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Can blockchain help fill journalism’s funding gaps?

The New York-based startup Civil launched last year with the goal of using blockchain -- the same technology that powers the cryptocurrency Bitcoin -- to help to build a network of independent news organizations with a sustainable business model. Civil hopes to create a new economy for journalism, including its very own cryptocurrency, the "CVL" token. Hari Sreenivasan reports from New York.

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  • HARI SREENIVASAN:

    Reporter Mauricio Peña is working on a story about rising property taxes in a predominantly Hispanic neighborhood in Chicago.

  • MAURICIO PEÑA:

    Estoy tratando de hacer una historia sobre…

  • HARI SREENIVASAN:

    This neighborhood is Peña's beat. He works for a new website called "Block Club Chicago." It's focused on telling hyperlocal stories.

  • MAURICIO PEÑA:

    A lot of legacy newspapers have kind of disinvested or have, no longer have the boots on the ground reporting that we are doing here. And when you don't have that a lot of things get overlooked.

  • HARI SREENIVASAN:

    Peña is right. Investing in local journalism like this is increasingly rare. He used to a work for a hyperlocal news network called DNA Info. The owner shut it down abruptly last November saying that even though the network, which included a website called Gothamist in New York, had 15 million visits a month online, it wasn't economically successful

  • SHAMUS TOOMEY:

    Our owner just made a decision that it wasn't working out.

  • HARI SREENIVASAN:

    Shamus Toomey was the managing editor of DNA Info in Chicago. After the site was shuttered, he and two other DNA Info editors co-founded Block Club Chicago.

  • SHAMUS TOOMEY:

    We can guarantee that at least the old DNA Info audience will be interested in us. Will they pay for us? It's up to us to figure that out.

  • HARI SREENIVASAN:

    Block Club Chicago is a non-profit news site. It's relying on subscriptions for funding from readers. It also got a boost from a crowdfunding campaign on Kickstarter.

    But Toomey and his co-founders also decided to try something more radical.

    They're partnering with a New York-based start-up called the Civil Media Company, which is building a network, or platform, for independent news organizations, including a new model for funding journalism using a technology called blockchain.

    If you've heard of blockchain at all, it's probably because that's what is under the hood of Bitcoin. Bitcoin is the cryptocurrency whose value has swung wildly, making and losing a lot of money for a lot of people.

    In its simplest form, a blockchain is a giant digital ledger that keeps track of transactions. The records aren't stored in any one place, but across independent computers anywhere in the world. Meaning, its supporters say, it's permanent and nearly impossible to hack.

    Civil is trying to harness that same technology for journalism, including creating its own cryptocurrency to help journalists get paid for their work.

  • VIVIAN SCHILLER:

    This isn't some kind of, you know, currency speculation. This is actually about supporting journalism.

  • HARI SREENIVASAN:

    Vivian Schiller is the CEO of the Civil foundation, which is a non-profit arm of the Civil Media Company, and she's also a former executive at the New York Times, NPR, and Twitter.

  • VIVIAN SCHILLER:

    We're facing twin crises in journalism around the world. On the one hand there is a growing trust gap. There is a, people are farther and farther apart in terms of what sources of information they believe. On the other hand there's also a financial sustainability gap. At Civil what we're trying to do is get out solutions to both of those crises.

  • HARI SREENIVASAN:

    What does the blockchain have to do with those solutions?

  • VIVIAN SCHILLER:

    So blockchain brings along with it a new kind of economics. At Civil we are issuing a cryptocurrency called "a CVL."

  • HARI SREENIVASAN:

    This week, Civil is offering 34 million of those CVL tokens of its cryptocurrency to the public, which will eventually be traded on exchanges. Just like Bitcoin, the price of each CVL will fluctuate depending on demand. The company is aiming to raise at least $8 million dollars. And Civil is setting an upper limit at $24 million dollars to discourage people from speculating. The money will be used by the Civil foundation to fund grants to journalism projects.

    In addition to raising cash, the goal is for the Civil token to tie together a community of people creating and supporting journalism in the Civil network.

  • VIVIAN SCHILLER:

    We encourage everyone to support a news organization in any way they see fit. If they're using a credit card for U.S. currency that's fine. But on the blockchain there are additional ways that people can support news organizations that just have not been accessible or available before. For instance micropayment or microtipping.

  • HARI SREENIVASAN:

    Right now, if you want to tip a website, say, a quarter for an article you read, the site would lose money on the credit card transaction fees alone.

  • VIVIAN SCHILLER:

    Once you're in a crypto-economic world there are no transaction fees. There's no middleman. And they can make those donations directly to that news organization. You know, they can give them as little as a few cents to as much as they want.

  • HARI SREENIVASAN:

    The Civil token also plays a part in how the network governs itself.

  • VIVIAN SCHILLER:

    With your tokens you have a say in who is and isn't on the platform.

  • HARI SREENIVASAN:

    Tokens enable the owner to do a few different things. With at least $1,000 worth of tokens, anyone can start a Civil newsroom of their own. Tokens are also used to challenge a newsroom if someone believes it violates basic standards of journalism as outlined in a constitution the Civil foundation has created. Token owners then vote, using their tokens as proxies, on whether the offending newsroom should be removed from the network.

  • SHAMUS TOOMEY:

    That could be a lede tomorrow.

  • HARI SREENIVASAN:

    Civil provided a grant to Block Club Chicago in cash and in Civil tokens. Editor Shamus Toomey knows the tokens aren't going to make Block Club Chicago rich overnight, but he is hopeful that the Civil token can be part of a sustainable business model.

  • SHAMUS TOOMEY:

    I've been in this news business a long time and every place I've ever worked we eventually end up in the sort of the same position of we just don't have enough money. So the idea of going to a place that had a new model a new idea, that was huge. You know, it's a gamble at this point. You know, we're trying to figure this out on the fly. You know, we're hoping that this is going to be the one that's gonna really solve the puzzle.

  • HARI SREENIVASAN:

    In addition to Block Club Chicago, there are more than a dozen newsrooms that have also received start-up grants from Civil, partially in the form of cryptocurrency. The startups range from local news outfits like the Colorado Sun. It's founded by journalists who worked at the Denver Post, a newspaper that has been decimated through layoffs. There are also topic-focused newsrooms that report stories about, for example, money in politics, immigration, and even more narrow niches like the cannabis industry.

    It's also not just print media.

  • MANOUSH SOUND-UP:

    Welcome to season 2 of ZigZag. I'm Manoush Zomorodi.

  • HARI SREENIVASAN:

    Manoush Zomorodi and Jen Poyant are co-founders of podcast company in Brooklyn, New York. Their first show is called ZigZag, which explores, in part, how Civil will work.

  • MANOUSH ZOMORODI:

    My cofounder and I, we left our stable public radio jobs to join an experiment using blockchain in an attempt to save journalism. What is blockchain? How is it going to save journalism? We didn't know. So we thought…

  • HARI SREENIVASAN:

    So you put yourself in the middle of it.

  • MANOUSH ZOMORODI:

    Exactly. That should be the show.

  • HARI SREENIVASAN:

    For Zomorodi, who previously produced and hosted the podcast "Note To Self" for New York public radio, Civil is both an experiment and an incredible story.

  • MANOUSH ZOMORODI:

    So this was an opportunity to be in at the ground up to. I don't have the tech chops to help build it but I can give feedback about what the humans think of the actual use of it. And for a journalist to be part of a potential solution, I think that's where we are right now in this country. You can't just report on it. You have to figure out how you fix it.

  • HARI SREENIVASAN:

    So what happens after these tokens go out into the world?

  • MANOUSH ZOMORODI:

    Well I don't know. I mean we're not banking on it. To me, they give us an amazing story to tell. This is the best story I've ever covered in my life and I happen to be in it. If it goes well, it's unbelievable. If it doesn't, it's fascinating and…

  • HARI SREENIVASAN:

    It's still a good story.

  • MANOUSH ZOMORODI:

    Oh yeah and I have a front row seat. This is an amazing opportunity for me as a journalist.

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