The service, called Livestand, also will be open to other publishers looking for a way to connect with the tens of millions who are expected to own tablets such as Apple Inc.'s iPad by the end of this year. Livestand also will be available on smart phones.
Readers will be able to pick from a frequently updated assortment of content including news, sports, finance and other topics. Most of the content will be free, although Yahoo plans to allow publishers to sell subscriptions, too.
Although Yahoo previewed Livestand for reporters Thursday, it's not available yet. Yahoo expects Livestand to debut by the end of June.
The "digital newsstand" is the latest bet that touch-screen tablets will deliver a new vein of revenue for publishers and other ad-driven businesses such as Yahoo. Apple is building a newsstand within its iTunes store, and began selling subscriptions last week to a daily newspaper called "The Daily" that News Corp. designed especially for the iPad. Google Inc. also is expected to encourage publishers to develop editions for tablets running on an upcoming version of its Android operating system.
The tablet audience is rapidly growing. Apple sold nearly 15 million iPads in just eight months last year and research firm Gartner Inc. expects 55 million tablets to be shipped by the end of this year. That estimate includes iPad alternatives running on operating systems made by Google, Hewlett-Packard Co. and Research in Motion Ltd.
With so many people embracing tablets, Yahoo is confident advertisers will be eager to pour more money into marketing campaigns tailored for the device.
"We see the tablet as a catalyst that will allow advertisers to shift dollars away from print, TV and radio," said Blake Irving, Yahoo's chief product officer.
If that turns out to be true, it could be another blow for newspapers. Despite efforts to harvest more revenue from websites and digital devices, newspapers still make most of their money from a steadily shrinking volume of print advertising. Total newspaper revenue from print ads has fallen by nearly 50 percent during the past five years, draining about $25 billion in annual revenue from the industry.
Yahoo already has forged a partnership with hundreds of U.S. newspapers to help them sell more online ads. The company, based in Sunnyvale, Calif, indicated it will also invite newspapers to sell editions and share in ad revenue on Livestand. Most major newspapers and magazines already have or are working on applications for tablets and smart phones.
Although it's in better shape than most newspapers, Yahoo has been losing ground to Google and Facebook in the race of online advertising. In its most recent quarter, Yahoo's ad revenue fell by 11 percent from the prior year while Google's surged 26 percent. As a privately held company, Facebook doesn't release its results, but documents recently distributed to its investors indicated its 2010 revenue was on pace to double from the prior year.
Livestand will make it easier for advertisers to target people more likely to be interested in their products and services because the product will collect information about users' interests and whereabouts, according to Yahoo executives.
As it learns more about what individual users like to read, Livestand will show more material targeted to those interests.