News foundations make big bets on crowdfunding, despite poor track record for funding journalism

Clay Shirky, Newspapers and Thinking the Unthinkable(1)

Shirky takes a grim view of the digital revolution’s impact on the news. Newspapers’ “most passionate defenders,” he writes, “are unable, even now, to plan for a world in which the industry they new is going away.” But there is a silver lining for journalism because the internet has made it easy to make goods and services available to a global user base.

If Etsy.com can create a platform to sustain handcrafted goods, can crowdfunding help support local journalism?

Kevin Kelly, technology thought leader and former Wired editor, wrote, “To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.” In 1,000 True Fans he argues that creators just need 1000 people to pay $100 a year to sustain their life while pursuing a passion. This idea sparked online crowdfunding platforms.

The latest crowdfunding innovation comes from a Dutch team that produces the online new site De Correspondent. A manifesto served as a minimum viable product to raise as raised $1.7 MM through 25,000 subscribers paying 60 Euro per year (about $65) to support the newsroom in 2013, according to Gigaom — RIP. Positioning the funding as a “membership” rather than a one-off contribution may have helped the organization take advantage of recurring annual revenue.

Members don’t get to choose stories to fund, but they do get access to the journalists. “Correspondents are required to invest in rich interactions with readers. They do not have a choice,” said NYU Journalism Professor Jay Rosen, “It is part of the job.”

Rosen announced in March that he is working with De Correspondent on a $515,000 grant from the Knight Foundation and the Democracy Fund to research how to make the membership model work in America with the goal of developing a US platform. Meanwhile, De Correspondent has an English newsletter, and is taking donations in dollars to translate stories into English. De Correspondent is a national news source, but local newsrooms could copy their model on a smaller scale.

Co-founder Ernst-Jan Pfauth, thinks subscriptions are the future of news for three reasons: platforms like Facebook and Google control the relationship between readers and publishers, platforms also dominate mobile, and ad-blockers are more popular than ever.

The first journalism crowdfunding website, Spot.us, was like a Kickstarter for news. Individual donors paid to support one-off articles or projects. Spot.us predates Kickstarter. The idea was to increase transparency and engagement with readers while raising money to support quality journalism, according to David Cohn in a phone conversation on Friday. The issue with project-based crowdfunding is that most journalists work a beat on an ongoing basis that yields stories over time. Investigative one and done stories are risky — they may not come together in the end.

Crowdfunding raises unique questions for journalists who must manage the tension between journalistic independence and fairness and the potential for partiality or bias when individual writers are beholden to readers who are paying directly for the content.

Nonprofit newsrooms manage the tension between donor influence and editorial input. “Our donors support the independence of our work,” said ProPublica’s President, Richard Tofel, “and do not influence our editorial processes.” But in a survey by NiemanLab on newsrooms in the global south, respondents acknowledged they are writing for donor either implicitly or explicitly. Let’s assume every journalist is writing to impress someone: an editor, colleagues, a professor, a patron, fans or supporters.

Like Spot.us, Beacon and Contributoria also landed in the journalism start-up graveyard. Contributoria’s founder said it was a challenge to manage both users and producers. “One problem was the amount of work each writer needed to put into promoting their crowdfunding campaign,” co-founder Matt McAlister told news outlets, “We really struggled to help independent journalists with smaller followings and unproven ideas who priced their articles too high.” Journalists need credibility to raise money at scale and produce high-quality work. McAlister also said it was difficult to deal with difficult customers and moderate comments.

Crowdfunding journalism is fairing better across the Atlantic. Byline, based in Europe, is publishing, though the site says “beta.” Crowdfunding holds the promise of bypassing a publisher and allowing readers to support content creators, directly. But, non-profit organizations also used crowdfunding platforms as a fundraising tool. The Texas Tribune raised money to live-stream video of legislative sessions. Even though there are anecdotal success stories, most journalism crowdfunding campaigns fail, according to a Neiman Report, including over 75% of journalism projects on Kickstarter.

Patreon, unlike Kickstarter, is a platform that allows fans to support artists and writers on an ongoing basis. It’s a better suited to journalism because, in exchange for donations, users receive exclusive content when it’s ready. Patreon appears to be a success for a podcast called Canadaland. Their goal in 2015 was to raise $10,000 a month, and according to their Patreon page, the podcast receives $15,000 a month from supporters. But fundraising can be slow for local newsrooms. It took the one-man-show The Asheville Blade three years to raise enough money to hire a second person, according to NiemanLab. Crowdfunding favors credible journalists who start with strong brands.

A recent college graduate Mariah Stewart received funding through the now defunct Beacon to report from Ferguson. She also worked with reporters from the Huffington Post. But she couldn’t quit her day job at the mall. For journalists covering local news, crowdfunding is still only a stopgap measure.

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(1) Robert W. McChesney (Editor), Victor Pickard (Editor) (2011) Will the Last Reporter Please Turn out the Lights: The Collapse of Journalism and What Can Be Done To Fix It. The New Press.

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For marketing folks at startups who use data, tell stories, want better results, and to be happier at work.

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