What CNN could learn by acquiring Zite

News giant CNN (s twx) confirmed on Tuesday that it is buying Zite, the news-reader app built by a Vancouver, British Columbia startup, for what some estimate is as much as $20 million. The media conglomerate says it plans to leave Zite alone and doesn’t want to integrate it into its existing assets, or clog up the app by forcing CNN content into it — something Zite CEO Mark Johnson promises won’t happen either. So what is the purpose of buying the app at all then? If CNN is smart, watching what happens inside Zite could give it something that all media companies are in desperate need of, whether they know it or not: real-time insights into what people really want to read about, instead of what CNN editors think they want to read about.

When the deal was announced, a number of media-industry and tech-industry observers said they were disappointed to see Zite being acquired by a media giant like CNN, instead of remaining independent. As I mentioned on Twitter after hearing the news, I can sympathize with this viewpoint, since large institutions — whether in the media business or not — aren’t known for seeking out innovation or being particularly creative (and yes, I know that CNN was a pioneer in real-time news, but that was 30 years ago). Some fascinating experiments in new media, such as Newsvine — which was acquired in 2007 by MSNBC (s cmcsa(s ge) — have effectively stagnated after being acquired.

That said, however, Zite’s CEO made the case in a blog post on the news that the company will benefit from having access to CNN’s resources, and plans to continue developing the app and focusing on what makes it different from some of the other similar news-reading apps out there: its predictive algorithms. And that’s also a key part of what CNN could gain from this acquisition, if it wants to.

Making sense of oceans of information

As we’ve written at GigaOM a number of times, the onslaught of content that has been created by the web and the explosion of social media and social networks — from blogs to Twitter and Facebook — creates a number of problems for traditional media companies, but it also creates opportunities. The problems are fairly obvious: In an environment where anyone can become a content creator and publisher, where social tools create what Om has called a “democracy of distribution” and journalism becomes something that anyone can do instead of just a select few, the competition for attention has become a serious issue for any media entity, even giants like CNN.

The opportunities, meanwhile, stem from those same disruptive effects. Among other things, they include the ability to use new tools for journalism — as Brian Stelter and others have at the New York Times (s nyt) and Andy Carvin has at National Public Radio — and the ability to bring new viewpoints into a story by reaching out to readers, the way the NYT is trying to do with its recent partnership with YouTube (s goog) and Storyful around the anniversary of the Sept. 11 attacks on New York.

But there is also a significant opportunity for media outlets to get better at the job they have always had, which is filtering oceans of information and sorting out what matters and what doesn’t. As Clay Shirky has said, we aren’t suffering from information overload so much as “filter failure.” Apps like Zite — and Flipboard, which has become one of the central ways in which many iPad (s aapl) users consume the news — allow users to create their own filters, and to build what amounts to a customized newspaper from traditional news feeds, blog posts, Twitter streams and Facebook friends (although some fear that this will create a “filter bubble” that will lock people into certain viewpoints).

This kind of filtering is what media outlets like CNN used to do: They took in all the information via news-wire services and reporting, and then made sense of it and presented it to us in a specific format. But now there is so much more information out there, coming in from hundreds or even thousands of different sources, and it is happening constantly — not in neat increments, the way newspapers and other media entities have gotten used to doing it. But even more than that, news is also reaching more people without having to go through a traditional news outlet at all. And they aren’t always interested in what editors at media outlets think they should be.

The ability to watch what readers do

That’s what apps like Zite can theoretically help CNN figure out: What kinds of content are people sharing and why? When are they reading about certain topics, and do they return to them or read quickly and move on? What sources do they seem to trust? Of course, media companies like CNN have tools like Omniture that show them what webpages people are coming to, how long they spend, and so on — something that newer tools such as Newsbeat also provide in real time. But watching what people do with content outside your own universe is just as valuable, if not more so.

This is the kind of thing that Google is trying to get better at too, by launching its Google+ social network and spreading +1 buttons around the web. It’s not just that it wants to compete with Facebook; it’s that Google needs to understand the “social signals” that are provided by the kind of sharing activity that occurs on Google+ and Twitter and other networks — so that it can figure out how to improve its search results (for more on that, see a GigaOM Pro report (subscription required) I wrote recently on social search).

In a way, media companies are in the search business too. Ideally, they are trying to provide news that matters to their readers and viewers, a way of making sense of the oceans of information that are flooding our lives. In the past, they gave us what they thought we wanted to read (and in many cases, what they wanted to write), but now there are tools like Zite that can help media companies really understand what their audiences want, and hopefully get better at providing it. Because if they don’t, someone else will.

Post and thumbnail photos courtesy of Flickr users Rufino and George Kelly