potential ad impressions in the process. “We did it because we have the bests interest of the users at heart,” Johnson says. Also, he says, there just wasn’t time to negotiate republishing agreements with every Web publisher whose content might show up in the app. “We are a small, scrappy company that didn’t spend a lot of time building relationships. We thought we would launch, and then talk to people. We had no idea we would get so big so fast and draw the attention of major publishers.”
The solution, though, turned out to be straightforward: if a publisher requests it, the app renders their pages in Web mode first. There’s still a button that lets users switch back to reader mode, but only after those crucial ad impressions have, at least nominally, been delivered. “There are some clear disadvantages to Web mode,” Johnson says. “It loads a lot slower. It’s not optimized for the iPad. User engagement isn’t as high,” as measured by how many times readers share or rate the content. But the compromise was the only way for the startup to get back to business.
And the more time publishers spend studying Zite, Johnson says, the better they understand how it differs from some of the other news-aggregation apps. Zite doesn’t have Flipboard-style publisher sections, for example, so it’s not as if the app is duplicating the experience readers would have at the publications’ own websites. Articles from one source are always interspersed with content from other sources—some of them quite obscure. “We look at hundreds of thousands of sources every day, mostly smaller publications you have never heard of,” Johnson says.
The topic-based content streams are likely to contain articles that wouldn’t turn up in a user’s existing RSS feeds or social networks. The way Johnson sees it, that means Zite is actually bringing publishers new readers. “We fare a lot better with publishers” these days, he says. “The e-mails we typically get now are ‘How do I get more exposure on Zite?,’ not ‘How do I change the way my pages render?'”
A few months after the iPad app debuted, Zite got a different kind of message, from CNN. “They said ‘We really love your product. How can we work with you?” Johnson recounts. “‘How can we work with you?’ quickly turned into ‘How can we buy you?'” Venture firms had offered Zite “interesting” term sheets, he says, but the CNN deal ultimately proved too enticing to resist.
The network promised to let Johnson run Zite independently and to leave the startup’s team untouched (today there are four employees working in Vancouver and nine in San Francisco). It said it would promote Zite on its website and in its TV programs, and that it hoped eventually to incorporate Zite’s personalization technology into other CNN apps. But it hasn’t leaned on the company for much technology help yet. “CNN bought us because they really saw something unique here, and very wisely, they are letting it run its course,” says Johnson.
With CNN and Time Warner as it new protectors, Zite isn’t likely to get many new C&D letters. That doesn’t mean publishers have gotten used to seeing so many people consuming their content via platforms they don’t control and can’t readily monetize. But that train left the station long ago—and where readers go, publishers must ultimately follow.
Johnson says Zite’s job is to keep improving the browsing and reading experience for users, while still helping publishers find a way to thrive. “I think any company in our position needs to be sensitive to the fact that there are three parties here—the application builder, the reader, and the publisher,” he says. “The application builder wants to make sure they are creating a great user experience and have all the right content and can deliver it to users. The users want to sit and read and have a really streamlined experience. And the publisher needs to get paid, at the end of the day. We have to figure out how to work together to make sure users are getting the content they want.”
In a world where readers apparently want to consume more and more content in bite-sized chunks on smaller devices, it’s not clear which new business models will ultimately work for publishers and app makers. “It might be subscriptions,” says Johnson. “It could be advertising, but it would have to be much better than current advertising on the Web.” Zite itself is experimenting with one form of advertising—Intel has signed on to sponsor the entire technology section of the app, and Bergdorf-Goodman sponsors the fashion section. “Or something might come along that makes micropayments a lot easier. It’s a hairy situation where no one really knows the end game.”
Aggregation aggravation, in other words, isn’t going away. But the publishers’ lawyers have—at least for now.
