updated 3/23/2005 3:31:42 PM ET 2005-03-23T20:31:42

Three major newspaper companies are investing in Topix.net, a startup technology company that collects and sorts news stories from various sources on the Internet.

Gannett Co., Knight Ridder Inc. and Tribune Co. are each taking a 25 percent stake in the Palo Alto, Calif.-based company, while its founders will retain the remaining share. Financial terms were not disclosed under the deal, which was expected to be announced Wednesday.

Topix launched its site just over a year ago, but has 1.4 million monthly users as of February, according to comScore Media Metrix, which measures Internet traffic. That's still well behind leading automated news aggregators like Google News, which had 5.9 million users last month.

Topix remains a small company, with just nine employees working above a trophy shop in Palo Alto. According to its CEO and co-founder Rich Skrenta, Topix became profitable this past December and has "about" $1 million in annual revenues, mostly from advertising.

Skrenta says that about half of the visitors to the site use it to search for local news. Like other automated news aggregators, Topix uses computer software to troll around sites on the Internet to collect stories from thousands of different sources.

But instead of searching articles for keywords such as "Chicago" or "Madonna," Topix uses a computer program that its founders designed to separate news stories into very specific categories and geographical reasons. Thus a user can type in a zip code and get local news from that area, or go to one of the 300,000 pages that contains specific categories of news.

Last month, The New York Times signed a separate deal with Topix under which it will pay to have its headlines featured prominently in sections of Topix's news pages.

Gannett, Knight Ridder and Tribune, for their part, own local newspapers nationwide that produce regional news. As part of their arrangement with Topix, they will also add links to Topix on their own newspapers' Web sites, and allow Topix to sell online advertising from their sites, Skrenta said.

However, Skrenta emphasized that his company would "continue operating as a startup" and "remain editorially independent." Topix's software automatically searches for stories from 1,400 daily newspapers, 800 college newspapers and 3,000 magazines, among other sources, he said.

News of the deal came just as the French news agency Agence France-Press said it suing Google for infringing on AFP's copyrights by using stories and photos from the news agency without authorization.

The investment in Topix marks the latest effort by newspaper companies to capitalize on the growing boom in readership and advertising spending online.

In recent months, The New York Times Co. paid $410 million for About.com, an aggregator of special-interest sites that makes money from advertising, and Dow Jones & Co. bought MarketWatch Inc., a financial news site. The Washington Post Co. also purchased the online magazine Slate from Microsoft Corp.

The three-way investment also marked the latest joint effort from Gannett, Knight Ridder and Tribune to invest in online properties. The three are also joint owners of CareerBuilder, a company that sells help-wanted advertising both online and in print, as well as Cars.com and Apartments.com.

"This is a really good deal for us," said Gannett spokeswoman Tara Connell. "It allows our content to rise to the surface."

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