sullivan, content delivery networks could reach $2.5 billion in revenue by 2013. On the surface, it seems Google possesses the necessary components for competing in these markets. The company has made significant investments in data centers, for example. And now, Google has clearly taken the first step toward hosting other companies' content.
"One of the big issues is scale to distribute content globally. This is not a regional process," Goodman said. "Google might be tipping its hand. If you see a couple more deals, it will become obvious that Google is hosting content and wants to become a distributor. One is just a random occurrence. Two is anomaly. And three is a trend. So it's something to watch for."