How publishers and tablet readers will benefit from the future of Flipboard, Zite and news aggregation

by Doug Drinkwater

August 16 2012

With news aggregators having flourished since the iPad’s arrival in 2010, TabTimes looks at what the future of this market means for news publishers and tablet reading.

Once derided by publishers, news aggregators have become commonplace over the last 18 months. An increasing number of digital readers have taken to apps like Flipboard and Zite to unearth news from all their favorite sources and this has led Flipboard to hit eight million users, and Zite to be acquired by CNN.

News aggregation has not always been a blossoming business though. While Flipboard is now recognized as a key player in the media industry (by big names like The Economist no less), other news aggregators have been less fortunate.

This view stemmed from some aggregators taking publisher content illegally, actions which resulted in more than a handful of publishers pushing out ‘cease and desist’ letters. Indeed, a quick search for ‘cease and desist & news aggregators’ brings up 970,000 results on Google.

But recent content deals between Flipboard and the New York Times, as well as Pulse with The Wall Street Journal, would hint that times are changing.

Flipboard is promoting exclusive content and advertising with the New York Times while Pulse struck a similar deal with the Wall Street Journal a day later.

Mobiles Republic makes the News Republic and Appy Geek news aggregation apps and reckons publishers are now aware readers want to read all their content in one place.

“I think the relationship between publishers and aggregators is changing, although this depends on the aggregator’s business model”, said Rich Reiter, director of marketing.

“That relationship was once difficult and whereas content providers once put up walled gardens, they now realize they’ll never get more readers by doing this. Publishers know now that they have to go off site”.

Zite CEO Mark Johnson echoes Reiter’s thoughts, and reckons publishers now see the benefit of working with news aggregators.

“I think it’s just time. We’re growing really fast, Pulse is too, and publishers don’t want to be left behind, especially as reader habits are changing. They now see it in their benefit to talk with us.”

News 360 CEO Roman Karachinsky says that publishers only started to embrace news aggregators after successfully deploying their own pay walls (the NYT is one fine example), but doubts whether all aggregators will be able to get behind this business model.

“The cease and desist letters have more or less stopped. We still get publishers reaching out for us to be conservative on the content we aggregate, but it’s much less aggressive and more civilized", said Karachinsky when quizzed on the changing relationships. "They’re now much more open to having a discussion”.

“I like that publishers have now embraced this industry as a content platform, but it’s going to be a bumpy road. The monetization is not quite there yet, but there is a bright future for news aggregators. We could almost become like the cable provider for the TV network”.

The aggregator business model: Advertising or exclusive content?

The Flipboard and Pulse deals have brought about a question; do aggregators look to partner with publishers for exclusive content, or stick with an advertising business model?

Having struck the deal with the Wall Street Journal last month, Pulse co-founder Akshay Kothari believes similar deals could be beneficial for both publishers and aggregators going forward.

“Most content plans are currently $20 a month, which is a pretty big jump from a freemium user. What we’re doing is really trying to get readers comfortable with paying for content.”

For Karachinsky, leader of a firm with no business model or revenue at present, advertising remains the most viable way of monetizing.

“I feel advertising best supports our scale. I hope that more publishers that aren’t behind paywalls come to work with aggregators as there’s definitely space for premium content. But I think advertising is going to be the easiest way and will generate the most revenue.”

And while the idea has been raised of news creators bringing across their own ads to aggregating apps, neither News360 nor Zite see this as the future of the market.

“Ideally, aggregators sell the ads and not the publishers,” said Karachinsky. “We need to be careful about taking a broken advertising model and throwing it on a tablet”, said Zite’s Johnson.

“The online world never made the same margins as the print world. It’s really a chance to rethink the model from the ground up, and the tablet gives us a great opportunity”, said Johnson.

The future of news aggregation: Better personalization, and more tablets

So, where do news aggregators go from here? There’s already been talk about new premium publishing agreements and new ad models, but what will the Flipboard, Zite and Hitpad of the world look like tomorrow?

“You’re going to see more cross-platform access, and however the user wants to use Mobiles Republic, we’ll make it available for them wherever the eyeballs are; Google TV, iPhone or the Microsoft Surface”, said Reiter.

“From a design and functionality view, you’ll also see more personalization, customization and discovery. You’ve also got to imagine that how readers find news and news apps in the first place becomes more interesting”.

Karachinsky says that changes in content creation are slower than in the technology industry, but stresses aggregators will get better at finding the right sources and people to follow.

“Getting news is still a pull-based concept, but it’s becoming more push-orientated with new technology like Siri and Google Now”, said Karachinsky.

Pulse’s Kothari backs this up by saying that discovery will improve in future.

“We’re really moving into the discovery of content you wouldn’t know existed. It’s also going to be a space which will provide context in terms of why a story is important. These things are really interesting, and it’s a natural next step for us.

Zite's Mark Johnson believes aggregators will increasingly work with publishers to a point where there is a "pretty solid" business model for curators in three to five years’ time, and reckons on the app front that there’ll be more tablets, and even HTML5 apps.

“Every year more and more people are buying tablets. There’s movement from Surface and I wouldn’t be surprised if there is a fourth of fifth contender on the market soon too. And as an app developer, it is extremely costly to go to all the different platforms, but you just have to.”

For now though, news aggregators are busily aligning with major publishers and sorting out business models. And that couldn't be better news for the health of the media industry or for avid tablet readers.

Doug Drinkwater is the International Editor of TabTimes and is based in London, England.

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