From crowd to community: Krautreporter’s road to sustainability

“We don’t believe in this dependence between content and payment on the internet,” says Sebastian Esser, founder of Krautreporter. So how does a great journalism crowdfunding idea grow into a long-term business model?

by WAN-IFRA Staff | February 13, 2015

First comes the joy and the hype. Your journalism startup is fêted as the German De Correspondent, a Beacon but without the venture capital. The coverage in the German mainstream press drives a highly effective crowdfunding campaign as you shoot past 15,000 subscribers.

And at the pinnacle of that success, you host a bevy of quizzical WAN-IFRA publishers in search of online inspiration.

So what next?

This is the big challenge for Esser, journalist by trade and one of the founders of Krautreporter. We visited just days after they moved in to their new offices at the Kulturbrauerei in Berlin.

As Esser himself points out, they are long past the crowdfunding stage. The website launched as planned in October 2014 and this is now a tangible news product. The crowdfunding campaign has morphed into a more prosaic €5-per-month subscription model.

But there is one important difference to De Correspondent and other subscription-only services: the content is free to anyone.

Inverting the usual model, this means the content is free but the community is behind a paywall. So these are not your ordinary subscribers, Krautreporter is “marketing a membership”.

They must be doing something right as this membership has grown to around 20,000 since July 2014. But Esser is well aware they need to grow more. To have the right income growth they estimate they need 30 sign-ups per day, and at the moment they are below this target.

Explaining a new product

The problem: “People don’t yet understand exactly what they are paying for – they find it good, but they don’t yet understand what the product is. We have a product. But we must try to communicate that precisely.”

It’s a classic second year startup dilemma. The early boosters are all on board, and now they need to attract a wider audience.

Membership includes enhanced content, ebook versions, extra material, comments from authors, invites to events and micro-communities that run over Facebook or reddit or Twitter or simply email. And now they need to sell this proposition.

Esser himself is a fan of the Guardian’s membership model which he describes as ‘fantastic’. Unlike German newspapers, “they know that it’s not enough for their readers to stay as a silent mob”. But the Guardian also has an advantage of a long-established fan base that is keen to engage and attend events. By contrast, Krautreporter still needs to bring people on board.

Building a community is time intensive.

“You need people that really look after the community. We have three that do nothing else apart from look after the community”. That’s almost half their office staff of seven, alongside twenty-five journalists, eight of whom currently work full time.

With an audience with an average age of 35 and unashamedly ‘niche-media’, Esser has absolutely no interest in clicks, “the deciding metric is our conversion”.

So how do they convert when as he says, “the kiosk today is social media” and they are very dependent on Facebook and others.

“We make very few posts and focus on high interaction rate […] It’s still a little bit witchcraft.”

Ad-free into the future

Esser believes “the business of journalism is terribly positioned for advertisers in the long run”. But their zero advertising model means the team at Krautreporter has to be more creative with new ideas.

This includes partnerships with journalists to create hyper-local news websites as the big regional print publishers decline.

But above all it means getting more subscribers. To put it another way, the club needs more members.

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