The story required at least three days of reporting and editing work. The facts had to be bulletproof. The post went live on nymag.com’s Daily Intel column at 7:57 p.m. on March 13.

The next morning, an editor for the Huffington Post spotted the item and wrote a rendition of it for that site, publishing at 8:27 a.m. Huffington Post played by the rules: It credited Sherman by name and gave nymag.com a link at both the beginning and the end of the item. What Huffington Post took from Sherman’s post—237 words, or about half the original length—would be justifiable under almost any definition of copyright.

The power of aggregation soon became clear: The original Sherman post drew nearly 53,000 readers on nymag.com, and about 17,500 of them came directly from the links on Huffington Post. Smaller numbers of readers came from hotair.com, which is part of a network of conservative websites and publications; and from Andrew Sullivan’s popular blog, The Daily Dish. All told, three-fourths of the traffic to Sherman’s story came from other sites. The item also drew more than 130 reader comments on nymag.com, which is far higher than what the typical blog post gets.

The real winner, though, was Huffington Post. Its aggregated version of the item got more than 2,000 comments. Comments are not a perfect proxy for traffic, but it appears that the Huffington Post item got a much bigger audience for its post than the original New York item, for a fraction of the cost.

As this example shows, links from other sites or search engines are among the cheapest and most efficient ways to bring in new users. Even the largest news suppliers, such as Time.com or CNN.com, appreciate what top billing on YouTube or Google News can do to increase traffic and advertising revenue. “There are ways you can deliver better ad results, but you can’t do it if you focus on your own content only and not others,” Scout Analytics vice president Matt Shanahan says. He adds that when sites promote each others’ content, they create more engaged audiences through additional page views and commentary. “The advertiser wants the audience,” he says. “And the audience wants the audience.”

News organizations have always blended material from a variety of sources by combining editorial content from staff, news services, and freelancers; adding advertising; and then distributing the package to consumers. In the digital world, news aggregation is not so different. It involves taking information from multiple sources and displaying it in a readable format in a single place. Digital aggregation businesses can be successful when they provide instant access to content from other sources, and they generate value by bringing content to consumers efficiently.

The cheapest way to aggregate news is through code and algorithms, with little or no human intervention. The way an individual story is displayed throughout the day is determined automatically, typically according to how recently the article was published and how popular it becomes. Aggregation is slower and more expensive when it becomes “curation,” involving humans in the filtering and display processes.

Google News belongs to the most basic aggregation category, called “feed” aggregation, in which an algorithm sorts news by source, topic, or story and displays the headline, a link and sometimes a few lines from the original story. The costs are low.

Yahoo News is an enhanced aggregation feed; it has always had some level of editorial management in the selection and placement of stories—though it posts up to 8,000 stories a day, so editorial involvement is fairly minimal. Like Google News, Yahoo News aggregates from across the web, but it gives preference to the approximately 200 media companies from which it licenses content—such as the Associated Press, Reuters, and ABC News. In return for the content, Yahoo News gives the partners a share of its ad revenue—in addition to sending them traffic.

Traffic to the news sections of Yahoo and Google is relatively small compared with the total traffic of these companies’ sites. For example, in one week in April 2011, Yahoo News represented about 6.5 percent of the total traffic to all Yahoo sites as determined by the online audience measurement company Hitwise. But Google News and Yahoo News are the first stop of the day for significant numbers of users, and that is considered a good predictor of multiple visits and customer loyalty. Yahoo and Google also let individual users customize their home pages by personal preferences—according to topic or news source. In the latest refinements, Yahoo has introduced a recommendation engine for stories called LiveStand, while Google introduced “News for You,” which keeps track of what stories a user has clicked on and provides related content.

Bill Grueskin, Ava Seave, and Lucas Graves are the co-authors of "The Story so Far: What We Know About the Business of Digital Journalism." Grueskin is dean of academic affairs at the Columbia University Graduate School of Journalism. Seave is a principal of Quantum Media, a NYC-based consulting firm. Graves is a PhD candidate in communications at Columbia University. For further biographical details, click here.