The rise of the Net has led to all kinds of interesting legal questions. I’m not a lawyer, but some of these new questions raised are pretty interesting. Adam Penenberg says that Google News doesn’t show ads because of legal questions. The notion is that carring headliens and lead paragraphs from news sources is in all likelihood fair use when you’re not making money from it. Mix money into the equation, and you might just run afoul of copyright law.
Fair use is a tricky balance. On the one hand, Google drives traffic to news sites whose articles get prominent placement on Google News. On the other hand, Google News may very well displace front page hits of news sites (it is one of the top 10 news sites), and it shows news from many sources. Just looking above the fold, I see more than a dozen news sources.
Desktop aggregators would seem to be safe, because that’s just software run by individual users. Services like Bloglines, on the other hand, would seem to have the same issues that Google does.
I don’t think there has been a case yet that has touched on this particular issue. I’d guess that it’s only a matter of time before there’s a test.