Video, verification, value: Why News Corp’s purchase of Storyful deserves your attention
I first met Storyful CEO Mark Little at the 2011 ONA Conference in Boston. We headed off to find a quiet corner so I could hear more about what exactly a "social news agency" was.
“Three words: it’s discovery, it’s verification, it’s delivery,” Little told me. “I think that’s essentially the three component parts of the new form of social news.”
I was amazed they were basically running an outsourced verification service for other news outlets.
"I see the need," I wrote. "The question is, can verification form the basis of a viable business?"
On Friday, the News Corp announced it paid $25 million to acquire Storyful. Question answered.
Storyful's exit is about far more than the market validation of verification, though that is one clear takeaway. It's also about the continued importance of video for news organizations, and what I think is a good strategic move by News Corp.
First, two necessary disclosures: In my role at Spundge, I've had discussions with Storyful leadership over the past two years about the two companies working together. As of now, and as far as I know, there are no plans to do so. I'm also in the final stages of editing the Verification Handbook for the European Journalism Centre, and two Storyful journalists contributed chapters and a case study. I'll also simply say that as someone who writes and thinks about verification on a borderline obsessive level, I've been a fan of Storyful's work.
But, as I said, this is about more than just verification. Here are six thoughts on why I think News Corp was smart to buy Storyful, what it means for both companies, and, yes, what it says about verification for all news media.
1. Online video, with rights and revenue
Storyful has two offerings: a Newswire that provides a TweetDeck-like stream of UGC content and news via Twitter lists, cleared UGC video and other social sources. This is used by news organizations and others to help them track breaking stories and viral content, and to find video they can use. It also provides access to a database of sources journalists can contact for interviews related to the content.
The second, newer offering sees Storyful work with content creators/uploaders to license UGC and viral content. Both result in Storyful discovering, verifying and clearing/licensing a lot of video content.
In particular, they are great at identifying soon-to-trend, trending, or otherwise newsworthy content and tracking down its owner.
They initially would attempt to get the owner to agree to some form of licensing so Storyful clients could gain access to the material. Starting in January of this year, they expanded to offer the ability to manage and protect the rights of the content for uploaders, and to share revenue with them.
It's been a very good piece of business.
The upshot is News Corp now has a company that is home to, and a licensor of, an ever-growing library of viral and newsworthy video. Let me rephrase that: an affordable and ever-growing library of viral and newsworthy video. That appeals to all of their news properties, but it also appeals to the brands News Corp sells advertising to.
In the official announcement from News Corp, the company's alliteration-addict CEO, Robert Thomson, hammered home the video point. “Storyful has become the village square for valuable video," he said.
Video is a vocation for the new News, which will combine with Storyful to reach a growing global audience, enhancing our own editorial products and creating new content communities.
News Corp is pretty clear: video is today a core need and content asset for any news company. It's also very important on the business side, as expressed by News Corp. Senior VP of Strategy Raju Narisetti in a interview with Quartz:
I’m just using this as an example, but the ability to piggyback on a really cute cat video that takes off, is difficult for a brand, they don’t know who manages the rights.
Video for newsrooms and video for the advertisers who fund newsrooms.
Narisetti drove the point home with what he told Poynter:
“Storyful is not just a pioneer in verifying news video,” he said, but it’s very good at spotting and obtaining rights to news videos. “That gives us an opportunity to take viral video and not only use it in our global newsrooms but offer it to third parties as well,” a prospect Narisetti said has “significant revenue potential.”
Storyful's ability to both surface and get the rights to viral and UGC video, and to drive revenue from this work, is unique. The other two news organizations that do a really good job of surfacing and obtaining permissions on a large scale are Associated Press and BBC, but they do not have as much of a revenue model around this practice. Storyful has that, and the video.
With that in mind, spending $25 million to get into this game at the top level looks very smart for News Corp. Plus, Storyful says it earned its first profit last month, making it a business with a reasonable prospect of helping, rather than hurting, the News Corp bottom line.
2. Scale, scale, scale
This was the key theme from Storyful's Little.
“We want to be in every newsroom in the world,” he said, “and offer them a solution that can scale. And that’s the word we want to emphasize today, is scale.”
Startups often have to deal with sales prospects who want a good deal because, hey, you're a startup and need the business to prove your value. This is particularly true in the news business, where big news brands know that their logo on your customer page is a big deal. They also need to show the market that they can, yes, scale what they do.
To whatever extent these and other startup-related sales issues challenged Storyful, they're now gone -- although a new issue arises. (See number four below.)
Storyful has a big backer, and the path forward to scale is clear, according to Narisetti, who told Quartz about "expanding the service to other languages, such as Chinese, Japanese, and Hindi." And also the above mentioned ability to target brands.
News Corp gets a great video asset that's in line with their strategy, and it's an asset they can help scale to maximize the return.
3. Younger, more social video
Yes, back to video. The international expansion detailed above is very similar to what was said about the plans for Vice Media when News Corp's sister company, 21st Century Fox, spent 70 million to buy a stake.
Storyful and Vice Media are two different sides of the video coin, so it's easy to see how they both ended up in the recently-split Murdoch companies.
Vice produces some great original video (and other) content for its young audience, including a show for HBO and a big YouTube channel. Video that resonates with young people and that comes from a company that's already found a way to bring brands into the equation? That ticks a lot of boxes for 21st Century Fox (and for News Corp).
As for Storyful, it's great at identifying and the securing rights to newsworthy and attractive user-generated content. This currently is mainly an ideal fit for hard news. (Hello, News Corp.) But overall, it's a very cheap way to get your hands on video content that can engage an audience and help with storytelling. (Hello, 21st Century Fox.)
They may not be under the same Murdoch company roof, but Vice and Storyful are already working together, thanks largely to Vice's recent big push into news.
"We are working with Vice and hope to deepen that collaboration in 2014 -- we love what they are building," Little told me in an email. (Disclosure: I've also had talks with Vice about working with Spundge.)
It seems Storyful is already providing some connective tissue between News Corp and 21st Century Fox. It's not surprising that this is happening around digital video, which both Murdoch companies have clearly identified as a key priority.
4. Tabloid-ready digital content
News Corp properties like The Sun and the New York Post must be thinking about how to counter the explosive digital growth of Mail Online, the web version of U.K. tabloid Daily Mail.
There are a number of reasons why Mail Online is a juggernaut, and one of them is its ability to pick out, and often outright scrape/copy, highly viral stories. (They also package them extremely well, but that's a different post... .)
With Storyful as a sister company, the News Corp tabs have a powerful discovery, verification and licensing operation as part of their organization, not to mention a great set of tools that Storyful offers to journalists. It would be a colossal mistake for the News Corp tabs to not take advantage of this.
Storyful should be able to help The Sun's and Post's digital efforts compete better against Mail Online through breaking news and, most of all, viral video and social media content. They may also in some cases be able to obtain the necessary rights to lock out Mail Online, or go after them for infringement. I don't think the latter is a major part of the acquisition, but I also don't doubt Murdoch and the folks at The Sun would love to paper the Daily Mail with solicitor letters if they ever have the opportunity.
As for giving special treatment to its new News Corp brethren (such as a first look at certain UGC content), Little told me, "It's too early to predict the exact relationship with other NC properties but we will make sure all clients and partners are treated equally well."
5. The challenge to competitors/customers
My first reaction upon hearing the news, aside from being happy for the Storyful folks, was to think that The New York Times and some other existing Storyful clients will need to take a step back and think about this.
Storyful is remaining a standalone entity and I'm sure it won't change how it serves clients. That's not the issue.
The issue is if I'm The New York Times, or another company with big aspirations, I have to look at this acquisition and ask myself if I need to build or buy this competency for my newsroom.
Any company that competes with News Corp and is a Storyful customer is going to have to at least think about this. It's great that Little told Poynter that Storyful gave some of its customers an early heads up, and "so far the response has been very positive.”
But it's possible this acquisition causes some existing clients to think about building their own in-house Storyful, or to seek out similar acquisitions or partnerships.
6. Validation for the business value of verification
Storyful has done a great job branding themselves as verification experts.
They are seemingly at every big journalism conference to share their knowledge; they publish blog posts about how they do it; they run an open newsroom on Google+ that is a fantastic testing ground for crowdsourced verification.
But it's important to recognize the value Storyful ultimately built came from its ability to develop products and offerings based on its expertise at discovering and verifying user-generated content. It used verification as the foundation upon which to build products and services.
Storyful started with a basic newswire service and at first a public website where it published some of its work. It found, published and sold stories. It added in tools to provide a real-time dashboard for clients, and provide piecemeal verified content that newsrooms could use, along with validated sources. It gave newsrooms content they could use. It offered training services and workshops around verification.
And then, Storyful saw that by finding and verifying valuable UGC it often had a unique, early relationship with the creators. So it built an offering around helping right-place-at-the-right-time creators manage and monetize their content. That, in my view, is the offering that changed the game for the company.
All of that flowed from finding and verifying social content better than almost anyone else.
Today, there are organizations that will have to seriously consider this acquisition in the context of their competition with News Corp.
But I encourage every journalist and news organization, regardless of who you see as competition, to view this acquisition as a demonstration of how investing in verification can add new value to your organization, and give birth to new products and new revenue.
What can verification build for you?