Is advertising still an asset?
Journalism is an industry under siege. Today's ubiquity of information and the diffusion of social media have undermined the economic foundations of this vital activity for human development.
The model established in the era of mass media is now in pieces. The online migration of historical journalism has turned out to be a half-disaster if one makes the exception of a handful of major newspapers which, although downsized, have been able to find a balance which however is continually put to the test. Newspaper advertising, one of the two pillars of journalism in the age of mass media, has evaporated. The new advertising, the online one, is the prerogative for two thirds of two giants, Google and Facebook which carve out a substantial slice of the advertising they convey to what these leviathans still call "publishers". But you have to put quotation marks, as for "honest Pete", the sheriff of the Chicago police in First page by Billy Wilder.
Mark Thompson, CEO of the New York Times co., boosted by the so-called “Trump boom” and the 50% increase in subscribers to the online edition in the fourth quarter of 2017, said:
Advertising is still an important revenue driver, but we believe our focus must be on a long-lasting and close relationship with highly engaged, paying users…this is the best way to build a sustainable and successful news business.
And Thompson is right. But that's not an option for everyone given current market conditions. A drastic redefinition of the scenario is needed.
Back to patronage?
In fact, if the heirs of the great information of the mass-media era seem oriented towards following the path of paying users, and even the "Guardian" now seems to be on the same page as the great transatlantic newspapers, the initiatives born on the new media and those that have reconverted to this channel do not have this option and their fate continues to be linked to advertising or the support of wealthy donors who are not always neutral with respect to the information produced by the publications to which they generously contribute.
In this regard, just look at what happened to Breitbart News and Steve Bannon. After leaving the White House, Trump's chief strategist returned to Breitbart which he had directed after the disappearance of its founder in 2011. Here, however, he took a big misstep that greatly irritated Rebekah Mercer, daughter of billionaire Robert Mercer who has financially supported the alt-rights masthead since its inception. After Bannon confirmed the legitimacy of some dystopian stories told by Michael Wolff in Fire and fury (now also translated into Italian), Mercer demanded Bannon's resignation with the threat of withdrawing financial support for the publication. And Bannon walked out complete with a Stalinist purge-style retraction.
In November 2017, two online newspapers from New York (Gothamis e DNAinfo), which specializes in local news, had to close overnight when billionaire Joe Ricketts, a Trump supporter, withdrew his financial support and both after the staff decided to create a union.
Patronage is a double-edged sword for journalism. By now the conviction is gaining ground that consumers of information must pay to have it and above all to have it free from any external conditioning, above all to remove it from the insane "news>hits>advertising" spiral that the anonymous mechanism of Google and Facebook rewards beyond all measure.
The technology that destroys and creates
A scholar of contemporary journalism like Jeff Jarvis has long supported the need to find efficient mechanisms that allow consumers of information to compensate the journalism that produces it. These mechanisms are not there yet. Micropayments, which many believe to be the ultimate solution, in their current form are snubbed by consumers and virtually unworkable. With Visa or Mastercard, each money transfer costs around 20 cents. This means that it is not possible to transfer any amount of money lower than 20 cents and that for 50 cents the seller must transfer 40% of the proceeds to obtain collection. A lot of innovative micropayment-based business models cannot work in this scheme.
The subscription option, which has become more popular in the last two years, is starting to show signs of saturation. Many people wonder how many subscriptions a person can reasonably subscribe to, manage and tolerate. Other forms of direct commercial relationship are bizarre if conceived within traditional payment systems.
The only possible way for a sustainable business of independent journalism to develop is, as Thompson says, to establish a direct relationship, even of an economic nature, with the reader. But how? Through the architecture of the blockchain which, as we have also seen in the Previous post speaking of Kodak, it's starting to be an option that more and more content producers are looking at.
There is still a long way to go, there are still many problems to overcome, but that architecture has the infrastructure that independent journalism absolutely needs: the elimination of every intermediary and the establishment of a direct relationship with readers through micro-dimensional payments.
Emily Bell, director of the Tow Center for Digital Journalism at Columbia University said:
Cryptocurrencies have the potential to create a marketplace that brings together journalists and the reader community to fund the work of the former.
And indeed something is moving.
The platform Civil litigation su Ethereum
Good news is coming. A new journalism platform, called Civil, will be launched shortly, which is based on the Ethereum blockchain architecture. Ethereum is one of the largest decentralized peer-to-peer platforms for handling encrypted commercial transactions. But Etherum is much more than a network for the exchange of monetary values. It is rather a platform for the exchange of secured and encrypted contracts (called smart contract) to regulate a large number of commercial relationships, including those related to intellectual property and content distribution. Ethereum is an open source project that is based in Zug Switzerland with development teams in London, Berlin and Amsterdam. The Italian group is in Rome. Ethereum is the second largest and most popular cryptocurrency after Bitcoin with a market capitalization of over $70 billion.
Civil, relying on Ethereum technology for project use, aims to build a journalistic platform that operates on a marketplace open to journalists and readers. In this marketplace, using the Civil (CVL) cryptocurrency, readers will be able to directly support journalists and journalists, collaboratively, manage their publications, in thematic clusters called Newsrooms.
Newsrooms (planned for 30 at launch) are independently run newsgroups with the ability to manage, fund, produce, review and distribute original content on an open marketplace. Newsrooms are self-governing: they define their mission, governance structure, operational parameters and levels of sponsorship, all within the Civil platform and in accordance with its code of conduct. The Newsrooms are a mix of content and self-managed software that systematically manages all the incentive structures, the smart contract, the content database for both internal and wider network sharing.
Civil, as a metastructure of the Newsrooms, will be coordinated, after a public recruitment action, by an independent advisory Commission in charge of verifying the application on the platform of journalistic, professional, objective and verifiable standards with the task of validating the new Newsrooms. The platform also provides for a complex and structured information verification and fact-checking process.
Initially, according to co-founder and head of communications Matt Coolidge, the Civil team intends to focus on three areas: local journalism, investigative reporting and public policy reporting. Three areas that are indeed suffering from the crisis of independent journalism.
Forms of pay
Every piece published in Civil is associated with a pay table that reflects the agreements made between the contributors to the piece. This information is available as soon as the piece is published.
In addition to these, there are two other sources of compensation: donations (pledges) and sponsorships. Donations are similar to tips, completely discretionary and given only for a specific job. Anyone is free to give a certain amount of CVL tokens to a journalist in appreciation of her work and this donation is automatically allocated to the journalist's compensation table through a smart contract.
The sponsorship, on the other hand, is equivalent to the condition of a supporting subscriber and provides for recurring payments through smart contracts that give access to premium content according to a schedule decided by the managers of the Newsroom chosen by the sponsorship. Incentive and reward mechanisms are envisaged for sponsors which may also include forms of back-payment.
The ecosystem of Civil litigation
Here's how Matthew Iles, the founder and CEO of Civil, describes and visualizes the ecosystem he plans to build.
Readers and supporters, the largest contingent, will be able to visit Civil for the sole purpose of gaining access to and championing good journalism. The core of the community — that is, those who own the CVL tokens and determine key community decisions — will work below the waterline and participate in the community's self-governance activity. Finally, the group of "creatives" will be the real nucleus of the system and will be made up of journalists who write the stories published in the Civil Newsroom and developers who build new tools to meet the needs posed by the ecosystem. The system is not very different from Wikipedia, but powered by cryptotechnology. The latter makes it possible to keep the intermediary out of the equation and to place the work of the newspapers under the direct control of the readers, guaranteeing them total independence.
It is a project that is not easy to implement, but which could represent the first embryo of a new model of independent journalism. It will certainly not be the panacea of independent journalism, but in these dark times it is a small beacon of hope.
