Is Crowdfunding the Future of Journalism?
Leah Betancourt is the digital community manager at the Star Tribune in Minneapolis, Minn. She is @l3ahb3tan on Twitter.
Crowdfunding, or getting many people to donate small amounts of cash to fund a project, startup, or service, is nothing new. Think public radio or television pledge drives. Think political campaigns. Think tip jar. Now, as the media landscape changes and traditional revenue sources are beginning to disappear, some forward-thinking journalists and entrepreneurs are starting to apply the crowdfunding concept to the news. A new crop of sites are combining crowdfunding with volunteer and professional contributions in order to source news that people want to read.
There are two issues with crowdfunded sites that also have volunteer journalists, however: who’s going to pay for it and who’s going to write it. These sites are experimenting with ways of answering these questions.
Finding a Sustainable Model
The problem with the writing issue is that professional journalists typically want to be paid and non-professionals likely need incentives. The sites have to become sustainable not just for the people running them, but also for the people writing the stories and creating the content.
“Everybody is facing reality to find a sustainable model,” said Dan Gillmor, Kauffman Professor of Digital Media Entrepreneurship at Arizona State University's Cronkite School of Journalism & Mass Communication. “The point is that everybody is figuring this out now.”
For example, a South Korean citizen journalism site that began in 2000 called OhMyNews, recently ran up against a major budget shortfall and reached out to the public for help with funding.
The site’s founder and CEO Oh Yeon-ho posted an open letter July 8 on the site saying OhMyNews lost $400,000 last year and needed 100,000 people to donate nearly $8 a month in order to become financially stable. A July 10 update on OhMyNews reported that less than 24 hours after the plea, an estimated 1,100 readers confirmed a financial contribution, and 1,825 pledged a commitment to contribute.
The Crowd Funds Production
About three weeks ago, Chi-town Daily News, a hyperlocal community news site in Chicago that launched in 2005 and is also a registered 501(c)(3) non-profit, began posting a box at the end of each story stating how much it has spent on reporting, writing and editing and asking people to donate. Editor Geoff Dougherty said the cost is calculated based on the site’s expenditures for the fiscal year that closed June 30, divided by the number of words they published during the year to get the cost per word (67 cents). The cost per word is multiplied by the number of words in each story.
“We're looking for ways to a) educate our audience about the costs of doing good journalism; and b) convince them to help pay for it. This seemed like an interesting step forward on both of those fronts,” said Dougherty in an e-mail interview.
Dougherty said it seems as if they have received more donations although he hasn’t yet seen the monthly total. Chi-town Daily News has also received several grants, including two from the John S. and James L. Knight Foundation.
“We're working toward a situation in which we have four roughly equal revenue streams — grants, individual contributions, advertising revenue, and revenue from consulting and events,” he said.
Another experimental community-funded journalism site is Spot.us, an organization located in California’s Bay Area that seeks donations to pursue story pitches. It launched in October and is supported in part by a two-year, $340,000 grant from Knight Foundation. Spot.us has four types of reporting, with costs and deadlines for fundraising and reporting tied to each.
For example, one investigative pitch currently active on the site seeks to raise $6,000 to send freelance writer Lindsey Hoshaw to the Great Pacific Garbage Patch, a mass of plastic garbage in the Pacific Ocean that’s twice the size of Texas.
Spot.us Founder David Cohn said the trip costs $10,000 and that Hoshaw will pay the rest herself. Part of Hoshaw's reporting, an online slideshow and story about the ocean area, is being considered by the New York Times, and Hoshaw would provide separate content to Spot.us that would be available under the Creative Commons license, according to the pitch.
As of this writing, $1,375 has been raised toward the pitch’s goal.
Other Ways to Raise Money
Both Chi-town Daily News and Spot.us rely heavily on grants, as well as crowd donations, but those aren’t the only options. In a recent column, Steve Outing, a media consultant and Editor & Publisher columnist who covers interactive media, wrote about three new monetization models for content producers, the soon-to-be launched Payyattention, Kachingle, and Contenture.
Payyattention
Payyattention users pay a few cents for a specific piece of content and the default price is set by the publisher, according to Outings’ column. He told me Payyattention displays an icon at the bottom of all stories, and if readers like a story, they can donate and then click through to see who else has donated to the story and how much. The idea is to add a social element to funding content to make it more fun. He said Payyattention’s founder Stephen Farrell is considering expanding the funding icon to include syndicated stories, so that the contribution mechanisms would still be embedded no matter where the content runs.
“I think that’s potentially a powerful concept,” Outing said.
Kachingle
Kachingle users contribute $5 a month, and participating sites add a medallion to their pages. Users click on the medallion when they see something they like, and that $5 is shared proportionally based on how many times the user has visited the site and other sites he or she likes, according to Kachingle’s site. The funds are collected by Kachingle and automatically deposited monthly into the content provider’s account.
Outing pointed out that Kachingle also has a social media component in which donor activity can show up in a user’s Facebook news feed. That means Kachingle could theoretically help publishers spread their content virally, as well as make money.
Contenture
Contenture charges readers a monthly fee and promises that users visiting member sites will get something that non-paying readers won't. In other words, they're enabling a freemium model for content sites. Contenture tracks site activity from subscribers and divides the monthly pool among its member sites based on how many times they were visited during that time, according to Outing’s column. Several sites are currently using the system.
Long-term forecasts could be premature for some of these young sites, but the confidence is there. Outing said the short answer about whether crowdfunded sites are sustainable is yes, but they’ll need more than one way to raise funds.
“My belief is this [crowdfunding] will be one significant revenue stream for them,” he said. Outing said that community funding could work well too for state-specific investigative journalism startups or to fund the work of independent foreign correspondents.
Combining Crowdfunding and Crowdsourcing
Global For Me, which is part of Global Radio News Ltd., is a crowdfunded site that launched less than two months ago with an eye toward providing more detailed news coverage using crowdsourcing techniques. Global For Me visitors choose a story and then pay if there’s enough interest. This process is crowdsourcing for topics — the public directly commissions the journalist to report stories that are of interest to them.
“There is a lack of detail in news coverage, whether it be local or international. Twenty-four-hour [news] channels just skim the surface and rarely have time to get into the detail. Online, there is a lot of detail, but also a lot of the same news everywhere. As advertisers start to control what content gets out, there have to be other options,” said GRN Director Henry Peirse in an e-mail interview.
He said that removing traditional editors from the commissioning process gives power to the user and that’s what the Internet is all about — choice and delivery — connecting people who want something with people who know something. Global For Me reporting is done by a professional network of print, video and audio journalists who apply through GRN. Peirse said the first major commission was for a podcast from the CBS Kennedy Space Center correspondent.
Prices start at £1.50 and increase incrementally to £500. That highest figure designates donors as the sole commissioner of the story, which makes them subject to agreement with GRN on usage and rights, according to the site.
“Anybody can donate and there are no restrict[ion]s at the moment. We’re kind of letting that grow organically. The more people that contribute to making the stories, the better. Our reputation is on the line so we have to be aware of the issues,” said Peirse about conflicts of interest. He added that GRN is monitoring the process to avoid issues related to conflicts of interest and will have the final say.
“I’m relying on the crowd to pull or push us into a model where there is transparency and a democratic standard operating procedure,” he said.
Despite the site’s moniker, it is at the local level where this approach could make the most difference. “Things local papers would have covered, but now don’t. This is a very important aspect of what we are doing — still using professional reporters to fill this key gap,” Peirse said.
Who Owns the Story?
At Spot.us, pitches get funded before the reporting starts. Individual donors can contribute up to 20% of the cost. Only news organizations can donate more than 20% of a pitch. They can also fund up to 50% of the freelancer’s salary upfront, and Spot.us can work to raise the other 50%, according to the site.
If a news organization raises 50%, it can temporarily copyright the story until 51% is raised through community donations. If news organizations fund 100%, they get exclusive rights and donations are reimbursed, but all content is eventually available via a Creative Commons license.
All of the Chi-town Daily News’s content, meanwhile, is copyrighted, but Dougherty said they are exploring the possibility of licensing it to other news organizations.
At Global For Me, where the story ends up depends on the story itself and what those who commissioned it want to do with it. Global For Me just produces it. “The story will be yours to distribute and we'll talk to you in the production process about where we can all publish the story around the world for maximum exposure. The rights stay with the reporter and are managed by us,” according to their site.
The High Churn Rate of Crowdsourcing
One problem that citizen reporting sites such as Chi-town Daily News and Spot.us face is turnover. Chi-town Daily News has a full-time staff of five, plus two interns and several volunteer neighborhood reporters. Beat reporters cover education, labor, public housing and public health. The site also has blogs and the best posts are promoted on the home page.
“When news breaks on one of the beats we cover, we jump on it,” Dougherty said.
However, retention is challenging, said Dougherty, and they have tried using different approaches to make sure volunteers have a high level of engagement. They have a monthly e-mail newsletter that highlights the volunteer of the month and empowers them to set the coverage agenda for their neighborhoods.
“We hold monthly story meetings where we work with volunteers to understand what’s going on in their communities, and identify possible stories related to those issues and trends,” he said.
Chi-town Daily News requires a four-hour training session for volunteers that covers reporting, interviewing techniques, news writing, and ethics.
Spot.us’s Cohn said his work involves a lot of reaching out and getting people to take ownership of themselves. The site has a mandatory reading section for reporters.
“It’s a diaspora of journalists. They come and go,” he said. “We’re being picky and choosy about who we’re working with, but not exclusive. We’re looking for people who are passionate about reporting.”
Not Everyone is a Believer
Alan Mutter, a consultant and investor in media and technology properties, said that because of time and money constraints, citizen journalists can’t do the same caliber of work as paid professionals.
“In the case of Spot.us, I’m proud of what [Cohn is] doing, I just don’t think it will work,” he told me. Mutter said people will come and go because it’s exhausting to do the work. He also pointed out that with time sensitive stories, the story will have come and gone before the money is raised.
“My point here is it’s not a sustainable way for having good journalism because those people are going to be burned out,” he said.
What's Next
Cohn said Spot.us has 26 stories partially or fully funded and 32 pitches. He said they have had to refund just four times because they didn’t raise enough money (money gets credited back to donor’s account to fund another pitch).
“It’s meeting my expectations because what we’re trying is so radically different,” he told me. “It hasn’t lived up to all my expectations and hopes. I still have a lot of ambitious plans for it.”
He wrote on the MediaShift Idea Lab blog about how crowdfunding has worked so far and outlines goals to grow the site and what it will take to reach those goals. Cohn said he wants to expand into markets such as Los Angeles, where he’s from.
“Obviously, I’m a big fan of what David’s doing,” said Gillmor, of Arizona State University, who’s also a Spot.us adviser. “He’s learning what is working and what is not, which [is] exactly how these things are supposed to work.”
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Image courtesy of iStockphoto, enot-poloskun
