A couple of weeks ago I poked fun at Flipboard for seeking to raise $50m on the strength of a free product and zero revenue. At around 8.30am yesterday morning I did a 180 degree turn and now believe it could be an absolutely unbeatable product.

What happened at 8.30am yesterday? I read Erick Schonfeld’s interview with CEO Mike Cue in TechCrunch and saw the light, despite the lack of detail.

My scepticism of Flipboard’s future was based on the observations that (a) their app is free, (b) it’s in active use on only a minority of tablet devices and will remain so (after all, no app can be the app for everyone), and (c) building a social recommendation app is difficult but not difficult enough to ward off competitors — see Zite and Pulse.

So with maybe 45 million iPads to be sold in 2011, plus other tablets, taking out market share from Flipboard’s competitors, that’s (generous finger in the air) perhaps 5-10 million Flipboard apps in use by the end of 2012. Take out the ad revenue they’ll be sharing with media companies, I figured they’d make a few million a year from advertising.

And then I read this in the interview:

Q: Why do you need $50 million?

McCue: We want to build a large business here that has the ability to get into the billions of dollars in revenue.

Billions of dollars! And suddenly being faced with that magnitude of ambition I stopped thinking about piffling little apps — that’ll never do it — and had to raise my sights. They would have to take a significant cut of the global advertising market [pdf]. How could they do that…?

Flipboard can become the world’s content recommendation engine. The Flipboard app is merely the first stop, and plausibly just a showcase. Socially-recommended content is incredibly compelling — whether it’s recommended by your friends or a group of specialists (often called “editors”) or a mix of both. And the final product doesn’t have to be in the manner of the Flipboard app — just as not all newspapers look like USA Today. Such products will be a major part of the media product mix of the future.

So what if we break out of the idea of recommendations just by your friends? And what if we break out of Flipboard-the-app? What about… just New York Times content recommended by your friends? FT.com content as read by Asia fund managers? All the hot news about Google? Guardian environment news plus a smattering of links recommended by its readers? WSJ-4-U?

In his Monday Note Frédéric Filloux says

Flipboard is THE product any big media company or, better, any group of media companies should have invented.

Media companies can’t ignore social influence — because consumers are following that already — and they have to make it a big part of their offering. But they won’t build Flipboard, as Frédéric urges, because it’s a distraction from their more pressing issues, especially if they intend to do it well. On the other hand if someone steps forward and says, “Hey, you want to build your own social publication? We’ve got everything you need…” then that’s very tempting offer.

Flipboard has the content mapped to the social graphs; they could filter in or out certain classes of user, include just their media client’s content, and maybe add a mix of other content just to spice it up. The media company gets to produce its own compelling socially-recommended publication, with its own choice of content (just twiddle Flipboard’s admin dials to taste) and to its own design, with a fraction of the hassle. They could make any number of specialist standalone publications or sidebars on what they do already. And by building a large social graph of recommendation the early leader — Flipboard — has a good chance of keeping that dominant position, continually attracting more media clients. All the while Flipboard shares in the ad revenue the media company itself sells into its product.

At the Guardian you can already see some exploration of ideas in this area. Zeitgeist is a constantly changing collection of “hot” stories, as determined by unusually high readership of the moment. The Social Guardian was created on a hack day and steers you towards similar content that others are reading right at that second. And you can filter Charles Arthur’s Twitter stream for everything that begins “Linkage”. But of all these, only the first is anything like a packaged product, and the Guardian has the special privilege of being able to explore those kinds of things. Most media organisations are not that lucky, however much their content might deserve it. And even the Guardian hasn’t spun out any of these things into an actual standalone product. Despite this it’s clear that what the readers read is an essential part of the media package of the future.

Now I have no idea if Flipboard really is going to go in this direction. One possible use of pulling in $50m is to get the world talking and see if anyone comes up with a better idea than what you started with (in which case: You’re welcome, Mike, I’ll just take 1%). But really I’d be disappointed if Flipboard was only ever Flipboard-the-app. I’d much rather see “The New York Times powered by Flipboard” or “Paramount Comedy powered by Flipboard” or even a consortium of media companies pooling their content for “Science News Today… powered by Flipboard”.