June 27, 2017

We’ve all heard the bad news. Newspapers are struggling because of decreasing circulation and advertising revenue, media organizations are competing with Google and Facebook for traffic and layoffs are plaguing nearly every corner of the Fourth Estate.

Yeah, the situation looks pretty bad. But have you considered using cryptoeconomics, digital marketplaces and blockchain to fix it?

That’s what Civil is trying to do. Last week, the “Ethereum-based decentralized platform” — read: startup media organization — released its white paper on Medium. The paper, a word salad of future-of-news terminology, touts three big solutions to the news industry’s woes: marketplaces, governance and blockchain.

So how does Civil’s team explain what the heck blockchain and Ethereum are, and how they’re going to solve the media crisis?

“Doing exactly that is going to be one of our biggest challenges over the next three to six months because it’s so new and mind-bending,” said Matthew Iles, founder of the media startup.

He can say that again. Here’s how Iles broke it down.

  • Civil is dividing its focus into three distinct marketplaces, including newsrooms, stations, and “fact-checking-as-a-service,” according to the white paper. Instead of physical newsrooms or large media brands, Civil’s vision for the future is a vast network of journalists and media consumers, who all opt into the platform by investing a certain amount of cyptocurrency.

  • That nerdy-sounding, futuristic term refers to any set of digital tokens that derive value from an online community, such as Bitcoin. Citizens can pool cryptocurrency — which Civil calls “CVL” tokens — for coverage of specific topics important to them in “newsrooms,” while journalists can use crowdfunding to back ambitious projects in “stations.”

  • The entire system, based on the open-source Ethereum computing platform, is enabled by blockchain technology, which is essentially a digital ledger that records transactions in cryptocurrency both chronologically and publicly.

“The idea would be that we are going to create a variety of different ideas on the platform that we on the community deem valuable, which would include newsworthy content and fact-checking,” Iles said. “This is a big idea that’s going to impact a lot of businesses.”

Each marketplace ultimately aims to solve two major problems in media today: a devastating lack of rigorous reporting on a local level and a faltering business model for media outlets sustained by advertising revenue.

“So far, some of the things that have come up are local news, policy news, investigative reporting and reporting on communities that feel underrepresented in mainstream media,” said Tom McGeveran, an adviser to Civil and the founder of Capital New York. “Part of the idea here is that if a group of people live in a neighborhood where a newspaper pulled out, they would be able to put up a fund for coverage of the neighborhood.”

McGeveran is one of the journalists working with Civil to try and create a “by journalists, for journalists” brand, according to the white paper. Joining him are Josh Benson and Katherine Lehr, the two other journalists who used to work with McGeveran on Politico’s state operations. The full-time team is made up of founder Matthew Iles, Stephanie Soussloff and Lillian Ruiz, and hopes to grow by 10 people by the end of the year.

Some people have serious doubts about Civil’s ability to create change for the traditional media industry.

“It’s almost like a Rube Goldberg device to solve the problem of paying for journalism,” said Ken Doctor, media analyst and author of “Newsonomics.” “It just seems overthought and kind of missing the obvious.”

To Doctor, it’s obvious that traditional news organizations like The New York Times and The Washington Post have recently seen a significant increase in their subscriber bases while continuing to conduct the top-notch investigative and enterprise journalism they’re known for. While there are obvious economic problems in the media industry, it’s clear that a subscription-based model can work, Doctor said.

“What we’ve seen in traditional models is that people will pay, and if people will pay on a subscription basis, the system works,” he said. “It is the institutional structures of longstanding media brands that have resonance in the modern world. We don’t need to create new brands or works and hope that people will hopefully try them.”

For Civil, the very premise of the project is that brands won’t exist in the future of media. Instead, people will pay for their news by coughing up cryptocurrency to specific journalists that report on topics that interest them. According to Iles and McGeveran, this approach would ensure the survival of local news while maintaining transparency and accountability in the system. But Doctor disagrees.

“The idea of funding journalism on a story-by-story basis, or even a reporter-by-reporter basis, is not what’s needed,” he said. “And even on a local basis, what’s needed is strong institutional brands that stand for a community and employ a critical mass of reporters.”

The most important thing for Civil is the growth of the network, not its staff, Iles said. The startup currently has no venture backing and is finding alternative ways of generating revenue in the meantime.

Iles and his team plan to hold a CVL token distribution event in fall or winter of this year, where participants will be able to get a first glimpse at how the platform will work. Prior to the event, they aim to launch a “first fleet” of journalists on Civil, who will work in 12-24 different newsrooms focused on areas that have been hardest hit, such as investigative reporting.

The hope is that the distribution will pique interest in the platform — and the more people who want to join Civil, the more valuable it becomes for token holders, Iles said.

“Those tokens will appreciate, then (users can) sell those to next wave of people who join the platform,” he said. “The vast amount of the economic value created by the platform is captured by the community itself and not by the company.”

The startup is looking at a 2018 launch at the earliest, McGeveran said. While Civil is still in the first stages of innovating in the cryptocurrency and blockchain space, McGeveran said that what he learned while working as a journalist during the internet boom of the 1990s is that it’s never too early to take advantage of an emerging platform.

“There were a lot of opportunities we didn’t take that we should have, and a lot of media organizations sort of allowed this free and open internet to develop into something that is actually, once again, difficult to publish (on) without a tremendous amount of money and scale,” he said. “To me, this represents another opportunity to get a shot at something that can be free of a lot of those pitfalls.”

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Daniel Funke is a staff writer covering online misinformation for PolitiFact. He previously reported for Poynter as a fact-checking reporter and a Google News Lab…
Daniel Funke

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