It is msnbc.com's first acquisition in its 11-year history.
Neither of the companies would disclose terms of the all-cash transaction, which was announced Sunday, but deals for other social media sites have ranged as high as the $75 million that eBay was reported to have spent for StumbleUpon.com, which claims about 3½ times the number of users as Newsvine.
Newsvine CEO Mike Davidson will report to Charlie Tillinghast, president of MSNBC Interactive News and publisher of msnbc.com, but otherwise, Newsvine will continue to operate independently, Tillinghast said.
Tillinghast said msnbc.com was racing to foster a community among its readers and to exploit the power of unmoderated user commentary and ranking of the news. Ideally, he said in an interview, the site would design and build its own tools, but Newsvine, a small, lean company headquartered in downtown Seattle a few minutes from msnbc.com's newsroom, "is just a great fit."
"Newsvine is local, small, nimble — they don't come with a lot of things you don't want," he said, such as complicated partnerships and contracts. "There isn't a lot to rearrange."
Sreenath Sreenivasan, a specialist in new media at the Columbia University journalism school, said the deal was a good fit for both companies.
"As the news environment is changing so quickly, it's important for more traditional media companies to take advantage of some of these newer technologies," Sreenivasan said.
For Newsvine's part, "it makes sense for them to look at msnbc and msnbc's parent companies [Microsoft Corp. and NBC Universal] as a place where they would have a way to really make a difference," he said.
Deal pushes msnbc.com into community
With just more than a million monthly users, Newsvine not only is dwarfed by its new parent, which attracts more than 29 million users a month, but it also widely trails such competitors in the news-social media field as Digg.com, Reddit.com and the latest incarnation of Netscape.com as a social news site.
But the site has generated significant buzz since its launch in March 2006 because of its inventive merger of mainstream reporting from The Associated Press and ESPN; the contributions of individual users, who are paid for their writing; and the social media model of user-driven ranking of the news.
That buzz, and the technology behind it, are what msnbc.com is buying. While msnbc.com has long ranked among the three most popular news sites on the Web, it has been late to the game in expanding its offerings in user participation and non-professional reporting.
"Msnbc isn't as strong in community as it needs to be," Tillinghast said. Newsvine offers "a lot of interesting features" that he hopes to "evaluate and port to msnbc ... rather than us creating a feature they already have," he said.
For Newsvine, the immediate attraction is direct access to msnbc.com's audience and distribution power.
"While Newsvine may be well known in early adopter circles, we want every college student, every farmer, every weekend journalist, and every household to have their own branch on the 'Vine," the company said in a statement.
Newsvine will piggyback on msnbc.com's data centers, giving it vastly more server power and reliability, which Davidson said in an interview had been the site's most significant challenge.
"The ability to deal with gigantic spikes of traffic is a tough thing for any start-up to handle," Davidson said. "We can learn a lot from the people in Redmond."
New direction for news site
The deal, which had been in the works since May, comes as a number of news aggregators and social media sites are eroding large media Web sites' control of their distribution. More and more frequently, users come to individual articles on sites like msnbc.com and newyorktimes.com from portals like Google News or social media intermediaries like Digg; Reddit, which is owned by Wired.com; Del.icio.us, which is owned by Yahoo.com; and StumbleUpon.com.
They are also being challenged by a robust "citizen journalism" movement that is providing a growing forum for non-professionals to gather and report news without filtering it through a team of editors and the bureaucracy of a large news organization.
The purchase of Newsvine gives msnbc.com a foot in both worlds.
"It begins what I believe is the revolution that big sites like msnbc need to go through," said Merrill Brown, chairman of the citizen journalism site NowPublic.com, which boasts 100,000 "contributing reporters" around the world. Brown was founding editor of msnbc.com in 1996.
Although the deal will bolster one of his main competitors, Brown called it "a visionary thing to do."
"It's a really good thing for citizen content and the news category in general, because it demonstrates [that] the citizen content opportunity and the growth of community in a big way around news content is not a niche," he said.
Newsvine independence promised
Part of the appeal of intermediary sites like Digg, Reddit and Newsvine is their perceived independence from large, corporate news companies, with the promise of a purely democratic ordering of the news.
Newsvine will now report to one of the largest such companies, but while Davidson said it may "expand a little bit" with msnbc.com's support, growing from six employees to perhaps 10 or 15, he and Tillinghast both stressed that Newsvine would continue to run as an independent site.
"We want to understand [Newsvine's technology and processes], but we don't have any agenda," Tillinghast said. "Where companies get into trouble is when they try to impose big-company standards in small companies."
Sreenivasan said it made sense that msnbc.com would want to "look at their technologies and ideas" without involving itself in Newsvine's day-to-day operations.
"We have seen big companies buy smaller products and smaller companies and then keep them at an arm's length," he said. "You are seeing that the big companies are seeing that they can't do on their own what the smaller, more nimble companies can do."
Msnbc.com will integrate Newsvine mainly at the story level, Tillinghast said, promoting Newsvine links "on stories that might stimulate a lot of community activity," such as political articles.
Likewise, he said, while msnbc.com would probably "take a look at" Newsvine's use of Google as part of its search function, it was not likely to force a switch to Microsoft's Live Search. "Consistent with their independence ... we're not going to impose orthodoxy," he said.
Newsvine, meanwhile, hopes to get msnbc.com's original reporting on its site "as quickly as possible," Davidson said.
"It's interesting to think what sorts of things you can do when you have this really healthy news ecosystem growing," he said. "It doesn't just have to stay there."
'Hacking' incident explained
While Newsvine is well-known in online publishing and news circles, Davidson, its chief executive and co-founder, is perhaps best known among the general public for an incident in March, when he explained how he had carried out what he called "the immaculate hack" of the presidential campaign Web site of Sen. John McCain, R-Ariz.
Davidson added a box to McCain's page "announcing" that the senator had "reversed my position and come out in full support of gay marriage ... particularly marriage between passionate females."
Davidson said the prank — which he said did not involve actually breaking into McCain's site or doing anything illegal — was in response to the McCain campaign's appropriation of his unique MySpace.com page design without permission or credit.
When Davidson changed a piece of code on his own MySpace page, the McCain site sucked it in and "a new John McCain was born... ... and The Straight-Talk Express isn't just for straight people anymore," he wrote on his blog.
Tillinghast declined to say whether the prank would have been allowed under msnbc.com's ethics policy, but he said, "We have an overall sense of ethics that we want people to play by."
Tillinghast said Davidson had explained the incident, noting that McCain's site now lists Davidson as a MySpace "buddy."
"That told me that everybody's OK with how that ended up," he said.
Although it is backed by two of the largest corporations in the world, Microsoft and General Electric (which owns NBC Universal), msnbc.com has pursued a conservative financial strategy with a goal of turning a profit as soon as practical. That point was reached in the quarter that ended June 30, 2004, eight years after its founding.
The site has a smaller staff than many of its rivals, such as CNN.com, and when the tech bubble burst in early 2000, it shelved ambitious plans to go public and acquire complementary properties.
Eight years after that retrenchment, the purchase of Newsvine highlights the "maturation" of msnbc.com "from a start-up-type company to one where we can do acquisitions of our own," said Tillinghast, who would not rule out further acquisitions.
"We're always looking at opportunities," he said. "If they make sense, then we'll do them."