We’ve written before about how crowdsourced verification of user-generated content is a significant trend in new media, and Storyful has been at the forefront of that wave since before most people had even heard the term. On Friday, the three-year-old startup — which is based in Ireland — agreed to be acquired by News Corp. for $25 million, in one of that company’s first acquisitions since it was split in two by chairman and founder Rupert Murdoch earlier this year.
News Corp. and Storyful have both talked about the deal in a press release and a blog post respectively, but I wanted to find out more about the reasoning behind it from both sides, so I spoke with Raju Narisetti — a senior vice-president of strategy at News Corp. and the chief architect of the acquisition — and Storyful founder and CEO Mark Little, who is based in Ireland.
A trusted agent for user-generated content
For his part, Narisetti said that he has been a fan of Storyful’s news-verification model for a long time and has also been a partner, ever since he helped negotiate a deal for the Wall Street Journal to use the company’s services when he was still a senior executive with the News Corp.-owned newspaper. One of the benefits of using Storyful, Narisetti said, was that it helped the newsroom get over some of its anxiety about introducing user-generated content.
“They offered one of the first ways to get around this ‘not invented here’ syndrome that most newsrooms have, especially mainstream newsrooms that have a long brand history. That was always a little bit of a stumbling block for embracing user-generated content, so when verification became their core principle it offered us a way to use it without having to worry about credibility.”
Narisetti said that as the “gold standard for verification of social media,” Storyful can help other news entities in the same way, by acting as a professional middleman for use-generated content — a kind of 21st-century version of the old news-wire model that Associated Press and other entities were built on, with correspondents in locations around the globe.
congrats to @newscorp on @Storyful. But especially to @r2000c who 1st pitched it to @rupertmurdoch this summer pic.twitter.com/u94Unn9vP1
— Natalie Ravitz (@nravitz) December 20, 2013
And it’s also about monetization
Little, a former foreign correspondent who founded Storyful in 2010, has said that this was his vision for the company from the beginning — that is, to provide a platform that news outlets could use in order to filter and make sense of the massive quantities of videos and other forms of “citizen journalism” coming out of news events around the world.
It’s not just about verification, however. Narisetti said the other aspect of Storyful that interested him — and the reason it fit in well with News Corp.’s strategy — was the potential for monetizing the user-generated content that the service verifies. Storyful has been building this part of its model over the past year, in partnership with YouTube. Said Narisetti:
“While everyone knows them for verification, they’ve been able to use the same principles in spotting potentially viral videos and then managing the rights to that content, and that’s where we see some significant revenue opportunities.”
In particular, Narisetti said that one of the opportunities he sees is in helping brands and advertisers curate and verify and make use of user-generated content and Storyful’s services for their own purposes — since they are even more overwhelmed by the challenges of doing that than many news organizations (News Corp.’s senior vice president for video, Rahul Chopra, is joining Storyful as chief revenue officer).
Creating a 21st-century social news agency
Both Narisetti and Little made a point of saying that the idea is not to create a company that owns all the user-generated content in the world — as some observers of the deal seemed to fear — but to build a kind of social-news agency that can help both creators of content and publishers monetize it efficiently and ethically (Little in particular has been a vocal advocate of the rights of content creators to get credit and compensation for their content).
Narisetti said that this is part of why the deal is being done by News Corp. rather than the Wall Street Journal or Dow Jones, and why Storyful will remain a standalone unit with an independent brand — so that News Corp. can use it to provide services to media outlets and other partners of all kinds. Little said this ability to act as a kind of neutral third party for customers was a big part of why he wanted to do the deal with News Corp.
“Storyful needed to maintain its neutrality — we don’t want to own all the user-generated content in the world. The only way we could grow is to work with many platforms, and to help turn UGC into really compelling part of news agenda for many different entities, and this allows us to do that… we see the development of an ethical partnership between the creator or uploader and a middleman, an agent who can help manage those relationships.”
Little said he could have remained independent, but he believes that the industry is evolving so quickly that he might have lost a major opportunity if he had tried to become larger on his own or hold out for a higher valuation.
“With this deal we’ve guaranteed that we can move at a faster speed, and take advantage of the right moment,” he said. Little also said that the new News Corp. may be a large company, but it “feels like a startup” because of the energy that Narisetti and his team have. “In the end, it’s not about the dollars — it’s more about the culture,” the Storyful founder said.