Q&A: Ernst-Jan Pfauth, CEO & Co-Founder @ De Correspondent

This week, The Idea talked to Ernst-Jan Pfauth, one of the co-founders of Dutch digital news site De Correspondent. Five years after launching in The Netherlands, we talked to Pfauth about the company’s unique membership program and how it plans to launch an English version in the U.S.

Can you give a brief description of De Correspondent and your role there?

It’s an online journalism platform in the Netherlands that tries to be an antidote to the daily news grind. So we don’t cover the news, but we try to uncover the forces that shape our society and our lives.

We do that together with our members. We have 60,000 paying members. They make up 78% of our revenue and we’re ad-free, so thanks to them we can exist. They don’t just contribute their money — they also contribute their knowledge. Every time we have a new story idea, we share it with them in the hopes that they can share, from their personal experience or their professional experience, what they know about the topic. I am one of the four co-founders and CEO.

Can you talk about what the journalism landscape was like in the Netherlands when you first started? What was the problem or need you sought to fill?

When we started (we launched a crowdfunding campaign in 2013), Dutch newspapers were very subscriber oriented, so they were doing relatively fine; they weren’t as dependent on advertising as some American newspapers back then. As a result, they were still pretty focused on print. In fact, The New York Times of the Netherlands, called NRC, had around 200 people working on the print edition and maybe 15 on the digital side. So there was really a need for quality journalism online.

Also, we didn’t really see an online journalism platform that focused on the longer term. Most of it was only focused on news and what was happening at that very moment, instead of the things that happen every day. So we saw a need there.

We wrote a manifesto, our 10 founding principles, and we said if you believe that the Netherlands needs this kind of journalism, give us 60 euros or more and a year to prove ourselves. If 15,000 people do that, we’ll have 900,000 euros and that would be enough for us to get started.

That’s how our landscape looked when we started in the Netherlands, and to our astonishment, almost 19,000 people backed our crowdfunding campaign and we raised $1.7 million.

It’s been five years since you launched. How has the journalism landscape changed since then?

Most media organizations have become more digital focused, which is great of course. I think more organizations started valuing digital design and the role of developers in finding news ways of storytelling.

There was a moment where a lot of newspapers closed down their comments sections, whereas we have always been fierce proponents of comments — we believe it’s really important to involve your readers in journalism. Right now we’re seeing a new movement that big publications in the Netherlands are re-opening their comments section and welcoming comments again. So that’s a really good development.

We don’t see other media organizations using the term members. Most Dutch media organizations still talk in terms of subscribers. I think the key difference between subscription and membership is that when you have a subscription, it’s a very neutral transaction — I give you money, you give me information in return — whereas membership really means, in our definition, that you’re joining a movement for a different kind of news where you’re not just contributing financially but also contributing your knowledge, sometimes even your time, or your questions. So it’s more collaborative, and it’s not just a neutral business transaction.

In the past, you’ve talked about how people don’t just become members for access to the content, but because they want to become part of the community and part of the movement. Do you still find that to be true?

Definitely. Exclusivity and the tote bags and all that isn’t important for our members. They are a member because they believe that what we do is important to society and to them personally. They don’t want us to hide the content behind a [hard] paywall or make it hard for other people to read it. They ask us to make it easier from them to share articles with their friends and family. That’s why we don’t have a meter.

If you are a member, you can share articles on your social media profiles, and we don’t have a limit to that. We see them as ambassadors of our journalism.

And of course, the content has to be great and has to be valuable. If that’s not the case, then people won’t support us.

Can you talk more about your decision to do the hard paywall on your home page? How are new members supposed to discover you?

So the only time you see a paywall is when you go to DeCorrespondent.nl. If you have a link to an article, you can always read the article.

We came up with this hybrid model that if you go to our home page and you’re not a member, you see a marketing page. But if you have the link to an article, you can always read it. You can’t see the comments, you can’t see the community around the article, but you can read the article itself. It’s like a virtual equivalent of a newspaper clipping.

We did that because we believe that journalists want their articles to be spread and to be read. It’s almost unnatural for them to have their articles behind a paywall.

For readers, if you read something interesting, you want to share it with friends and family. If there’s a paywall preventing you from doing that, you’ll find a way around it, using screenshots or copy and paste the text, so we thought we’re not going to fight that — we’re going to open it up and encourage our members to share our articles.

If you are a member and you share our article with someone who’s not a member, they’ll be able to read it, and there will be a banner on top saying, “This article has been given to you by paying member xxx,” so they know you paid for it.

This has been our biggest driver of member growth, especially in the first years. Now it’s also important that we as a publication share new articles on Facebook and Twitter and make it easy and accessible for Google of course. But we still see our members as our most important ambassadors. They’re the ones who are spreading our journalism and making sure new people sign up.

Also, what’s really important in the discovery is print books. After a year or so, we started publishing our first book. One of our authors told us he felt like he had finished his first project for De Correspondent and wanted to summarize it in a book, to share everything he’d learned from members in this more sustainable format. So we said well, okay, let’s publish it ourselves as an experiment. This book, called Utopia for Realists, became a really big success — it’s been translated in 35 languages, the author gave an official TED Talk about it, and it’s been sold almost 300,000 times.

We noticed that our members really liked the print book. We also noticed that we got a lot of new members through these books — they were in bookstores all over the country and had a bookmark inside saying, “This book originated from De Correspondent, here’s a promo code, you can try us for free for one month.”

Now we’ve published around eight books. They’ve all become national best-sellers. In the Netherlands we’ve sold almost 150,000 print copies of our books, and they are a big marketing tool for us as well, because people all over the country discover us in their local bookstore or on the Dutch equivalent of Amazon. So this has also been a big promoter of our journalism, and it’s 14% of our revenue right now.

Are there any key lessons that you’ve learned since you’ve started? Or any challenges you’ve had to adapt to?

I think the key lesson is that everyone has to be involved. It’s not something you can make one person or one division responsible for. It’s not just the business division’s concern, or just the engagement editor’s concern, it’s something everyone in the organization has to believe in and has to invest in.

So if our journalists, for example, don’t participate in the contributions [the comments section], then the model wouldn’t work. It only works if everyone believes that readers collectively know more than we do and that it’s our responsibility to tap in to that knowledge.

That’s been our biggest lesson and that’s why I think it’s really hard to do this, because it really takes a lot of investment and effort to foster this communication between journalists and readers.

After five years, we’ve created this new position called a conversations editor. Her responsibility is to coach our journalists, to help them with the discussions, and to look for blind spots in discussions and invite new people to the contributions if we see that there’s groupthink happening.

The other lesson is that it’s not just a business model. Membership only works if you see it as people joining a movement — if they contribute more than just their money. (It’s not a glorified ATM.)

A challenge is that you have to be up there with Netflix and Spotify — that’s the level people expect from a platform these days. So we really have to make an effort to provide a really good experience, to have the best customer support, and to make everything really easy for them, because why should they expect less from us than from Spotify or Netflix.

I think media companies aren’t used to that level of service, historically. We, of course, are a start-up; we’ve been around for five years, so it’s part of our DNA. But it still takes a lot of resources and trainings to make sure our product is really good and our customer support is also really good.

How do you think about yourself in relation to other news outlets or other subscription products?

I think the market for it is just expanding, so I don’t see it as a zero sum game. I think people are getting used to paying for journalism, for things they value, and I think more and more people realize that if they’re not paying for it, an advertiser is, and then the needs of advertisers are served instead of their needs as readers.

In video, for example, I have Amazon Prime, I have Netflix, and sometimes I have an HBO subscription, and I make that decision based on the content and the value they’re adding. There’s not just one provider of it.

At the same time, I think we’re also complementary to a lot of other journalism outlets that are more focused on news, whereas we are more focused on background — we try to describe the systems and the structures that lead to news. News is most of the time about incidents or scandals or symptoms of things, and we try to uncover the things that happen every day instead of just today. So if you read The New York Times, you can still read us next to it because we’ll offer a completely different form of journalism.

Speaking of The Times, as a subscription-driven business, one thing they’ve become focused on is retaining subscribers and reducing churn. Is that something that you think about?

We’ve started focusing on this more. In the beginning, sort of in the first five years, we were really focused on building our organization — of finding a way of publishing our journalism in the best possible way and involving our members in our journalism.

Now we are focusing more on research and understanding how our model works and why it’s successful, so that’s part of the membership research Jay Rosen has been doing with the Membership Puzzle Project. We also hired more people in the Netherlands to focus on this.

One of your 10 founding principles is your data minimization policy. Are there any times you wished that you had more data or that you knew more about your members to inform your reporting?

As soon as we need data or knowledge from our members for our reporting, we ask them. And we ask it for that purpose only and we delete the original dataset afterwords. We’ve noticed if you explain why you need it and why it would lead to valuable journalism, our members are really willing to share that information with us.

We don’t ask for their demographics or anything like that when they sign up because we don’t have to know what sort of groups we are serving since we don’t have to cater to advertisers. But we do want to understand why they are supporting us, so that’s why we ask them from time to time to fill out questionnaires. Which is more work of course, but ultimately what’s most important is the relationship between our members and our journalists and our data minimization policy is really key in that.

In the Netherlands, Dutch people are very aware of their privacy and of how big tech companies could be a threat to them (that discussion is also becoming more salient now in the U.S.), but it’s been a long discussion in the Netherlands already, so for a lot of people it’s key that we have this data minimization policy.

I’ve read that your two core pillars to making De Correspondent financially sustainable is 1) creating a quality product and 2) forming partnerships. Can you talk about the partnerships that you’ve formed in the Netherlands and how you’re approaching partnerships here in the U.S.?

The partnerships that we had in the Netherlands were mostly focused reaching new audiences in ways we aren’t. For example, we’re not in business of making television. That’s not a thing we know yet. So as soon as we have a big story that we feel should also be included in a news show in the Netherlands (a big difference between the Netherlands and the U.S. is that Dutch people collectively watch the same news shows, there are two really popular news shows that people from the left and right watch), we work together with the journalists to make sure that the findings are also presented in the news.

We’ve also done partnerships with festivals, for example, to create a background to the thing they’re offering. For example, for a documentary festival, we would write articles about how the documentaries came to be and about the countries that the documentaries were about. So most of the partnerships serve our journalism goals.

In the U.S. we have a partnership with NYU to help us understand how our lessons apply to the U.S. market. We work with Blue State Digital as our strategy partner for setting up a campaign here. But I think the most important partnership we have, and we’ve had that from day one, is with a creative agency from Amsterdam called Momkai. They really helped us with design, brand, and development.

So they are co-founders of De Correspondent — the two owners of that creative agency are on our board — and together with them I think we’ve created a platform that presents our journalism in a calm, effective way. I think that’s the most important partnership that we’ve formed.

We now have our own developers, but the technical direction and the creative direction still come from Momkai. They’re also our creative partner for the upcoming membership campaign in the U.S.

Talking about the U.S., you raised $1.8 million in funding in May and are aiming to launch the English version of in 2019. Can you talk about where you are right now in the process?

So as I said, in the Netherlands, 94% of our revenue comes from readers (78% from members, 14% from book readers, and 2% from donations.)

We also want to be dependent on readers here [in the U.S.], because we only want to think of their needs and not other stakeholders.

But to find those readers and to reach those readers, we needed money upfront, so that’s why we raised $1.8 million runway funding from investors that value that kind of journalism. That money will enable us to launch a membership campaign in which we will share our founding principles, share our ideas for how we can un-break the news, and how we want to create a movement.

If that campaign is successful — if we raise enough money from a large group of people (we’re currently researching what those numbers should be) — then we’ll launch The Correspondent a couple of months after the campaign.

Are there things that worked for you in the Netherlands that may not necessarily work for you in the U.S.? What do you foresee being different?

So from day one in the Netherlands, we felt that we should publish in English because it’s our mission to help people understand the world around them. Most of the important developments these days are global developments, climate change for example, and we work with our readers to describe those developments, but if there are only Dutch readers you’re working with, you basically have a Dutch perspective on the world. We wanted to offer a more diverse view of the world.

But we realized exactly what you’re asking now, that the U.S. is a completely different market than the Netherlands. In the Netherlands there are only 17 million people, so it’s a really tiny country. That’s why when we announced our plans for the first time, we formed this partnership with NYU to really help us understand how our lessons about memberships apply to the U.S. We’ve been researching that now for almost 18 months with them. Last May we started working with Blue State Digital to also understand this market better.

I think the core of what we’re doing in the Netherlands is relevant here. We want to restore trust between journalists and readers. The trust figures in both the U.S. and the Netherlands in journalism and journalists are really low, and we want to create a new journalism model that fosters this relationship of trust between the audience and journalists. So that’s key in what we’re doing here as well.

Of course, because of the sheer size and because the U.S. is more polarized, we’re going to have to do a couple of things differently, but the principles will be the same.

Do you foresee any challenges with readers commenting or contributing to articles, seeing as that’s not something they might be used to, or might have a negative perception of?

That was the same in the Netherlands. People in the Netherlands also thought that comments sections were just for anonymous conspiracy theorists who shout at each other. That makes perfect sense because most journalists weren’t reading the comments and absolutely not participating in the comments.

I think the rationale for a lot of publishers was that blogs have comments sections, so news site should have comments sections too; whereas we felt the comments sections was a means to exchange knowledge between journalists and our readers. So we have a clearer goal for our comments section.

But it’s been really hard for us in the Netherlands to win the trust from readers, because they felt like normal people don’t comment on sites. We had to convince them that we really wanted to hear their comments. That was one challenge. The other challenge was to train journalists to spend 30–50% of their time on talking with their community and their network in our comments section.

So I think that challenge is similar in the U.S. There are some great journalists who are using the comments sections on their blogs or on the sites of their publications, but most of the comments sections aren’t read or used by journalists. So we’re going to face the same challenge here. But now we have five years of experience with this challenge, so I’m confident that we can also tap into the knowledge of U.S. readers.

What’s an interesting thing you’ve seen recently from a media outlet other than your own?

There’s a Danish site called Zetland and we’ve been talking a lot with them. We’ve helped them in setting up their membership program, but we’re also learning from them because they started investing heavily in audio; they started reading all of their stories so that you could listen to every story and created a great app for that.

Their audio numbers are astonishing. They’re incredibly successful and it turns out that a lot of people want to listen to their articles, which I intuitively wouldn’t have expected. That’s been a really great inspiration for us, and we’ve started investing in audio more now too and reading more of our articles to our readers. The first numbers in the Netherlands are also very promising.