Yahoo said on Tuesday it has agreed to acquire the user-generated publishing company Associated Content to add more pages to attract advertisers. Financial terms of the deal were not disclosed.
Associated Content pays its 380,000 contributors a nominal fee to produce niche-related articles on thousands of topics like health, technology and travel.
With this deal, Yahoo is trying to capitalize on a deep trove of content created for very little money as traditional media companies struggle with the costs associated with producing news and features.
Newspapers, magazines and broadcasters have been downsizing their newsrooms on a severe drop in advertising revenue.
“We feel that a contributor-driven model is absolutely part of the future of media,” said Matthew Idema, vice president of local at Yahoo.
The idea is for Yahoo to broaden its content offerings as way to attract more advertisers.
Already the Internet company is producing its own material and has partnered with hundreds of newspapers and other traditional media companies to showcase their material.
Idema explained that Associated Content's articles - mostly bite-sized pieces on subjects like how to turn back the clock on aging - will blend with other articles featured on Yahoo.
But with the Associated Content purchase, Yahoo does not have to split advertising revenue like it does with its other partners, nor does it have to pay large sums to produce it.
“It makes them a publisher, essentially,” said Ken Doctor, a news industry analyst with Outsell Research and author of the book Newsonomics. “Now they have a lot more content they can serve advertising against.”
Yahoo is in good company. AOL is trying to take advertising share by producing content some of it provided by users with its Seed.com service.
AOL Chief Executive Tim Armstrong was an early investor in Associated Content while still an executive at Google Inc. His investment in Associated Content and AOL's recent strategic moves to user-generated content had led to wide expectation that AOL would be the most-likely buyer of Associated Content.
Associated Content also competes with Demand Media - which is reported to be exploring an initial public offering - and The New York Times Co-owned About.com. (Reuters)