I spent almost $1m in VC money and two years trying to figure out how to save journalism. Steemit is it.

The Backstory

Just over two years ago I got so fed up with the poor quality of news (particularly in the United States) that I decided to do something about it.

News organizations everywhere were making mistakes that were easily discoverable on social media. These reporters would parachute in, speak about topics they didn't really understand, and pass along misinformation to the rest of the population. It happened (and happens) again and again, every single day.

The terrifying part to me was that based on that information we vote, invest, and generally decide what is going to happen in the world. I probably don't have to tell you that the news as it stands right now is largely a joke - riddled with misinformation, bias, deception, etc.

So we started building a simple platform for people to come together, find and fact-check what was happening from first-hand sources, and publish only the news that matters. You can read more about it here and here.

We had a pretty good run going. Every day thousands of users would log into our platform and together find and fact-check the news. In our last month we had almost 1 million visitors to the site

We were doing quite well considering we didn't pay the users anything. They did everything out of sheer love for accurate information.

The Problem

Of course, there was no incentive for them to do what they were doing, but that wasn't the problem. The problem came from the fact that even though we had thousands of people working for free there still wasn't a monetization model built in that would support what we wanted to create.

We started working on integrating a bitcoin tipping system, but it was too late. It wasn't enough

We were about to close our Series A, and had $2 million in funding ready to go. A billionaire who was the CEO of a media company that is a household name joined our newsroom and saw how powerful it was. He wanted in. We did due diligence, got the docs circulated, and I was waiting for a wire when I got the fateful call. He wasn't investing.

Hearing that our other investors either bailed or expressed serious concern. We started scrambling after other investors, but even given our rapid growth rate we heard the same concern again and again - there's not enough money in advertising.

Those with experience in the field knew that even if we did very well we wouldn't be able to build something sustainable. Look at Circa - funded with millions of dollars of VC money, millions of users, and ended up selling for a paltry $500,000. The monetization just isn't there, and producing that much content is expensive.

We had a leg up on them - we had 65 fewer reporters to pay - but even that isn't enough.

Monetizing News

The difficulty in monetizing the news is that there isn't a big enough buyer on the other side. Am I really going to pay for your site when there are dozens of others out there? Not really. Do advertisers pay enough to justify the expense of thousands of reporters to produce hard journalism? Not unless we drive traffic and make most of our money from clickbait.

News is one of those things that people appreciate but aren't really willing to pay for. And why should they? If something is freely available why would you pay for someone to do a marginally better job?

##Steemit
I'm excited about Steemit not only because it's one of the first practical applications (and potentially a "killer app") of blockchain and cryptocurrency, but because I see very clearly how this is the problem to so many woes in the media industry.

Traditional tipping will never, ever work. People aren't going to load up their accounts with $10 and start giving out $.10 pieces of appreciation to articles. Not because they're unwilling to pay $.10, but because they would never go through the process in the first place.

But with a cryptocurency it's different. When my account is loaded in the beginning I can immediately give out inentive and influence. I can mine the cryptocurrency so that it doesn't run out, I can earn it on my own, and if I need to I can shell out a bit in order to give me more sway.

People will do that all day long. I'm convinced of it.

So I'm still new to this community, and I still haven't bought anything yet (frankly I haven't entirely wrapped my head around all the nuance), but from what I've seen I'm convinced Steem/steemit will be the most important innovation in the media since the advent of the Internet. I mean that; I'll be here, and I'll be investing and mining. If I'm wrong I'm happy to go down with the ship; this is exciting.

Here's to several years of watching this thing take off.