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Originally published Wednesday, March 23, 2005 at 12:00 AM

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3 newspaper giants acquire stake in online news collector

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.

The Associated Press

NEW YORK — 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, Knight Ridder and Tribune are each taking a 25 percent stake in the Silicon Valley company, while its founders will retain the remaining share.

Financial terms were not disclosed under the deal, which was expected to be announced today.

Topix, which launched its site just over a year ago, 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, Calif.

According to its chief executive and co-founder, Rich Skrenta, Topix became profitable in December and has about $1 million in annual revenues, mostly from advertising.

Skrenta says that about half of the site's visitors 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 regions.

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; 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 newspapers nationwide that produce regional news. Under their arrangement with Topix, they will add links to Topix on their own newspapers' Web sites and allow Topix to sell online advertising from their sites, Skrenta said.

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Skrenta emphasized 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.

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 paid $410 million for About.com, an aggregator of special-interest sites that makes money from advertising; and Dow Jones bought MarketWatch, a financial-news site. The Washington Post also purchased the online magazine Slate from Microsoft.

The three-way investment marked the latest joint effort from Gannett, Knight Ridder and Tribune to invest in online properties.

The companies are also joint owners of CareerBuilder, which 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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