How Well Does Flipboard Monetize?

After Twitter’s IPO last year, the market has been abuzz with speculation of other Internet companies planning to list soon. One such player expected to go public is the news aggregating service, Flipboard, which continues to add to its content library to improve monetization efforts.

Flipboard’s Rapid Growth

Flipboard’s app, released in 2010, lets users create a compilation of news articles using social feeds and third party content that they could read as if they were reading a magazine. Initially, Flipboard allowed users to collate feeds from different publishers to create a magazine that they would like to read. Last year, they expanded that offering by enabling users to share these magazines with others. Within 8 months of the launch of this feature, Flipboard has over 4.5 million user-created magazines.

As of April last year, Flipboard had 56 million users, a number that grew to 100 million users by December last year. They have more than 800,000 publishing partners for content. Access to Flipboard’s app is free for their users, but they are looking at alternate ways of monetizing this growing user base.

Besides content from third party magazines, Flipboard also recently enabled a shopping section for their readers. Users can now view curated magazines from over 60 big brands including Levi’s, Cisco, Estee Lauder, and Land Rover. The content includes original and third-party articles and images along with catalog-style sections that are used to display products. The site also allows integration of content from social media including Facebook and Twitter to let people share information outside of Flipboard. For the hand-craft product site, Etsy, Flipboard users can directly buy a product from the magazine article. With this update, Flipboard is getting to be more similar to product curation websites like Pinterest, but with additional features that help marketers add more content besides images. The move is expected to help push Flipboard’s revenue growth.

Flipboard also earns revenues through sale of full-page ads which come up nearly in 1 page out of very 10 pages accessed by the viewer. Publishers can sell these ad spaces directly or through Flipboard. Paid advertising is available on pages of formal publishing partners like Vanity Fair and ESPN. Flipboard believes that because they offer a “magazine-like” experience, they are able to price these ads at the equivalent of print ads. This is a significant achievement considering that the digital ad rates are a lot lower.

That said, we have no information about how well Flipboard is monetizing. Conceivably, 100 million users and a large amount of content can be monetized reasonably well.

Flipboard’s Financials

While Flipboard maintains that their monetization is “very good”, they have kept details of their financials under cover. They remain venture funded and last quarter raised an additional $50 million in a round led by Rizvi Traverse Management and Goldman Sachs to bring their total funding to $160 million. An earlier round of funding last year from the same investors had them valued at $800 million. Other investors in the start-up include Kleiner Perkins Caulfield & Byers, Index Ventures, and Insight Venture Partners. Flipboard has accepted that they want to go public in the long run, but they are not looking to list this year.