A Spanish news startup led by ousted El Mundo founding editor Pedro J. Ramírez has raised €3.1 million ($3.4 million) through crowd-funding in less than two months, likely the most ever generated by a journalism crowdfunding campaign. The well-heeled website, El Español, has €18.2 million in total capital and reserves, and is also taking the unusual step of giving all donors a financial stake in the business.
The outlet’s early successes encapsulate many of the forces that have shaken up Spanish journalism and politics. Mass layoffs from traditional media enabled the launch of 400 news startups since 2010, and these have found audiences among an increasingly disaffected public. Whereas Occupy Wall Street withered away to nothing, Spain’s populist movements have spawned new political parties and electoral wins—witness this weekend’s municipal elections, in which an anti-poverty activist was elected mayor of Barcelona. In this environment, El Español hits the Goldilocks zone: small enough for anti-establishment credibility, but big enough to make a real impact.
More than 5,600 people made donations ranging from €100 to €10,000 to the crowdfunding campaign for El Español, which plans to launch in September. In addition, Ramírez has put in nearly €5.6 million of his own—everything left over, after taxes, from his €11 million-plus El Mundo severance. Six main investors have together put in €5.5 million, and other benefactors, including several employees, have contributed tens or hundreds of thousands.
Supporters include Spainmedia—the publisher of Forbes and Esquire in Spain—as well as a private Madrid university and a small Spain-based hotel chain. Journalist David Jimenez told CJR he put in “a minor amount that represented about 0.2 percent of the money raised by the country” (by our calculations, about $36,000), but decided to sell his shares when he was appointed editor in chief at El Mundo.
The crowdfunding figure alone is impressive when you consider that no single journalism campaign on Kickstarter has raised more than $150,000, says Khari Johnson, editor of Through the Cracks, a website that reports on media crowdfunding. Johnson says he knows of only three journalism campaigns that have raised more than $1 million: the Netherlands’ De Correspondent, Germany’s Krautreporter, and El Español.
The site’s fundraising muscle can be attributed in part to the clout of its high-profile editor. Ramírez, who founded El Mundo in 1989, is known not only for building the paper into Spain’s second-largest by circulation, but also for breaking important investigative stories, including revelations of death squads sanctioned by the Socialist government in the 1990s. Peter Preston, editor of The Guardian from 1975 to 1995, describes Ramírez as “probably the greatest Spanish (and European) journalist of the past 25 years,” one who built up the paper “through years of blistering scoops and passionate invective—and prickly contempt for the gentilities of fairness and balance.”
Pedro J. (pronounced “Hota”), as he is known, has never shied from controversy. Critics charge that the paper’s editorial line on the 2004 Madrid bombings fueled conspiracy theories about involvement by Basque separatists ETA. (A Spanish judge concluded that a local Islamist terrorist cell was responsible, finding no link to tie the bombings to ETA.) In 2013, Spain’s Supreme Court convicted Ramírez of “violating the honor” of judge Baltasar Garzon, whom the paper labeled a “Nazi” for the way he pursued investigations of the bombings.
Ramírez’ opponents have played dirty as well. In 1997 he was the subject of a secretly filmed sex tape, and six people were convicted for invading his privacy. They included two executives from the newspaper Ya and the assistant of Spain’s former prime minister Felipe González.
Ramírez’ many years of muckraking came to a head in early 2014 when he was fired from El Mundo. He promptly blamed the ouster on government pressure, claiming the firing was retaliation for El Mundo’s stories on corruption in the ruling People’s Party—a charge which El Mundo’s parent company Unidad Editorial denies.
That firing, however, gave Ramírez a chance to act on his theories about opportunities in the Spanish media market. He has argued that the internet and smartphones are lowering the costs of distribution, which may soon allow the rise of a “new golden age for newspapers.”
“When I was fired as editor-in-chief of El Mundo at the beginning of last year—when I became victim of that epidemic that had killed off the editors at three newspapers—then I decided it was time to demonstrate that my theories were right,” Ramirez says.
Ramírez says El Español will aim to compete with the main print newspapers in Spain and, later, in the wider Spanish-speaking world. Unlike most of the country’s previous digital launches, El Español seems to have the resources to reach its goals, and it plans to have between 50 and 60 journalists, as well as 15 developers, by September. Ramírez says he looks to Politico, Vox, and the French website Mediapart as inspiration.
At the same time, Ramírez says El Español will be less vulnerable to political pressure than will its mainstream competitors. For one thing, going digital-only cuts out major costs. And while advertising will start at about 80 percent of operating revenue, with subscriptions making up the rest, the business plan calls for dependence on ads to shrink year by year. Estimated revenue for the first year is €5.8 million, with about €9 million in operating costs, so the balance will come from El Español’s fundraising coffers. The company expects to start turning a profit in its third year.
The website will distinguish itself with investigative journalism, long-form stories, data visualization, and a cinematic take on video, says María Ramírez, the startup’s deputy editor, who is a Univision contributor and former New York correspondent for El Mundo, as well as Pedro J.’s daughter. A beta version of the site is already active, and it provided coverage of Spain’s local and regional elections last weekend.
But El Español won’t limit itself to politics, and plans to cover all the usual newspaper departments, including business, sports, and the arts. In one project next month, the website will partner with production company 93 Metros to present a 360-degree view of an opera—including a virtual reality version for use with Google Cardboard.
The success of its crowdfunding campaign may make El Español an important first—as well as a last. While pending SEC rule changes are poised to open up equity crowdfunding in the US, Spain this year passed a law that prohibits crowdfunding campaigns from raising more than €2 million from members of the public. The law is intended to address problems with corruption and offshore assets, says Ramón Salaverría, a journalism professor at the University of Navarra.
“My impression is it is guided by financial reasons—and not by political or freedom of speech issues,” Salaverría says.
But El Español’s success speaks volumes about the changing media and political landscapes in Spain, and the intersection between the two.
The country was hit hard by a deep recession and the decline of traditional media, with 11,000 journalists and other media staffers losing their jobs since 2008, Salaverría says.. Meanwhile banks’ increasing stake in the country’s media has raised questions about newspapers’ impartiality.
Spain has no formal, legal restrictions on freedom of the press, and claims of government and corporate pressure are often hard to substantiate. But such tales abound, María Ramírez says.
She recalls writing a story about the Spanish billionaire Villar Mir, which included details about his court appearance related to investigations of corruption within the ruling People’s Party. Someone called the newsroom and persuaded the paper to remove the offending paragraphs, post-publication, without Pedro J.’s knowledge, María Ramírez says. (Unidad Editorial told CJR, “The current management of El Mundo is not aware that any passage of the story you mentioned has ever been eliminated.”)
Sometimes, it’s hard to tell when conflict arises from undue influence, and when it comes from economic pressures. El Pais and La Vanguardia both fired their editors within three months of Pedro J.’s departure from El Mundo—a situation Salaverría describes as symptomatic of the general decline in mainstream media. But María Ramírez doesn’t rule out government pressure in those cases: “It’s very easy to put pressure on you when you’re weak.”
Adds Pedro J.: “The main powers, the political and economic powers, have profited off the crisis of the legacy business model … to introduce censorship and especially self-censorship in the newsrooms in our country.”
Fueled by this atmosphere of distrust, and by the ready labor of thousands of pink-slipped journalists, Spain has become fertile ground for news startups. El Español seems perfectly poised to ride this wave, but with deeper pockets—and more shareholders—than its forebears. Now its challenge is to live up to that promise: of commercial viability, and editorial independence.