Google News is cherry picking, it picks the best stories, and it picks the very best, and most valuable part of a news story: the headline, the first paragraph, and often, an accompanying photograph.
As journalists we are taught to write an inverted triangle. We write news stories assuming that only the first paragraph might be all that is published, because of space reasons. Copy editors cut from the back, because when you are on press deadline, you cannot rewrite you can only cut. Therefore you have to try to distill the essence of the news story into the first paragraph.
By copying the headline, the first paragraph and an accompanying photograph, Google News, and other news aggregators, have cherry picked the most valuable part of the news story. You really don't need to read the rest. If you do want to read the rest you click through to the originating news site.
Google says it acts in a virtuous manner because it drives traffic to the news sites from which it copies the content for Google News. However, much of the traffic comes from the search engine--people typing in search queries that point to news stories.
Google News, however, allows users to scan hundreds of news sites and they don't click through to the original site. In this way, Google takes traffic away from news sites.
How much traffic does Google drive to news sites, how much traffic does it deflect from news sites? I don't know, I don't think anybody knows.
And it doesn't matter because the vast majority of news sites don't know how to monetize their online operations. So even if they were getting twice the traffic, it wouldn't help them much. It wouldn't help them pay the journalism bills.
Many news sites run Google AdSense, which pays a tiny amount, nothing near covering the costs of producing the content. New York Times runs Google AdSense. That shows these online sites, no matter how large and important, don't know how to monetize their online operations because Google AdSense, even if you are getting *all* the revenue, pays very little. It wouldn't even pay the costs of operating even just one of NYT's global network of news bureaus.
This is all part of the business crisis affecting media. Blogging is not disrupting mainstream media, it is online marketing, specifically online search marketing that is causing the disruption.
It is simply cheaper to market products and services next to a search box than it is next to journalism.
Newspapers paid for their journalism by selling advertising. Today, that newspaper advertising performs very poorly except for some large brands.
Google and other online search giants are better at selling products and services than through journalism--and that's mainstream media's problem.