CNN's $20M Hedge On Zite Values Aggregation Biz Over Original News

CNN paid $20 million for personalized iPad magazine Zite this week. But if you use it, odds are you won't get CNN's original news. So what's CNN getting for its money?

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The next time you click an item on Zite, the personalized iPad magazine CNN acquired this week for a reported $20 million, odds are you won't be clicking on an article from CNN. For Zite pulls content from hundreds of thousands of sources, as CEO Mark Johnson tells Fast Company, which leaves little chance that you'll see links to CNN, unless Zite's algorithm learns your tastes and determines you have a penchant for Wolf Blitzer's blog (and/or beard).

It's an odd approach for the self-branded "Worldwide Leader in News" that lessens the importance of The Scoop—of pushing CNN's own content—and places the focus on aggregation. "To me, it's introducing a new form of the newsstand, except all the magazines and newspapers you're looking at, and all the articles, they are selected based on your interests," says KC Estenson, senior VP and GM of CNN.com. "That's a trend we see coming, and something we felt we wanted to have a stake in."

No doubt CNN picked a good startup to have a stake in. Despite a few bumps in the road, Zite is one of the most popular "personalized news discovery" engines out there, thanks to glowing reviews and more than 120,000 downloads in its first week on the market. (Other services such as FlipBoard and Pulse offer a different kind of personalization, based on social and RSS feeds, respectively. Zite's algorithm tailors content to your interests.) The issue is that CNN does not plan to integrate CNN content with Zite—that is, CNN will not tweak Zite's algorithm or layout to push more CNN content. Rather, CNN will operate Zite as an independent business. "We have no intention of altering or changing Zite in any way, shape, or form," Estenson says.

That's suprising, because, traditionally, news outlets have aggressively lusted after your attention. When a news story breaks, The New York Times wants you reading The New York Times—not the Wall Street Journal. Similarly, when you turn on the TV after work, CNN wants you tuning to CNN for your news—not MSNBC or Fox. But with the acquisition of Zite, CNN's own product could soon (and most likely will) be telling you to read another source for your news, possibly even a competitor like MSNBC or Fox, depending on your tastes or political slant. Isn't that a problem?

"No, not at all," Estenson says. "I look at this as only additive to CNN's core business. Millions and millions of people love CNN and turn to it in times of breaking news, global crisis, and for our original reporting. At the same time, one of our missions in digital is to create products that people love. What Zite does is it plays more to your passions—more to your interests. Those type of stories have less breaking news momentum. For us, it's about helping people discover a wider array of content and stories that they're interested in."

It's a similar strategy that AOL is taking for Editions, the company's recently launched personalized iPad magazine, which I referred to as a "remarkably unselfish product." Like CNN's Zite, AOL Editions has not tweaked its algorithm to push AOL content—even though the company spent $315 million acquiring the Huffington Post, tens of millions of dollars acquiring blogs like TechCrunch, and has invested millions more developing Patch, its local news network. "Our general belief is that nobody reads content from only one source," David Temkin, head of AOL Mobile, told me at the time. Added Sol Lipman, senior director of mobile projects, "I don't think we believe that if it's not written on the Huffington Post, then it doesn't matter…I think aggregation is probably the way to go. We definitely want to build a product that's good for the user—our focus was on the user, not on the publishing business."

CNN strikes a similar tone. Estenson refers to the tablet as a "different mode" of consumption. "Having a product like this in our portfolio keeps us relevant and competitive," he says. "What we want to do is get it in the hands of as many people as possible, and make it a killer app. We want it to be a great product that people love."

That's true enough. If Estenson were to tweak Zite's algorithm to favor more CNN content, it would be displeasing to the reader. Zite would cease to be Zite, in other words, a service that was intended to provide content based on the user's interests—not on CNN's. While Estenson says CNN will integrate some of Zite's backend technology into CNN.com and other mobile properties, Zite will remain independent. And even in that awkward position—of potentially aggregating content from competitors—CNN can still make money through advertising, which the company plans to implement in the future.

"To be clear, we're in no rush to monetize this product—we don't need this thing to be a billion dollar business," Estenson says. "I guess the core of it is, if you do the right thing by the consumer, you build products people will love, and the business will follow."

[Homepage image: Flickr user Status Frustration; top image: Flickr user Wayan Vota]

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1 Comments

  • Pawan Deshpande

    CNN’s investment in Zite underscores
    what we’ve long believed here at HiveFire: streamlining the most relevant and
    timely content for today’s content-deluged audiences is the future of the
    internet. Publishers and marketers alike need to shift their thinking away from
    selling their own content, services or products, and more toward delivering
    value to their readers and customers, even if it does mean covering
    competitors, directing web traffic back to other sources, or scrapping a sales
    message.    

    Clearly the model works. Not only did
    CNN put significant resources—to the tune of $20M—behind it, but companies of
    all sizes (from non-profits and startups to major tech companies) have also
    invested their more modest budgets into similar efforts. Content curation, the
    process of finding, organizing and sharing third party online content, is now
    used by 48 percent of marketers (according to HiveFire’s Content Curation
    Adoption survey from February 2011- http://www.getcurata.com/conte..., and that number is rapidly growing.

     

    CNN’s move shouldn’t come as a surprise,
    just another proof point of what’s next for media and marketing.