UK startup The News Hub raises cash, and questions

It’s the latest example of a mini-trend in which startups like Tsu and Bubblews offer users cash for content. Top performing pieces at The News Hub, for example, receive $30, and bonuses of $150 are awarded to the best-performing writers periodically. It’s not much, but it’s more than an anonymous Medium or Tumblr blogger can earn. The News Hub hopes writers will ditch those types of established blogging platforms to enjoy “the network effect” of being part of The News Hub’s community (and its Google News listing).

“We believe that good content is valuable, which is why we pay for it,” said founder William Stolerman. “Our aim is to ultimately make news sustainable while offering a news experience that’s made for the digital age. We will continue increasing our fees until we’re paying market-leading rates.”

This week, the site launched a prank promotional video to get its journalistic mission across to potential users:

For an early-stage startup to burn seed funding on incentives for writers is, on the face of it, a risky strategy. The typical route to viral “platisher” success has relied on growth-hacking tricks like gaming Facebook or optimizing for porn searches. But as a purely user-generated publisher, The News Hub does not have that option. In addition to paying popular writers a small sum, The News Hub will also be putting its money toward the “labor intensive” effort to find and persuade other writers to sign up, according to Stolerman.

Three and a half months since the site launched, it claims to have exceeded early expectations with 100,000 unique visitors over last month and over 300 contributors from a variety of nationalities. The News Hub is keeping its revenue plans close to its chest. The company said it will be revealing its business model in the first quarter of next year.

With a focus on current affairs, lifestyle and sport, The News Hub is in danger of spreading itself too thin, observers warned. The two models that have worked best in online publishing have either focused on finding niche audiences, or cultivating huge, all-encompassing sites that benefit from economies of scale — and proprietary technology. Those stuck in the middle are struggling.

“The News Hub may struggle because it’s not focused as much on the platform side as on the content side,” said Nic Newman, visiting research fellow at the Reuters Institute for the Study of Journalism. “In the U.K. at least, there isn’t that big a gap to be filled in terms of content. With vibrant and very competitive traditional media and all the new players, there is a surfeit of supply and not enough demand for a site like this, I’d say.”

Paul Armstrong, principal consultant at HERE/Forth and former MySpace and Mindshare exec, agrees. “The problem that many platforms of this ilk suffer from is a lack of focus and planning with regards to the network effect required for immediate and continued success,” he said.

“Both [Tsu and The News Hub] are interesting properties and have a fair chance of seeing success with niche audiences but ultimately the model is risky, untested and will require a lot from both [investors and users] in order for favorable outcomes in the short or long term,” he added.