The multiyear agreement announced Monday has two key components: an undisclosed payment for the rights to AP's content, and a data-sharing arrangement aimed at helping the news cooperative make more money across the Internet.
The contract's financial terms and duration weren't disclosed.
The Google deal is part of AP's effort to bring in more revenue from the Web as less money comes in from newspapers and broadcasters hard hit by an advertising slump. As part of that process, AP renewed its licensing agreement with Yahoo Inc. earlier this year and is trying to strike a new deal with Microsoft Corp.
Citing confidentiality clauses in their new contract, officials from the AP and Google declined to provide many specifics other than confirming that there will be greater collaboration than in their first licensing agreement struck in 2006.
"We think this is a good deal for both sides," said Jane Seagrave, AP's chief revenue officer. "We have had a long relationship with Google and are pleased we were able to work out our differences."
As the Internet's dominant search engine, Google theoretically could provide the AP with more insights about the types of information and images people are looking for in the minutes, hours and days after a major news story breaks. Google also could help AP develop more ways to ensure its content is more likely to be highlighted by search engines.
The AP, founded in 1846, already has been trying to get a better grasp of how its material is consumed on computers and mobile devices through a tracking system called a "news registry." That technology has worked well since it was unveiled last month, Seagrave said.
Google conceivably could also develop new ways to showcase the AP's content within the news section of its website. That's something Google already has tried to do with more than 90 publications participating in an experiment called "Fast Flip." That feature tries to replicate on the computer screen the look and feel of leafing through a newspaper or magazine. Google shares ad revenue with the publishers in Fast Flip.
Although they have had a licensing agreement since 2006, Google and AP still have had an uneasy relationship.
AP executives have publicly complained that the news cooperative wasn't being adequately compensated for its material, partly because Google's search engine pointed to websites that the AP said had pirated its content.
Google, in turn, insisted that it was adhering to all international copyright laws as it tried to help Web surfers find pertinent information.
Besides the AP, Google also licenses news content from Agence France-Presse, UK Press Association, Canadian Press and seven members of the European Pressphoto Agencies.
Under these licensing agreements, Google publishes entire stories from the AP and other outlets in the news section of its website.
That's a departure from Google's usual practice of just showing snippets from stories posted on thousands of other websites. Google maintains those excerpts qualify as "fair use" under copyright laws, exempting the company from having to pay any licensing fees to most Web publishers.
Some media executives, such as News Corp. CEO Rupert Murdoch, have blasted Google for the practice, arguing that Google is profiting from the work of others. Google contends it is helping newspapers by driving more traffic to its website.
Unlike newspapers and broadcasters, the AP doesn't try to draw traffic to stories on its own website. Rather, the AP licenses its content to other media, which sell their own advertising in print, on the airwaves and on the Internet.
But advertising in other media, especially print, has been crumbling in recent years, prompting the AP to reduce the fees it charges U.S. newspapers and broadcasters.
Squeezed by those concessions, the AP's revenue fell nearly 10 percent to $676 million last year and management anticipates another drop this year. The slump prompted the AP to lay off about 90 employees from its news staff late last year, the biggest cutback at the cooperative in decades. The AP also eliminated other jobs through buyouts and a hiring freeze.
Google, meanwhile, has been thriving, even during the worst U.S. recession since World War II. The company earned $6.5 billion on revenue of nearly $24 billion last year. Its net income is on pace to surpass $8 billion this year.