Will news bites for digital natives work?

December 5, 2012: 11:45 AM ET

Companies are trying to crack mobile video. Lerer Ventures-backed NowThis News is working on a formula to do just that.

121205034738-nowthisnews-gallery-horizontalFORTUNE -- "Congress is being all Congressy again," quips a youthful male anchor with a gee-whiz eye-roll as he reports on the demise of a Congressional Bill called the Sportsmen's Act of 2012. He's an anchor on NowThis News, the new mobile social video news network started by two of the Huffington Post's founders. It's Brian Williams-meets-Jon Stewart with a hint of CollegeHumor packaged into a minute-long video sent spiraling through your social networks. Is this the future of news?

NowThis News is barely in beta, yet New York media watchers are keeping close tabs on the network, which has $5 million in funding led by Lerer Ventures, where cofounders Eric Hippeau and Ken Lerer are both partners. The service targets the always-on digital natives more likely to stumble across their news on Facebook (FB) than NBC (CMCSA), and it doesn't emphasize a standalone web presence. You can find videos on the web, sure, but NowThis News is produced for mobile viewers. "Mobile is a different technology and employs different modes of distribution," Hippeau told me. "Video is coming into its own and we're trying to figure out what news content should look like in this format."

Most media companies are increasing their digital video efforts this year as businesses invest more in advertising against online video. Advertisers will spend an estimated $2.9 billion in digital video advertising in 2012, according to eMarketer, up 47% from last year. So companies like The Wall Street Journal, The New York Times and The Huffington Post are building up digital teams to produce more video news. Most of these models are similar: reporters comment on the publications' stories from a desk placed in the center of the action, the newsroom. They are brand extensions, efforts at finding a low-cost way to extend a news product to digital platforms. And given that mobile video advertising will make up just $151 million of that sum, they are targeting digital video broadly.

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By contrast, NowThis News wants to reinvent content formats for mobile devices. The network produces 8 to 10 short videos daily that are distributed on the company's recently launched iPhone and iPad apps, its social media feeds like Twitter, Facebook, and Tumblr and through distribution deals with publishing partners like The Guardian and Buzzfeed. The company has a strategic partnership with Buzzfeed, which has also produced some videos. (Buzzfeed was also funded by Lerer Ventures.) It also has a RebelMouse page. (What? You don't know RebelMouse? It's a social aggregator that publishes a user's posts on every network in one location, and -- not surprisingly -- it's also funded by Lerer Ventures.)

NowThis News currently has 25 employees, most of whom are involved in editorial or production work. They create video segments daily that combine newsworthiness with likelihood of viral success. "We believe that especially younger people are getting their news from social mobile video channels. We're producing for them," General Manager Eason Jordan says.

The result is a peculiar brand of infotainment. Recent segments include "Obama's OkCupid Cabinet," a two-minute segment in which each of Obama's potential cabinet members is introduced through a faux dating site profile (Susan Rice "loves long walks around the Security Council") and a lighter piece on popular breeds of cats. "Which cats rule?" A tall blond woman asks: "Which cats suck?" Jordan explains: "If we don't think it will be shared, we won't produce it."

Jordan is betting that "digital is to cable as cable was to broadcast," and he knows something about starting a news network. He put in 23 years at CNN where he rose to become the network's chief news executive before leaving in 2005. He joins editor-in-chief Ed O'Keefe, who was the former ABC News Digital (DIS), along with managing editor Katharine Zaleski, who ran digital news at the Washington Post.

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If their new network isn't as serious in content as the older establishments, it may be offer the foothold the team needs to break into video more broadly. Forrester analyst James McQuivey point out that "news is the easiest place to break into new video watching because it's easier to launch a disruptive pattern." There's a realtime element to news that keeps people returning to find out what's going on.

So how does this kind of service make money? So far, the network is free of advertising, but Hippeau anticipates the NowThis News team will come up with new advertising formats. "For sure, it's not going to be pre-rolls," he says, referencing the video ad format that has become the web standard. "It will have a social aspect. And also, advertisers want to tell stories."

For a hint of what may come, users can look to the emerging model for native advertising on Buzzfeed. The news and entertainment site skips traditional banner ads, and lets brands author content, some of which is as popular as the editorial content. Hippeau says the company is already running internal experiments, which traditional media companies will likely watch closely as they begin to emerge. After all, as we turn to our tablets and phones for more and more time -- an average 82 minutes daily in 2012 -- the mobile web will belong to the companies that can figure out how to profit off it.

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About This Author
Jessi Hempel
Jessi Hempel
Senior Writer, Fortune

Jessi Hempel is a New York-based technology writer for Fortune. She has written extensively about digital media, online advertising and social networking. Before joining Fortune in July 2007, Hempel worked at BusinessWeek and most recently served as their innovation department editor. Hempel is a graduate of Brown University and received a Masters in Journalism from The University of California at Berkeley.

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