The Experiment

What’s next for NowThis?

May 11, 2015

Photo by Sean Hemmerle

Inside the office of video news startup NowThis, it’s quiet. Soft music plays from a nearby speaker, but most of the sound comes from clicking keyboards and computer mice. Nearly all of the 30 or so staffers are wearing headphones, absorbed by computer screens as they edit short clips for social media to meet their daily quotas. Desks are arranged in clusters, offering no visual distinction between the workspaces of video editors, producers, and executives.

This small newsroom pumps out 40 to 50 videos a day, all with the goal of capturing the trending topics of the day (or hour). The company can work fast because, unlike in conventional news, about 80 percent of the source material comes from subscription services, according to Executive Producer Sarah Frank. They interpret “news” broadly. Subjects can range from a flying car to President Obama challenging gender stereotypes in children’s toys. Often, their speedy efforts pay off. A recent post on a woman eating five pounds of bacon in under five minutes was viewed more than 65,000 times in a day.

The staff’s immediate goal is to grow the site’s audience (after hitting 72 million views in February, the goal is to keep surpassing that number) although the company has always had bigger ambitions—namely, challenging the way audiences engage with video news altogether.

Yet, in its two and a half years of existence, NowThis itself has changed course dramatically, altering its original name and shedding most of its senior staff in the process. The business model of a socially distributed video company remains dynamic and elusive. How much disruption, both internally and in the convulsive media world, can one start-up take?

If anyone could crack the code on video news, NowThis had the right pedigree. Founded in 2012 by two former Huffington Post executives, Kenneth Lerer and Eric Hippeau, it boasted a management dream team composed of former Washington Post, CNN, and ABC editors and execs at launch. The initial investment totaled $5 million. Called the “CNN Killer” by All Things D at its launch, NowThis had positioned itself as an early leader in social distribution. By the time legacy media companies began their transition to social platforms, NowThis had established its place on Facebook and Twitter. The team later decided to drop the word “News” from the title because they “didn’t necessarily want to be constrained by the traditional sense of news,” according to Steven Belser, vice president of production and creative and the third employee to join NowThis.

The venture was always designed to reach users on social media, but what constitutes “social media” has changed greatly in the past few years. Today the company publishes on eight social platforms with clear plans to expand as new social spaces emerge. However, its future stability is still unsure. Publishing to social media sites is like playing cat-and-mouse; for every update Facebook and Twitter makes, NowThis’ social strategy team must work to catch up to these minor changes. These platforms offer few options for advertising.

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It also remains unclear how the new company is creating profit. The only public information on funding available through Securities and Exchange Commission documents total roughly $15 million in investments that the company has raised since late 2012. When asked for further information on additional revenue, NowThis cited strategic partnerships and syndication programming deals in place but offered no specific numbers. “We’re already driving a sizable amount of revenue each year,” said Belser.

Through all this change, NowThis has been consistently iterating on its content, working hard to match the style of video with the platform that it lives on. When it launched, one- and two-minute videos were the norm. Most of the content was hosted by VJs, or video journalists and a flashy graphics-heavy intro played for several seconds before content began. Now anything longer than 50 seconds is verboten. The intros were abandoned in favor of on-screen text that lends itself well to Facebook’s autoplay feature.

Perhaps most dramatically, the newsroom abandoned its homepage in early February of this year. Rather than a traditional homepage, NowThis switched to a landing page that links users to content that only exists on social media.

“It was a movement that was unanimously supported in the newsroom,” NowThis Social Strategist Dhiya Kuriakose said. “Everybody who works here understand how valuable our social platforms are and that’s where our audience lives and that’s where we appreciate them the most.”

Despite the drastic change, Frank says the site’s audience continues to grow. In late 2014, it was announced that NowThis raised $6 million in funding through an investment from NBC Universal as part of a strategic partnership. “It’s an opportunity for them to work with people focused on social and mobile distribution,” said Steven Belser. The partnership, he believes, lends itself well to both parties.

NowThis and MSNBC are working together to produce two daily series, Sound Off and Facepalm. Sound Off features controversial content that prompts the audience to react in the comments. Facepalm showcases shocking, offensive, or downright dumb moments in trending news.

“Some [media companies] have a difficult time really adopting some of the social and mobile practices just because they do have a legacy model to protect,” he said. “It’s easy for a lot of those publishers to partner with someone like us to help push into that territory rather than try to reverse engineer it in house.”

But while NowThis may be a pioneer among content companies that want to move outside of the constraints of a homepage, by moving to social media the startup has given up the opportunity of onsite advertising. The side panel advertisements on Facebook are revenue streams for the platform, not the user. Most news videos are profitable because of pre-roll advertising, the 15- to 30-second ads that play before the video starts. Facebook does not support this advertising strategy. Sites like BuzzFeed and Vice have successful video arms but are profitable because they are tied to home pages that produce a much larger variety of content.

“There’s obviously downsides to distributing your content over other platforms that aren’t wholly owned,” said Belser. “Having an owned and operated experience affords you the ability to drive revenue in a variety of ways and there are obviously shortcomings when you’re working on someone else’s ecosystem.”

However, Belser argues that NowThis has a key skill that others lack: adaptability.

“We have a well-distributed model where we’re able to kind of weather downturns on some platforms by focusing on to the other platforms that are yielding the most upside,” said Belser.

But the balance goes far beyond what content is compelling—the team also has to decide which content to feature on different platforms. Different platforms, Kuriakose said, have very different demographics.

“Our audience on Tumblr is very liberal and very fond of content around Obama or the Democratic Party,” she said. Meanwhile, Instagram users are “not really politics-inclined but still interested in science and technology.”

NowThis is also exploring new ways to grow its audience. The company recently added Kik, a smartphone messaging app that allows users to communicate without sharing personal information like phone numbers.

“Young people, especially late high school and college, use Kik obsessively,” said Frank. With a younger generation avoiding platforms like Facebook that offer minimal privacy from parents and grandparents, a target demographic is moving to more informal content-sharing platforms.

“The types of things you share in a private message with friends are probably very different than the types of things you would share on your Facebook feed in front of friends, family, former teachers, and classmates,” she said. The gentle rhythm of taps and clicks behind her promises that no matter what platform, no matter what length, no matter what format or formula, NowThis is committed to making video news accessible to the social media generation. The company’s most consistent value is change.

Carrie Waltemeyer is a multimedia journalist form Springfield, VA. She recently canoed the Gowanus Canal in subfreezing temperatures for a video about citizen scientists. Follow her at @cmwaltemeyer