The lawsuit, filed in New York earlier this month, claims BuzzFeed owes more than $3.6 million in damages as a result of the soccer pic appearing on 64 sites around the web. According to Eiselein, who uploaded the original image to Flickr, BuzzFeed is liable for “contributory infringement” because the site’s viral news model encourages readers to share the content they find:

BuzzFeed Inc .. gathers items from around the internet, posts them on their website and encourages their visitors/readers to share them … BuzzFeed uses this fact to help convince potential advertisers to place ads on the Buzzfeed site in hope the ads will get a “viral lift” …

BuzzFeed, Inc actively encourages its users to share content, regardless of whether or not that content is owned by, or licensed to, Buzzfeed.

The complaint (embedded below) points to dozens of little known websites where the photo allegedly appears, in addition to the original BuzzFeed page which is still online but is now titled “The 29 Funniest Header Faces.”

The soccer suit is not BuzzFeed’s first brush with copyright law. In October, a paparazzi agency filed a lawsuit after a BuzzFeed staffer (the same one who made the soccer montage) posted copyrighted pictures of Katy Perry and a topless Kathy Griffin. BuzzFeed, which declined to comment, settled the case early this year.

The copyright issues poses a threat to BuzzFeed and similar websites, including Upworthy and For the Win, which have an editorial model based on finding content — especially images — that readers are likely to share on social media.

Last year, BuzzFeed founder Jonah Peretti explained to the Atlantic that the site pays to license images from companies like Reuters and Getty, but that it also pulls from amateur sites like Tumblr and Flickr. In these cases, the provenance of the images can be unclear — in some cases, the photographer has made them available for public use while other times the author is simply unknown.

Peretti also claims that, in any event, BuzzFeed’s photo montages are fair use under copyright law because they are “transformative” (which is one factor in the first part of a complicated four-part fair use test).

In the soccer case, it’s unlikely that the self-represented photographer “contributory infringement” theory will succeed on a legal basis — if he does, the case would throw a large chill over the sharing culture that has become a fixture of the social web. More likely, the case will just show once again how traditional copyright law — and its frequently abused enforcement tools — is ill-fitted for the digital age.

You can decide for yourself if the original soccer image is worth $3.6 million by looking at it here.

Eiselein v BuzzFeed

“Foreign coverage is one of the last spheres where new media haven’t competed aggressively with newspapers and television networks,” said editor-in-chief Ben Smith, in a release issued Monday morning.

The hire carries symbolic significance at a time when the Guardian is enjoying plaudits for its role in breaking a series of major stories involving surveillance by the U.S. government.

While BuzzFeed is still regarded by some as no more than a glorified forum for cat videos, the hiring of Elder — and other media establishment veterans like Smith from Politico and New York Times reporters — reflect its quest to build a serious news machine.

The hiring also reflects the diverging financial fortunes of the two publications. BuzzFeed is in a strong position due to recent investments and enthusiasm for its “native advertising” model, while the Guardian is losing considerable money as it fights for a share of the U.S. news market.

Disclosure: Guardian News & Media is an investor in the parent company of GigaOM/paidContent.

The latest apostle is News360, a news reading and discovery app that creates a personalized collection of stories based on algorithms. The tool, which competes with much larger Flipboard, this week began inserting including headlines from paid sponsors alongside those of regular news stories. It’s probably easiest to explain with pictures; here’s a “native ad” nestled in with the regular stories:

Here’s an example of the type of content a reader might get by tapping on a native ad:

According to News360 Roman Karachinsky, the ad format is “native” because it lets advertisers deliver full-length stories on the same topic that a user is already reading. In a recent phone interview, Karachinsky added that the format is more efficient than regular display advertising because News360 can use “interest graphs” to ensure the stories/ads are delivered only to people who will find them relevant.

News360 has signed up three brands so far to buy its native ads. Karchinksy says that, if a given ad/story isn’t getting an adequate response, the brands can swap it out for another one; the advertisers can also choose to pay on an engagement metric of their choosing — for instance, by requiring readers to spend at least ten seconds on the story.

And consistent with News360′s lightweight, machine-driven operation, it doesn’t plan on working with advertisers to produce content.

“Brands don’t have to do any creative,” said Karchinsky, explaining that they can just repurpose sponsored stories they’ve already made for sites like  BuzzFeed article. Or, in the case of companies like Cisco, they can draw on their own internal vaults of branded content.

Will its ad model work? In this case, the answer will be tied to News360′s own fortunes; the app currently faces a challenge to stand out from a gaggle of bigger, better-known news readers, including Flipboard, Zite and LinkedIn’s Pulse.

How does Politico plan to stay fresh while also making money? Executive editor VandeHei, who has an intense stare and speaks a bit like a character from a Christian Slater movie, shared some thoughts last week from the publication’s office in Arlington, Va. Here’s some highlights (our conversation has been edited for length and clarity).

Competition and staying relevant

Politico shook up the Washington media establishment when it launched in 2007. Do you feel as relevant now?

JV: We’re still in the middle of the great media disruption. Anyone who thinks that because they have success today, they’ll have success tomorrow I think is a fool.

We’re constantly evolving our content and our technology to the ways that people are actually consuming information rather than the way we wished they would consume it. One of the things that makes me most proud about Politico is that six or seven years into this, we’re as restless today as when we launched the publication. Every media executive has to think that way or you’re just going to get your clock cleaned.

Who scares you the most?

JV: Our core competition journalistically is the Washington Post, the Wall Street Journal, the New York Times. Financially, our competitive sets are different. On issue advertising, it’s everyone from the Post to the Atlantic to Roll Call. When it comes to selling high-end subscriptions our competition is Bloomberg’s BGov and, to a lesser extent, CQ and National Journal.

Who scares me the most? The entity that should worry media companies the most is Bloomberg because they have huge ambitions and huge cash reserves and they clearly have an appetite for more Washington coverage.

What about the people who say Bloomberg’s Washington strategy has fallen short? 

JV: It seems BGov hasn’t been as much of a success as Bloomberg had hoped. I would like to think that we’re one of the big reasons they’ve had trouble penetrating this market. Through Pro, we produce a product for each particular vertical and we have expertise in the Washington market. What might have hurt Bloomberg when they came into this market is that their expertise is fundamentally in financial information and New York. There’s a different type of expertise and reader here.

On making money in media

What about growth? How do you grow in a small, saturated Washington market?

JV: You grow by finding new revenue streams and squeezing more money from the revenue streams you already have. This is a unique market where almost all of our advertising is advocacy advertising. Every person in this space feels Politico is the first stop they have to make to influence lawmakers. We continue to grow that slice of the pie every year. Can we grow it forever? I don’t know.

But like any media company, you don’t want to be dependent on one revenue stream so about three and a half years ago we launched Politico Pro, our high-end subscription service. We also added events and the last few weeks, we’ve been testing metered subscription in six different small states scattered across the country.

What about pricing for Pro? You guys have been a little coy about describing specifics.

JV: I don’t know if we’ve been super coy. The problem is that, when you say you have 1,000 subscribers, that includes subscribers like Microsoft that have hundreds of licenses. Subscriptions can run at the low end in the $7,000 range to, at the high end, six figures, depending on the institution. It all depends on how much content you need, how many verticals, how big your organization is.

We get 96% renewal rates and everyone pays more the second year than they did the first year. We have 230-240 employees and will have about 265 by the end of year. It’s a growing media company.

What was up with the layoffs (reported in January by the Huffington Post’s Michael Calderone?)

JV: We never had layoffs. We’ve had people that come and go — I can’t imagine a journalistic market that has more turnover than this one. We told them it was a stupid story when it was written and it’s proven itself to be.

We’re continuing to grow. And that’s why we think a lot about the business and economics of this – I don’t ever want to work for a company that has to lay people off. I’ve been at one of those and it’s not a fun thing to be part of. We think as much about the business side of journalism as we do about the journalism side of journalism. The two have to work together.

You’re experimenting with the content engine Taboola, which displays a lot of scare ads about cancer or buying gold. It’s a revenue stream, but do you ever worry about compromising the user experience?

JV: Let me put that in two categories. One, we’re lucky in that we usually sell out our Washington inventory direct, which allows us to get a pretty nice CPM. Most of our ads are premium, advocacy ads. For some of our national buys, there probably is a fair amount of network ads and we’re careful not to let them cheapen the site, though one or two might sneak through occasionally.

But as for cheapening the user experience, I worry a lot more about the design of the site than the specifics of the ad. I think that media, because it’s trying to test so many things simultaneously, has sort of created a NASCAR-effect to web design with all kinds of crap everywhere that nobody’s looking at. It’s incumbent on all of us to simplify the design.

On media stars and the future of journalism

Andrew Sullivan and his staff at The Dish

What about the trend of star journalists becoming their own brands? Ben Smith decamped for BuzzFeed, Andrew Sullivan left the Daily Beast to start his own site and Nate Silver could leave the Times to set up shop on his own. Is that an issue for Politico?

JV: It is what it is. I think it’s fabulous for journalists. You can suddenly get in the business of journalism, create a public identity and reputation, and – if you’re so good that you can build a substantial following, you, yourself, can be a franchise. You can actually make money in journalism. Hell, you couldn’t do that five or 10 years ago.

People might bemoan what’s happening in journalism, but we don’t have time to whine. We have to deal with: what are the trends in journalism and the way people are consuming information? And then produce first-class journalism and hook it up to a first-class business model. For the rest, let the hand-wringers worry about it.

How will the impending sale of the TV stations held by Politico’s parent company, Allbritton Communications, affect operations?

JV: It should affect us in pretty big ways. Robert Allbritton’s a young guy in his 40’s who’s been a tremendous publisher and extremely supportive of this publication. He’s basically asked us to go out and find other things in media for us to invest in, inside and outside of Politico. I think the sale of the TV stations is nothing but good for Politico and nothing but good for media. The more people we have out there testing what works and what doesn’t, the better chance we collectively have as an industry to find ways to make all this work in a way that educates, informs and entertains people.

On media habits and (not) watching TV

What are your own favorite journalists and publications?

JV: I live and breathe politics so obviously, it’s Politico. I’m a sports junkie, in particular a Green Bay Packer junkie, so I spend a lot of time on Bleacher Report and the Milwaukee Journal Sentinel Packer page.

I’m a big admirer of David Carr of the New York Times and Jim Romenesko — what Niemen does and what Columbia does. All Things Digital and Kara Swisher, who is a person I deeply admire.

Foreign Policy is a fantastic site that I feel is modeled after Politico and has done a good job of dominating the specific space of the media [apparently: Politico just hired FP's editor-in-chief]. I remain a huge fan of the Wall Street Journal, where I once worked, and the New York Times. My absolute favorite column in the Times is Corner Office, which is the first thing I’d read on a Sunday morning.

Do you have time for TV or movies?

I really don’t. We finally got out of the dark ages and got Netflix and watched House of Cards. You’d think I’d have more of a life and watch something that has nothing to do with politics, but I don’t. I have young kids so we’ve watched American Idol until this season, which sucked. But if I’m going to watch TV, 90% of the time it’s going to be news like Charlie Rose or 60 Minutes.

Anything else about Politico or about you that you want to get out there?

When people cover us and think of us, I sometime worry that people view us through the lens that we’re the New York Times in 1995, and the obligations the Times had to a broad readership and to define what people should read and not read – as opposed to what we are, which is a specialty publication for political and policy junkies.

Fundamentally, it’s just a bigger version of the beast we created in 2007.

Media types debate the definition of “native advertising” but the basic idea is to create ad copy that resembles the editorial content around it. A quintessential example is a story like BuzzFeed’s ”18 of your favorite toys from the 1990′s” which was created as part of a marketing campaign for toy maker, Furby; the idea is that people will not just read such fare but like it enough to share it too.

The idea of trusted publications like the New York Times dabbling in sponsored stories inevitably sets of a wave of hand-wringing among media watchers, who are quick to cite cautionary tales like the Atlantic’s recent sponsored story debacle involving the Church of Scientology.

So far, though, the Grey Lady’s forays into native advertising feel fairly benign; this week, for instance, the Times’ ‘things to do’ app is promoting New York’s bike-sharing program in tandem with the program’s sponsor, CitiBank. And purists may also wish to note that the Times newspaper has long printed “stories” from advertisers, including unsavory ones like the government of Kazakstan — the underlying principle appears to be that, as long as the ads are clearly marked as such, the practice is acceptable.

News publications, however, must still tread more delicately than other types of media. As an Atlantic executive explained this spring:

“It goes back to the difference between entertainment and journalism … There’s a higher bar for a brand like the Atlantic.”

Update: Peretti took to Twitter on Thursday morning to clarify:

The deal, which was reported by the Wall Street Journal, will see BuzzFeed invest a low “eight figure sum” over the next two years to build up the platform.

Update: BuzzFeed followed up the CNN news by announcing it will “aggressively expand” its video operations under web video pioneer, Ze Frank, and that it will “build a social video studio, designed to create news and entertainment video content exclusively for YouTube.”

The first CNN video to appear on the site appeared Tuesday morning and features a mash-up of dramatic or heart-tugging clips drawn from famous rescues that have appeared on TV in recent years — Chilean miners, children in wells and so on:

The clip, which is hosted on a new BuzzFeed vertical called CNNBuzzFeed, includes ponderous voiceovers extolling the human spirit. It has yet to appear on CNN’s website.

The partnership appears to be an effort to bring some viral energy to CNN while allowing BuzzFeed to stake out more ground amidst mainstream media outlets. In the last year, the site, which was first known for cat videos, has broken several major news stories and formed partnerships with the likes of the New York Times.

CNN and BuzzFeed have not described the revenue angles of the deal, though it is worth noting that the conclusion of the “Rescue” video brings up invitations to watch clips other YouTube channels such as the Young Turks.

Here is how BuzzFeed described the nature of the YouTube partnership:

Production will be headquartered in a newly constructed social video studio in Los Angeles which will have a coffee shop and store where influencers, thinkers and celebrities will be able create informal videos made for the social web. The team will grow to over 30 people in the coming months. BuzzFeed Video will have a dedicated, prominent placement on the BuzzFeed homepage that will bring new forms of social content to the site’s 60MM unique visitors. Expansion plans include creating new channels, including recreating a video news format that is shareable.

In case you missed it, the controversy began on Friday, when the New York Post reported that merchant bank Goldman Sachs was annoyed that Bloomberg reporters were tracking employees’ log-on activities. The matter soon gained steam when BuzzFeed reported that Bloomberg brass had long known about the practice, and with the news that the Fed and Treasury were investigating the situation.

The company stonewalled at first but on Sunday, Bloomberg News editor-in-chief, Matthew Winkler, addressed the situation in detail:

“Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable,” wrote Winkler in a blog post. The rest of the post, however, amounted to a pushback; Winkler explained that the practice was nothing new, and that reporters only tracked “mundane” information.

As bad as voicemail hacking?

So what to make of all this? Did Bloomberg engage in sinister “snooping” (one NYU journalism prof has already compared the incident to the infamous phone hacking conducted by News Corp in Britain)? Or is just this a tempest in a teapot egged on by Bloomberg’s competitors in the news media?

The answer is somewhere in between. On one hand, Bloomberg reporters didn’t do anything approaching the UK scandal — monitoring bankers’ log-in activities is nothing like breaking into a dead girl’s voicemail. Moreover, the Bloomberg “tracking” appears to have done little more than confirm if someone still worked at a certain company. As a source told BuzzFeed’s Peter Lauria, “LinkedIn Pro is more useful and has better information for finding sources and helping to break news.”

All this suggests that some of the the fuss is not about what Bloomberg reporters actually did, but instead is tied to secretive nature of the company itself. This is reflected in a Quartz report that characterizes Bloomberg as “a black box” and portrays a data-obsessed, almost cult-like corporate culture.

News and power of the platform

On the other hand, the Bloomberg episode does raise ethical concerns over how proprietary platforms — including not just Bloomberg but also LinkedIn or Facebook — should handle customer data for news purposes.

The issue isn’t just academic. More and more, platforms are relying on news (think of “LinkedIn Today”) to keep users on their sites. And, as Bloomberg journalists know, customers’ activities on those platforms can be a source of news — and better yet, a source of exclusive news.

The question is where this all this should stop. Would you like reporters to know when you suspend newspaper to go on vacation? Probably not. Would you like your cell phone carrier to use the location of your calls as a source of news? Definitely not. The Bloomberg episode, therefore, appears to be less of a snooping scandal than it is a cautionary tale about what can happen when the line between a company’s news and data gathering operations get blurred.

While BuzzFeed has relied on reader content for years, the new vertical will increase the visibility of such contributions. It will also increase the chances of a viral pay-off from the site’s high-tech publishing tools. The new “Community” section includes a formal submission process that permits users to submit one post per day until their (what else) “Cat Power” increases, which will allow more frequent submissions.

“Community has always been a huge part of our site — some of our best posts have come from community submissions — and now we want to reinvent community for the social web,” editorial director Scott Lamb said in an email statement.

BuzzFeed’s decision to expand the scope of user-generated offerings comes at a time when media outlets are increasingly looking to commenters as a source of talent and future hires. My colleague Mathew Ingram explained the phenomenon well earlier this week in “Want a job at Gawker Media? You can get a head  start by being a regular commenter.”

The new section is consistent with BuzzFeed’s improbable quest to become more serious and more inane at the same time. In recent weeks, the site has been at forefront of major news stories like the Boston bombings while also churning out its regular fare like “14 cats who think they’re sushi.”

However, a few themes came out of our presentations from Paul Berry, founder and CEO of RebelMouse, Jeff Fluhr, co-founder and CEO of Spreecast, Matt Galligan, co-founder and CEO of Circa, Aria Haghighi, co-Founder and CTO of Prismatic, and Josh Miller, co-founder of Branch. Here were the ones we found most compelling:

• The future of news will come from other people. This isn’t to say that the majority of the world will eventually get all of their news from Twitter and Facebook, but it is fair to say that we’ll increasingly rely on recommendations and smarter social cues from friends and respected strangers as we sort through the vast amount of information available online. This could mean something like Prismatic, which as my colleague Mathew Ingram has written, is working to combine data from social media with individual interests to create a smarter social reader for news.
• We’ll be reading all the news that fits — on mobile. For traditional sites, having a strategy that works for mobile is not longer an option, but we’ll increasingly see mobile-specific approaches from startups like Instagram, which was able to scale successfully by creating a simple, fast photo experience for mobile users in a hurry, or Circa, the startup that’s re-thinking how to structure news stories based on the attention spans and needs of mobile readers.  ”We distill these important details into specific pages,” Galligan said. “You hop through and jump from point to point.”
• It’s all about the individual person and the brand they build. Obviously individuals have always had a hand in shaping the news since the days of newspaper editors picking the stories that end up on the front page. But since the early days of blogging we’ve seen the rise of the personal brand grow in importance, and our panel earlier on Wednesday with some of the pre-eminent bloggers like Maria Popova and Andrew Sullivan only solidified the idea that smart, passionate writers can build their own readership online. Berry talked about how RebelMouse is allowing any individual, whether a famous blogger or not, to highlight personal achievements and content in one place, and with the rise of Twitter we’ll likely see this continue. “RebelMouse allows you in a very efficient way to say, let’s make this my splash,” he said.
• People want to talk about the news but they’re looking for smart conversations. We’re moving on from the days of television round-tables and flame wars in comment threads — or at least many people are looking to move on. Several interesting tools have launched recently that allow for more dynamic conversations online about the news, and we’re seeing those conversations happen both in text and multimedia. Spreecast joins the likes of Google+ Hangouts in lettings users host video discussions with additional social components, and Branch is looking to re-invent online discussions by making them invite-only and embeddable across the web.
• Traditional advertising can’t support the future, but no one’s clear what the alternative looks like. Some of our most heated discussions all day came from the discussion over how to make money from content in a way that allows writers and artists to benefit, consumers to enjoy reasonable prices, and businesses to stay afloat. From Popova discussing affiliate links to Buzzfeed discussing sponsored content, it’s clear we’re far from reaching a consensus. But from Prismatic’s efforts to work with brands to make money off their content on the service to Spreecast’s premium services, it’s clear that startups are at least considering smarter ways to approach the problem than traditional banner ads.

Check out the rest of our PaidContent Live 2013 coverage here.

Felix Salmon, a popular and acerbic Reuters journalist, attempted to pour some cold water on the hype at paidContent Live Wednesday, where he spoke with a panel of native advertising apostles that included BuzzFeed President Jon Steinberg and Forbes COO Lewis D’Vorkin.

“So one percent of the time I’ll immerse myself in this beautiful listicle of cats?” asked Salmon, in reference to BuzzFeed’s promise to create ads that look and feel like the content surrouding them. Steinberg, who retorted that a very small percentage of BuzzFeed’s branded content contains cats, emphasized that native ads are superior because readers not only like them, but share them too. D’Vorkin offered a longer view.

“This is has been going on for 10-15 years … Marketers want to be seamlessly intergrated into a native product,” he said, adding that corporations spent lots of money to attract readers to their own websites before realizing it was more effective to integrate with famous media brands.

“Media partners give us credibility we can’t get on our own,” said Kyle Monson, the third member of the panel and chief creative at Knock Twice ad agency. He added, however, that native ads “can be shady sometimes” and said agencies should try to protect their publishing partners.

“Chef Boyardee put native ads on the Food Network. It’s a horribly bad deal … it’s way too downmarket for them.”

And what about the fear that native ads are deceptive? Nonsense, Steinberg said, noting that no reader will be confused since the ads are clearly marked and even a different color.

He also claimed the banner and programmatic ad industry has cooked up false tales of reader confusion on the fear that they are losing ground to native advertising.

Salmon had the last word in the native advertising debate.

“We’ve run out of time, so you get to talk English right now,” he joked, ending the panel.

(Update: I’ve removed an earlier sentence that said Steinberg exaggerated the problems of display advertising; you can make up your own mind based on the video below)

Check out the rest of our paidContent live 2013 coverage here, and a video embed of the session follows below:

A transcription of the video follows on the next page

Go to page 2 (of 2) on paidContent .