Funding the Future – Exploring the Potential of Crowdfunding As an Alternative Revenue Source for Journalism
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Funding the Future – exploring the potential of crowdfunding as an alternative revenue source for journalism by Meredith O’Hara This thesis submitted to the Faculty of Graduate and Postdoctoral Affairs in partial fulfillment of the requirements for the degree of Master of Journalism Carleton University Ottawa, Ontario © 2014, Meredith O’Hara Abstract Internet based systems of communication have altered mainstream business practices, including those of the news industry. Web 2.0 applications allow consumers and producers of content to interact in ways not possible in the past. In the last two decades traditional media organizations have faltered as new technology and changing audience expectations have diminished their position of power in their communities. This thesis explores the current state of the news industry and specifically the use of crowdfunding by independent journalists and news organizations. Through six case studies of Canadian journalists and journalistic organizations which have attempted different forms of crowdfunded journalism this thesis reflects on the benefits and drawbacks of this developing financial model. The research suggests that crowdfunding is a limited model which can be utilized in the right circumstances by the right individuals or groups, but is unlikely to replace mainstream funding options. ii Acknowledgements To everyone who has helped me through this process, I could not have done it without your support. I want to thank my supervisor, Professor Chris Dornan whose guidance and positive attitude made this work a reality rather than a tangle of ideas in my head. To the amazing professors and staff at Carleton who were both my teachers and colleagues: Susan Harada, Kirsten Kozolanka, Chris Waddell, Kathryn O’Hara, David Tait, Sarah MacFadyen, and Mark Valcour, your expertise and influence kept me going in both my academic and professional endeavors. To my friends who walked down this road with me especially Erin Murphy, Irini Mavroudis, Sarah Baker, Mary O’Shea and Leah Winter – thank you for the free therapy and for believing in me even when I thought this project was beyond my skill set. And last but not least, I want to thank my entire family who always encourage me to do whatever I set my mind to and whose own strengths, struggles and successes inspire me each and every day. iii Table of Contents Abstract ......................................................................................................................... ii Acknowledgements ...................................................................................................... iii Table of Contents ......................................................................................................... iv Introduction ...................................................................................................................1 Chapter 1: The Foundations of Crowdfunding ............................................................7 Crowdfunding and Online Communities ..................................................................... 8 Testing the Model .................................................................................................... 11 Crowdfunding and Consumers ................................................................................. 15 Origins of Crowdfunding.......................................................................................... 19 A Different Way of Doing Buisness ......................................................................... 22 Limitations to Crowdfunding .................................................................................... 28 Journalism and Web 2.0 ........................................................................................... 30 Chapter 2: The Economics of Journalism .................................................................. 34 Early News Organizations ........................................................................................ 35 Advertising and News Organizations ........................................................................ 39 News and Technology .............................................................................................. 41 Economic Factors ..................................................................................................... 43 A Changing Audience .............................................................................................. 45 News and the Internet ............................................................................................... 47 News and the Global Recession ................................................................................ 53 Web 2.0 and the News .............................................................................................. 55 Digital Journalism .................................................................................................... 58 Chapter 3: News Organizations and Funding Options .............................................. 64 Mainstream News Online ......................................................................................... 65 Digital-Only News Sources ...................................................................................... 69 Philanthropic Journalism .......................................................................................... 75 Community-Funded Journalism ................................................................................ 80 Chapter 4: The Case for Independent or Freelance Reporters ................................. 86 Sarah Petz: Journalism Student ................................................................................. 88 Joey Coleman: Blogger and Independent Journalist .................................................. 96 iv Naheed Mustafa: Freelance Reporter and Documentarian ....................................... 107 Chapter 5: The Case for Journalistic Organizaitons ............................................... 118 Canadian University Press ...................................................................................... 120 rabble.ca ................................................................................................................ 129 Algonquin College and GoJournalism .................................................................... 139 Conclusion.................................................................................................................. 146 Bibliography .............................................................................................................. 156 v Introduction The 21st century is only a decade and a half old but already the new millennium has been defined by the rise of digital culture. From global trade to democratic revolution, online communications and communities have been at the centre of most major events over the last two decades. The Internet has changed how people interact and react to almost every aspect of daily life. It has changed how people correspond with each other on a daily basis and has led to new ways for people to shop, bank, and create communities. It has also changed how people access news and information and allowed for new and different kinds of interactions between consumers and producers of news content. This development has led to a major shift in how the business of journalism is done. Where once newspapers, radio, and television news organizations could guarantee advertisers a large and diverse audience, that mass group is now fractured into niche communities that are empowered by the Internet to find multiple and dispersed sources of information which are more specifically targeted to their interests. The development of Web 2.0, the systems that allow the Internet to facilitate interactions between users, and activities like crowdsourcing and crowdfunding offer new ways to help individuals and businesses solve problems and fund the solutions. The Internet has also given the public the power to disrupt mainstream business models that have supported news and entertainment media organizations throughout most of the twentieth century. It has forced the companies that gather and deliver the news to reconsider their business models and acknowledge the failings of a system that was heavily subsidised by advertisers willing to pay for access to mass groups of readers and viewers. Though the reality of the Internet and a highly connected population has 1 disrupted the traditional business model for mainstream news organizations, it may also offer a new way of financially supporting the production of independent journalism through crowdfunding. This thesis investigates that change and the role of crowdfunding in journalism. By reviewing existing literature on crowdfunding in multiple industries, including journalism, and reflecting on the details of a number of recent and current examples of journalistic initiatives that have been supported by crowdfunding, this thesis attempts to assess what conditions or circumstances have to be met in order for crowdfunding to be successful in supporting journalistic projects and why other journalistic crowdfunding campaigns fail. This research also considers how different forms of financing the journalistic enterprise produce different types of journalistic content (e.g., a traditional subscription model produces quite different forms of coverage from journalism supported by advertising and aimed at the widest possible audience) and reflects on how crowdfunding may produce