Google pays for AP news content shocker

Google has agreed to pay the Associated Press for use of its news stories and pictures, according to a statement released by the two companies on Wednesday.

The deal settles a dispute between the AP and Google, and has implications for a lawsuit Google is facing from the Paris-based Agence France Presse news agency, which sued the search powerhouse last year for allegedly infringing its copyrights on Google News. Agence France Presse, which is seeking $17.5m in damages, hopes Google's revelation of payment to another news source for content will add weight to its argument, according to published reports.

Though it wasn't made public until Wednesday, the agreement between AP and Google has been underway for several months.

Financial terms were not disclosed. Consequently, it's unclear whether the deal involves a flat fee or paying AP according to traffic statistics.

On the surface, paying the Associated Press seems to conflict with the stance Google has traditionally taken regarding its Google News service. Because Google News is an aggregator, the company has argued, Google is not obliged to reimburse news outlets for linking to their content.

But Wednesday's announcement said the AP content will be the foundation for a new product that will merely complement Google News. Thus Google maintains the deal supports its original stance on fair use.

A Google representative said in a statement: "Google has always believed that content providers and publishers should be fairly compensated for their work so they can continue producing high-quality information. We are always working on new ways to help users find the information they are looking for, and our business agreement with the Associated Press is one example of that.

"The licence in this agreement provides for new uses of original AP content for features and products we will introduce in the future."

Online news sources have rapidly become a major threat to the 160-year-old AP, which pulls in a 10th of the revenue Google does. In response, the AP has been making a push for modernisation, and now estimates 20 per cent of its revenue comes from online sources.

CNET News.com's Nicole Girard contributed to this report

Caroline McCarthy writes for CNET News.com