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| Ignacio Escolar, left, of El Diario and Pedro J. Ramirez of El Español (photo: James Breiner) |
Both had founded important print newspapers. Both had turned to digital media in search of independence from the control of public discourse exerted by the political and business elite. Both are evangelists for making better journalism to build a better society.
And both had achieved remarkable financial successes with innovative business models for digital media. A packed auditorium at the XVI Digital Journalism Congress wanted to hear how they did it.
'Partners' not subscribers
"How did we get here?" asked Ignacio Escolar, 39, who founded El Diario ("The Daily") in 2012 with a handful of journalists who had been laid off or cast aside by traditional media in the financial crisis. "We're journalists, shareholders, directors, and chief promoters because we were pushed into starting our own media companies."
"I don't think either of us started out with the desire to be business people," said Pedro J. Ramirez, 62, who has raised 11 million euros toward the fall launch of El Español ("The Spaniard"). "We are making the best of a bad situation." Last year, Ramirez was forced out as editor of one of Spain's leading newspapers, El Mundo, which he founded in 1989.
In the case of Escolar, he and a handful of colleagues pooled about 400,000 euros in cash to launch El Diario and within a few months were operating in the black. They kept expenses low and supplemented advertising revenue with 60-euros-a-year contributions from 10,800 "partners" who support independent journalism. The site now has 4.5 million monthly unique users.
He told the audience that El Diario finished 2014 with 1.8 million euros in revenue and a 300,000-euro profit that will be used to add to the staff of 40, improve salaries, and expand coverage internationally. Being profitable is the best way to maintain editorial independence, he said.
Update: In a letter to readers March 18, Escolar gave detailed results for 2014. The number of "partners" rose by 69% to 10,800. The number of unique users rose to 6 million in February 2015 and page views totaled 30 million.
3.6 million euros from crowdfunding
El Español's financial success is also remarkable. In just 2 1/2 months, Ramirez's project has set a world record for crowdfunding of media by raising 3.6 million euros from 5,600 contributors. He has also invested 5.3 million euros of his own money and expects to have a total of 15 to 18 million euros in capital at launch in the fall.
Ramirez said he would have had difficulty convincing investors and the public to invest in El Español if it hadn't been for the success of digital media like El Diario, El Confidencial, InfoLibre, and other digital forerunners.
He described the new trend of journalists founding their own media as a throwback to the 19th century in Spain when newspapers were usually run by editorial people, not business people.
"What's happened in recent times is that the people in the business role in media have transformed themselves into a type of political commisar for politicians and the powers that be. The political and business powers have taken advantage of this to impose censorship on the newsroom."
Censorship hard and soft
Apparently it was this kind of pressure on Ramirez to go easy on the administration of President Mariano Rajoy and his conservative Partido Popular that led to Ramirez's being forced out of the editor's position (link in Spanish). He has since gained a measure of revenge by adding some of El Mundo's former top people to his team.
Ramirez believes that censorship and self-censorship of the media is widespread in Spain because of the economic dependence of media on government advertising at all levels -- national, provincial, municipal, local.
He echoed the journalism congress's keynote speaker, Arsenio Escolar, editor of 20minutos (and father of El Diario's editor), who called on Spanish media to reveal the amounts and sources of their government advertising in the name of transparency. Escolar pere estimated the annual amounts of this advertising at hundreds of millions, if not billions, of euros.
Ramirez told the audience that if these amounts were known, all of the corruption scandals rocking Spain at the moment "will look like a joke".
This kind of economic influence puts a stranglehold on free expression, Ramirez said, and leads to bad journalism and a worse democracy.
Worth 100 million in five years
In response to a question from the audience, Ramirez estimated that El Español will begin with a newsroom of some 50 people and will have expenses of about 8 million euros with losses of 4 million in the first year, 1 million in the second and profitability in the third. He cautioned that given the dynamic, fluid nature of the digital news business, the business plan could change.
El Español will use a balanced business model similar to El Diario, he said. Ramirez took the opportunity to rail against what he called "the grave injustice" dealt to digital media by advertisers who spend enormous quantities in print while dedicating little to digital media that have many times larger audiences.
Ramirez predicted that El Español will have a market value of 100 million euros in five years.
Progressive, not political
In the viciously competitive world of Spanish media where conspiracies are seen everywhere, rumors abound that El Diario's financial success comes about from having secret investments from political backers on the left.
El Diario's content definitely appeals to the left and center-left, Escolar admitted in an interview with me. However, 70 percent of the equity in El Diario is in the hands of journalists who work in the newsroom "We are progressive, not political. We support human rights, equality, transparency, independence, and a strong democracy. But we are not connected to any political party or business interest."
None of their advertisers has a large enough share of their revenues to exert influence over coverage, Escolar said. Indeed, they have lost advertisers who were not pleased with their coverage, he reported in an open letter last July that revealed all of the publication's financial results, salary levels, and policies.
"The main reason we founded Eldiario.es," he told me, "is that we realized at this moment in the profession, the best way to do professional, independent journalism was in digital media." Escolar should know. He founded the daily newspaper Publico in 2007. It went completely digital in 2009 and is one of his competitors for the mobile audience.
For the moment at least, the numbers make it look as if Escolar has been wise to bet on digital.
An interview with Ignacio Escolar (Spanish)
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