Design: Leon Postma and Harald Dunnink (Momkai)

How being open about your financials can help grow your reader-funded publication

Lessons in transparency from a $4.5M ad-free news platform

As reader revenue becomes increasingly central to media business models, we’re continuing our five-year tradition of sharing what we’ve learned about running a reader-funded news organization.

In 2013, we launched De Correspondent in The Netherlands with the help of some 19,000 founding members who backed our world-record breaking crowdfunding campaign. Since then, we’ve grown to an online journalism platform with more than 60,000 paying members. In the coming year, we want to expand our publication to the US and beyond with the launch of The Correspondent.

Just as in the Netherlands, financial transparency will be a key feature of The Correspondent. In this post, I’ll explain why, and how it could benefit your publication.

Readers were the source of 94 percent of De Correspondent’s $4.5 million revenue in 2017 — the remaining 6 percent came from speaking engagements and syndication. I have worked in management positions at legacy media, so I can testify to how liberating it is to focus on the needs of readers instead of advertisers.

But it’s also a business model that comes with new responsibilities.

When members fund your business, they want to know how you’ve invested their money

Readers pay us, and we invest that money into journalism. That is our business model in a nutshell. And just like shareholders from a publicly traded company, our members want to know how we invest that money.

For example, if we took the membership fee of a member with an Android phone and used that money to build an iOS app, that member would want an explanation for why we ignored their mobile operating system of choice.

That’s why, every year, we lay out our finances to our members in a financial report.

In that report we can show them, for example, how their money enabled us to launch a year-long investigation into the Dutch oil giant Shell, which generated headlines around the globe and helped millions of readers understand what role these oil companies play in worsening climate change. Or, we can show how their money helped us develop privacy-friendly analytic tools (an important benefit of being reader-funded: we don’t need their data for ad targeting).

‘Here’s how we spent your money last year’

In these annual financial reports, we alway publish two pie charts: one that breaks down our expenses and one that breaks down our revenue.

Distribution of expenses, De Correspondent

Distribution of revenue, De Correspondent

Infographics: Leon de Korte

We want to hold ourselves accountable to the people who give De Correspondent the right to exist. By sharing what we made and what we spent, we create a gateway to have discussions about our business decisions.

For example, we decided to shutter our speakers agency this year, because it distracted our journalists from writing new stories and having conversations with members on our own platform.

The consequences of this decision will be reflected in next year’s report — and we will give members an explanation. Where did we invest that money instead? And what did members get as a result of that decision?

Being open about our financials also benefits our business growth. Here’s three reasons why.

Why sharing our financials is also good for business

  1. We want to show our readers we can’t do this without them. 
    Note that there aren’t any ads in the revenue pie chart. We are ad-free by design. We only want our readers as stakeholders, so we can focus completely on informing them in the best possible way. By showing our readers this revenue chart, we tell them: we can’t do this without your trust and support. By reminding readers of the crucial role they play in our very existence, we want to encourage them to start or keep supporting us. Our research shows that many members support us precisely for this reason — they see our independent journalism as a ‘public good’.
  2. We want to give readers insight into what journalism actually costs to make.
    If the audience doesn’t trust you, they won’t contribute to your cause. To earn that trust, it’s crucial that journalists give more insight into their trade. This isn’t just limited to, for example, explaining how anonymous sources work — explaining the business side of things is also part of it. The audience needs to know how much money it takes to pay an editorial staff, develop a platform, and provide a solid support system. Only then can they make a well-informed decision about whether journalism is worthy of their trust and support. One of my favorite examples of costs-transparency is the FAQ page of the popular politics newsletter What The F*ck Just Happened Today: What The F*ck Does It Cost To Run This?.
  3. If readers like and trust our business choices, they are more likely to either become a member or renew their membership. 
    When members respond to our annual reports, they often laud our choice to invest more than 50 percent of our revenue in journalism itself, and that we have relatively low overheads. They mention this as a reason for their support.

My experience: this kind of transparency begets more transparency

When I worked at a legacy media company that didn’t disclose financial information to subscribers, I rarely received questions from readers about business decisions.

But I’ve noticed that once you start being more transparent about your business, the demand for transparency grows with it.

When we published our financial report last year, our readers weren’t satisfied. Yes, it will be hard to find a media company that is as open about its financials as we are. But still our members still demanded more transparency.

It makes sense: when you give your readers more insight, they will also have more information at hand to ask questions about. Come to think of it, that’s how journalism works!

In our case, members remarked that we only shared how we spent their membership fee. In the early years of De Correspondent, this made perfect sense. Membership fees were our only significant revenue source. But in 2016, our book publishing division was the source of 14 percent of our annual revenue (up from 2% in 2015).

Members wanted to know how we invested those returns as well.

We agreed with them. They had helped fund our first books with their membership fees, so it was only natural to tell them about what happened to the proceeds too. That’s why we included all our revenue in the expenses pie chart in this year’s edition.

Being more transparent leads to the need for even more transparency, I’ve noticed, which keeps us focused on building a reader-based publication.

Financial transparency will also be a key feature of The Correspondent

In the coming year, we want to launch a global membership campaign to start an English-edition of our publication. Like its Dutch counterpart, The Correspondent will be made possible by future members. But to find those members, we also need money up front.

You don’t see those costs reflected in De Correspondent’s expenses above, because we have set up The Correspondent as a different entity. Our Dutch members pay for Dutch journalism, so it doesn’t seem right to invest their membership fees in an international expansion.

Instead, we have raised runway funding that allows us to put together a top-notch campaign team from our US base in New York and run a worldwide membership campaign within the year.

If this campaign is successful, we will have the same level of transparency about our finances for English-speaking members.

You can read more about transparency efforts at Digiday: ‘De Correspondent gets more transparent with members about its finances’.


For more insights about membership models in journalism, please read the reports of our research arm The Membership Puzzle Project (MPP). We cofounded MPP with New York University to help us understand how lessons from our Dutch media business relate to the US.

If you have any questions or remarks, please let me know! I’m @ejpfauth on Twitter or email me at ej@thecorrespondent.com.

Ernst Pfauth (1986) is cofounder of De Correspondent, an ad free journalism platform in The Netherlands with more than 60,000 paying members. In November 2017, he moved from Amsterdam to New York with his family, to prepare the launch of The Correspondent, the English language platform for Unbreaking News.

Let’s build a movement for radically different news, together!
Check out thecorrespondent.com to learn more.