Crowdfunding – Last resort for high quality online journalism?

“Online journalism is dead”. This statement is the driving idea behind the business model of the German online magazine Krautreporter. A paradox?

Today many websites are exclusively financed by online advertisements. Google, the most visited website in the world, provides its services to the Internet users for free. Revenues are exclusively generated from advertisers who are interested in reaching out to the online users. Today Google is one of the most valuable companies in the world. Virtually no website misses the chance to broach the lucrative source of online advertisements. Websites with the highest click rates generate the highest profits, since advertisers are willing to pay premium prices for increased reach. In general there is nothing wrong with it. But how about non-commercial Internet content?

Freedom of the press is a crucial element of each democracy. This freedom mostly implies the absence of interference from overreaching states. Public opinion should be shaped by unbiased information. Online journalism, the distribution of editorial content via the Internet, is increasingly suppressing traditional print media and has democratized the flow of information. Today any content can be found online at no charge; therefore print media sales are falling. To ensure sustained revenue, publishing companies are using the previously described business model, by running advertisements on their websites, on which they also display their journalistic content.

Publishing companies’ source of revenue is their two-sided network of readers and advertisers. In order to generate profits, journalists have to produce content that can easily be found by Google’s search engine to generate clicks from as many readers as possible. This procedure puts online journalism under high pressure. Krautreporter argues, that even if freedom of press is ensured, journalists still do not have the freedom to provide readers with the content they are asking for, due to the two-sided market mechanism. This results in biased, short and sensationalized news of low quality. Therefore new sources of revenue have to be found.

“Information wants to be free. Information also wants to be expensive … That tension will not go away” (Steward Brand, 1984). Krautreporter (Kraut; German for “cabbage”, pronounced similar to “Crowd”) sees the answer in Crowdfunding. 15.000 users that are willing to spend 60 Euro for a one-year subscription are needed to finance the project. Krautreporter will start with 25 well-known journalists, publishing one article a week each, without the need to take click rates into account, without advertisements displayed on the homepage, to bring back quality to online journalism. Role model for this concept is De Correspondent from the Netherlands, an online magazine with 30.000 subscribers that has been founded one year ago.

There are different reasons why people participate in Crowdfunding. In this case it’s not the opportunity to get access to promising investment opportunities or to be the first to use a unique new product, since content will not be hidden behind a pay wall and will also be available for free. Instead, people will be participating, because they get the chance to support an idea that could revolutionize online journalism. The next 27 days will reveal, if there are enough people that are convinced that it’s time to rethink online journalism.

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