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The Story of Civil Is Not One of Total Failure

To judge the media company on its failed token sale is to overlook its very real wins for journalism

Phillip Smith
Oct 31, 2018 · 8 min read
Photo by Aleyna Rentz

The story of Civil’s effort to build the new economy for journalism is an interesting one. It’s the story of trying to overcome some incredible odds. And it’s also the story of some impressive creativity and a new way of thinking, at a time when society desperately needs it.

The undertaking was, in one sense, a massive crowdfunding campaign. Where previous efforts like De Correspondent, Krautreporter, and Mediapart raised in the range of $1 million to $2 million, Civil sought to raise between $8 million and $24 million. Where the previous efforts sought to raise funds for a single newsroom, Civil sought to raise money for dozens, hundreds, or even—in theory—thousands of newsrooms by selling its own cryptocurrency.

Civil may have just stumbled on some powerful new ideas for journalism’s future

The initiative was made more difficult because it was asking regular people, “consumers,” to purchase a new form of cryptocurrency. And that challenge proved insurmountable for now. However, in the process, the team and Civil may have just stumbled on some powerful new ideas for journalism’s future.

I experienced this firsthand when I exchanged cryptocurrency I already had handy (called ETH) for a very small amount of a different cryptocurrency that would supposedly benefit journalism (called CVL). Like many in the journalism industry, I watched the token sale unfold with significant skepticism. I checked the sale stats regularly and texted my industry colleagues incredulously, “How will this ever reach the target?” Progress did not look good, even in the earliest days.

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Passed the test. First try. No studying. Thanks JSK Fellowships!

I fretted about the whole undertaking, worried what it would mean for these “First Fleet” newsrooms, the first cohort of newsrooms that would be bankrolled by the Civil token sale, and the industry at large. I binge-listened to the ZigZag podcast that was documenting the entire adventure from the perspective of one of the Civil newsrooms for deeper analysis. And I reached out to a few people behind Civil newsrooms, just to get a behind-the-scenes view of what was happening.

There was even a strange and fateful night where I was seated next to Matthew Iles himself, the co-founder and CEO of Civil, at a private industry dinner. Here I was with a ringside seat, and I could ask him anything I wanted. And I did. Like many, I found his passion palpable and convincing.

Then the closing day of the token sale arrived: October 16. I checked the Token Foundry website and found out that Civil had not reached its goal. The media let loose, trade publications, commentators, analysts—just about everyone: “Civil had failed.”

What the Media Missed

But I don’t believe Civil failed at all. In fact, I believe it’s succeeded wildly at something that has been almost entirely overlooked.

Civil helped bring 14 newsrooms to life in less than a year, and with less than $6 million of investment.

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Civil’s “First Fleet” newsrooms

How did they do that? I believe one part is quite simple: Civil created an environment where people felt bold enough to start new newsrooms. And they did, with less than $6 million of investment. That alone is a success in my estimation, and one that’s worth exploring more deeply. To put that in context, Craig Newmark recently gave $20 million to start up just one newsroom, The Markup.

Civil helped bring 14 newsrooms to life in less than a year, and with less than $6 million of investment.

At a time when newsrooms are downsizing, Civil’s commitments provided the necessary runway for a number of journalists to launch digital upstart publications. While editor of the Colorado Sun Larry Ryckman recently stated that their long-term success hangs with subscribers, he acknowledged that “seed money from Civil has allowed the Sun to make a strong start.” When I reached out to Ryckman after the token sale ended, he had this to share:

I am incredibly optimistic about the future of the Colorado Sun because the people of Colorado have responded to our debut with enthusiasm and have given us strong support. Our ultimate success depends on great journalism, not tokens. While I, of course, am rooting for their success and believe in Civil’s mission, our focus is on connecting with Colorado readers and giving them the deep journalism they need and deserve.

So, just how small was the investment in each newsroom? There are no publicly available numbers, as far as I know, but my back of the napkin math says “no more than $250,000 per newsroom,” and—if I had to guess—the actual amount, on average, was probably less.

I base that estimate mostly on what Civil has already disclosed:

ConsenSys is committing $2.5 million in capital … in support of Civil’s newsmaking platform— October 2017

ConsenSys has committed $3.5 million to the Civil Foundation, which will be used to fund existing grants to the 14 initial newsrooms as well as overhead October 2018

Of that $6 million at least $1 million was committed to The Splice 100. There are other financial commitments Civil has made, like European Journalism Centre’s community engagement accelerator and International Center for Journalists (ICFJ)’s models of sustainable journalism event in Argentina later this month. I’m not sure how many of those partnerships there are or what they’re worth (the EJC example has been confirmed by Adam Thomas at $500,000). Then there’s the “overhead” referenced. If overhead was at 20 percent, that would leave roughly $3–$4 million divided between those 14 initial grants. Some took cash and CVL tokens, I suspect some took only cash, and it’s been reported that at least one newsroom founder, Maria Bustillos of Popula, took only CVL tokens. (Maria confirmed that the newsroom itself was founded through “a generous grant of cash from Civil.”) The range, in my estimate, is $0 to $250,000 in good ol’ fiat currency.

Regardless of the math, the key thing to remember is those newsrooms are producing reporting, and that reporting is getting attention.

The Spark That Starts a Fire

Matthew Iles wrote of those newsrooms, “They’re exposing political corruption. They’re calling out governmental hypocrisy on immigration policy. They’re uncovering massive, unreported environmental issues. The list (and the impact) goes on.”

The Civil newsrooms are doing all kinds of reporting: local, investigative, policy, and internationally focused. Somehow, Civil’s vote of support moved people from consideration to execution.

For example, a Civil grant helped several Denver Post journalists say enough is enough to an “era when hedge funds and billionaires are too often calling the shots,” and leave to start the Colorado Sun. Between Civil’s support and a successful Kickstarter campaign that saw over 2,000 supporters contribute more than $150,000, the Colorado Sun is now a reader-supported, journalist-owned news outlet focused on investigative, explanatory, and narrative journalism.

What convinces journalists who have been working in traditional newsrooms for years to take a leap of faith and start out on their own? Take, for another example, Manoush Zomorodi and Jennifer Poyant who left their established positions at WNYC to start a new media company and pilot podcast. Or any of the other individuals who staked out on their own as part of Civil’s First Fleet of newsrooms. That is the question that I invested a year of my life researching.

Civil created an environment where people felt bold enough to start new newsrooms.

These grants aren’t a golden egg, but they are a powerful endorsement, and the necessary runway to build momentum. Sometimes that’s all that’s needed. The spark that starts a fire.

Here’s what Manoush Zomorodi, co-founder of Stable Genius and the ZigZag podcast had to say:

So far I’d say the most encouraging part of Civil is that it has given us the confidence and cash to exist in the first place, without having to sell our IP or any ownership of our business. Considering the state of media right now, a hands-off investment like that is quite extraordinary.

Can’t We All Just Get Along?

But, perhaps most importantly—and perhaps most overlooked—these newsrooms appear to be working together. They’re in regular contact through Civil, they run the same software, and they provide each other with support. From the outside, it appears that Civil newsrooms know about one another and actually make efforts to collaborate. This alone is a breakthrough because this kind of newsroom collaboration is rarely seen outside the efforts of professional associations like INN or LION.

I’m excited that Cannabis Wire is part of Civil’s First Fleet, and have found their work, their wisdom, and their friendship to be rewarding aspects of the experience. I’m eager to see the Civil products roll out in the coming weeks and months as the ecosystem grows, and to incorporate them into our newsroom. — Alyson Martin, co-founder Cannabis Wire

Instead of picking apart Civil for what it got wrong, we might gain significant insight by investigating what it got right. Civil provided a compelling vision of a future where important reporting is undertaken by upstart digital news sites that are all connected together by a shared idea. That idea, at its core, is simple: Let the people who care about journalism not only invest in it, but let them also have a say in how the system works.

This idea of “the people formerly known as the ‘audience’” having more ways to participate has had a tough run, but Civil newsrooms appear to be onboard. When I reached out to Sludge, this is what co-founder David Moore had to say:

I think the novel meaningfulness of CVL token holders’ votes and polls and micro-tips will create a ‘thicker’ conversation with our readers than reporter comment forums alone, and encourage more followers of our free news articles to make the decision to become, say, a $5/month donor to our newsroom.”

In the summer, Iles wrote, “All told over the past year, we have had nearly 600 organizations apply to start newsrooms on Civil, and 40 percent come from outside the United States. We expect to onboard 1,000 newsrooms before the end of the year.”

At a time when the number of newsrooms in the last decade has been halved in several countries (in the United States and Canada, for example), this moxie is refreshing. I applaud their moonshot. This is the kind of thinking we need right now. It’s Kennedy describing a mission to the moon when everyone else is talking about making do with less. It’s a vision that brings people together to solve an urgent problem facing society.

A Learning Moment

In the wake of the unsuccessful token sale, Iles went on to say, “We’ve built a community of newsrooms and engaged members of the public, highlighted by the 125+ journalists across 18 newsrooms (14 from Civil’s ‘First Fleet,’ and four more that joined the Civil network earlier this month) that already form the backbone of the Civil community, and publish daily.”

I want to know more about how Civil accomplished as much as it did in the last two years. I want to know more about the rubric they used to select the First Fleet newsrooms, as well as the investment in each. And I want to know what the “secret sauce” was that compelled these individuals and teams to take the risk to start something as uncertain as a newsroom in 2018. When was the last time you saw a $6 million investment in news move the needle like this? It’s inspiring.

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👉 My passion is helping: 💰 Newsrooms make more money; 📈 News startups grow their audience; 🔥 Journalists succeed as entrepreneurs. Let’s talk 📩

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