What's a news producer going to do with an aggregation service? Do the business models mesh?
"It's not an aggregator," KC Estenson, general manager of CNN Digital says. "It's a curator."
By any name, CNN's acquisition of iPad news reading app Zite is a strong and positive signal to companies working on news reading apps, like News360, which I recently covered. But CNN is in the business of producing news stories, on which it sells advertising impressions at a rate commensurate with the expense of creating the content in the first place. Traffic to an automated news gathering service will sell at a substantially lower rate (especially now that Zite no longer runs its own ads on other producers' stories). It costs less to produce Zite pages, too. It is, in other words, a completely different business. Is there a business alignment?
Estenson says Zite "is for when you're not in a heavy news mode." It's a "Sunday morning magazine." He says that users often check back on CNN.com several times a day. Zite won't get that kind of usage. And that's OK. "We get a diversification in our digital portfolio," says Estenson. For both readers and for CNN the company, Zite is another kind of media.
Estenson says, though, that it was clear to him that CNN needed to get on the aggregation/curation wagon train. People read the news differently now. While big news brands, like CNN, still draw readers, so too do smaller or alternate sources of news, due to social recommendations and increasingly smart apps (like Zite) that find users what they like.
The Zite buy is clearly seen as a strategic move at this point. It's the first acquisition of its kind CNN has ever made and the company has no intention of squeezing revenue from it any time soon. There are no ads on the service, no plans to add them, no "overt monetization" at all. The eight-person Zite will remain a separate business, based in California, with its own leadership and team. Estenson plans to give Zite air cover so it can develop its technology "without venture capital pressure." The business model, he says, will come later.
It's also clear that CNN could learn from Zite's tech team. CTO Mike Klaas gave me a primer in how Zite picks stories for its users. It uses not just the "velocity" of a story (that'd be "trending" to people in the Twitter ecosystem), but social proximity for recommendations. It picks stories for users based on retweets and reposts from people not just closely connected on social networks, but also who have similar interests, determined by their public social network behaviors. While CNN plans to keep Zite independent, I expect the company will attempt to bring some of its technology to the main CNN site.
Zite, by the way, is a strong iPad app that I recommend installing. As a user, I hope CNN keeps the app alive and doesn't simply absorb the tech team into the CNN machine. But I would not be surprised if that's the ultimate outcome of this acquisition.