Upworthy, a website that aggregates and repackages articles from around the Internet, just raised $8 million in its third round of funding, which raises the question: How will Upworthy eventually make money?
Originally, Upworthy — started in the spring of 2012 — had a pseudo-altruistic money-making plan. As it explains in this busy infographic, the site hoped to connect readers to non-profits and take a cut: "We work with non profits and other groups to connect them with people interested in their causes. If you sign up to learn more about a particular organization, we receive a small fee for making the match."
That strategy, as the sole source of revenue, didn't last long. In the official announcement of its latest round of funding, Upworthy emphasized "partnerships" — code for sponsored posts. In other words, the content regurgitator plans on thriving via advertising.
This was an expected move. About fourteen months into its existence, the site ventured into more traditional revenue sources. It has worked with Skype, for example, which runs ads that are in-line with Upworthy's "clickbait with a mission," to borrow a phrase from AllThingsD's Peter Kafka, who first reported on the funding.* This video of a Ugandan man who stays in touch with his family by using Skype, for example, fits in with Upworthy's tagline, "Things that matter. Pass 'em on." The bottom of the post reads: "We were paid to promote this ad, but we only do that for things we think are actually Upworthy."
That traditional form of advertising — Microsoft, which owns Skype, paid Upworthy to run a commercial on its site — is not the future of Upworthy's monetization strategy, however. Like many media companies today, the site will walk the fine line of actual ad versus article-with-sponsored-content. The "partnerships" mentioned in the announcement refer to underwriters, as co-founder Peter Koechley explained to TechCrunch's Eliza Brooke. "We think a number of these sections that we might want to delve more deeply into are sections that people might want to underwrite," he said, adding, "If there’s a real alignment of a sponsor section on a particular topic, we find the best content in the world on that topic and draw attention to it better than anyone else can, and it’s great for our partner in those cases. We leverage how to draw attention, and they associate their brand with that."
Again, the idea here isn't novel: Upworthy hopes companies might want to associate their brands with its left-leaning posts, which happen to reach more than 22 million pairs of eyes a month. In other words, Upworthy is selling traffic. Does that make the site worthy of $8 million more in funding? The advertising model isn't what has investors interested, but, rather, Upworthy's huge growth. By packaging its stories just right for social media, it has attracted a huge audience — bigger than The Daily Beast's monthly unique visitors — in less than two years.
*This post originally stated that Upworthy had an on-going partnership with Skype.