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December 13th, 2011

In Business


Fred Dewey is misunderstood

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at:

[[ I leave the post below as it was written in 2011, for historical purposes. But I would no longer assume that Kachingle's actions can be understood in a positive light. ]]

Mike Krahulik is angry about Kachingle. What is the issue? There are 2 possible ways of putting this:

1.) the subscribers of Kachingle wanted to give money to Mike Krahulik and he is very angry about this

2.) Kachingle claimed it was raising money for Mike Krahulik, and some people donated money to Kachingle, but Mike Krahulik never signed a deal with Kachingle, nor authorized them to collect money for him

Scenario #1 makes Mike Krahulik sound strange, whereas scenario #2 makes Kachingle sound like some kind of illegal scam artists. Mike Krahulik seems to think #2 is true, as he writes:

The @Kachingle CEO speaks and he is a nut job: you can’t just start collecting money for me without some kind of deal.

Some of the other tweets that people posted:

Does that mean you don’t want any of the money I made selling photocopies of your comics?

What’s with the picture of him? He’s holding a corded phone. Do people still use those?

Well he can… its just up to you to sue his ass.

the way in which they claim to pay authors directly also makes no sense…I doubt they have ever paid anyone.

I love how he thinks he invented the common bribe. That’s what that is, is it not?

that is the weirdest creepiest business model ever.

I love that photo. “I’m so busy profiting off all you hard-working websites that I can’t even stop to take a photo!”

There is a lot of anger in the tweets, though perhaps not much sense of what is going on regarding new payment models on the web. This tweet offered a bit more balance:

PenLlawen@cwgabriel You know Kachingle ain’t the first at this rodeo, right? You’ve checked out Readability? And (less sleazy) Flattr?

Fred Dewey is the CEO of Kachingle. I should mention at this point that Fred Dewey is a friend of mine, I’ve known him since the 1980s when we went to the same summer camp as kids. I did not see him for many years, but then I just saw him this last August, in San Francisco, and we spent most of our time talking about Kachingle. Sharon Minsuk, the main computer programmer for Kachingle, was also there.

I ran into anger like this, in a different way. In the early days of my website, various people posted angry screeds about how my site was exploitive. They argued that my site promoted ultra-low payments for programming work, and therefore I was lowering the amount of money that a programmer could make, undercutting the normal rates that programmers normally made. I got a lot of angry email. I thought it was strange, because there are many forums on the web where programmers answer questions for free, and no one screams about how those forums are exploitive. At least on my site, they programmers got something for their efforts. However, I found that it was pointless to write about this. No matter how many times I explained myself in a blog post, I continued to get really angry email from people who felt I was exploitive. That continued till I introduced voting. Once the experts could vote who won the money, the sense of exploitation disappeared. Which makes sense, from a psychological point of view.

When I met with Fred and Sharon, they were discussing exactly what has Mike Krahulik upset: the new functionality that allows the subscribers at Kachingle to donate to any site.

Every startup has to pivot, every startup has to try a few things before finding the right model. From what they told me, I understand the history of Kachingle, so far, to have 3 acts:

1.) Pitch it to the big newspapers as a new funding model for journalism. I understand that Fred spoke with some of the biggest newspapers in the country.

2.) Pitch it as a new funding model for bloggers. I understand Kachingle had some uptake with particular niches, for instance, mommy bloggers.

3.) Pitch it as a funding model for everyone. This is the part that has Mike Krahulik angry.

Up until this summer, Kachingle had a model where the content producer had to first sign up, and then the subscribers at Kachingle could donate money. This was too limiting, as a lot of the places where Kachingle subscribers want to donate money have not signed up. So Fred and Sharon adopted this new model, where their subscribers can donate to any website, and then Kachingle take responsibility for getting the money to the content producer.

Fred told me some surprising facts about where the Kachingle subscribers wanted to donate. For instance, a lot of them wanted to donate to Google News, even though Google is obviously very well funded, and doesn’t need the money. But that is besides the point, of course. Possibly the subscribers feel that making a donation is a bit like offering applause for a great performance: if you enjoy a service, you should offer a tip, even if the service has plenty of funding. (Would love to hear Clay Shirky’s take on this, people donating to Google News but not to the newspapers from which Google News gets its info.) I understand that Kachingle has made every effort to get the money to Google.

Many of the tweets on this subject express outrage that Kachingle keeps a percentage for itself:

FreakinMike@cwgabriel Do what Straub is doing. He’s collecting money for Kachingle, and he’s going to give them 5% of it.

I think all of these new funding models are defensible, to the extent that they possibly bring in new sources of funding that would not have otherwise been there. Readability, Kickstarter and Kachingle are all spending marketing dollars on themselves, which brings in potential funders, who then get directed toward whatever is up for funding. None of these new models has worked out well so far, for content, but the old models for funding content are dead, so we need startups to figure out some innovative new models.

However, I would like to see a different model tried: a combination of Kickstarter and Kachingle, something where the money is held in a Community Pot and then the Community votes on how the money should be spent. With my own websites, that is the direction I am going.


Check out my book:


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Pingback: A fresh point of view: “Fred Dewey is misunderstood” | Kachingle Blog

December 14, 2011
8:53 am

By Dave V

Thanks Lawrence for a balanced and calm voice – any time there is a major change in how things work in the world, someone is going to be unhappy.

In this case, the vituperative tone of the discussion is to me indicative of one of the things “wrong with the web” today – unfortunately as people sit behind their keyboards many feel free to forget the manners mom taught. There is a way to have agreeable disagreements, and it is usually out of those discussions that insight and advancement occur.

Kachingle’s response to the additional concerns raised by the comic sites seems balanced and appropriate to me. And yes, I am a Kachingler and support its model and ideas.


December 14, 2011
9:25 am

By Barbara

Thank you, Lawrence, for that insightful and balanced review. I am a Kachingler, and I support its business model and ideals


December 14, 2011
10:58 am

By Lawrence Krubner

Thank you all. I look forward to seeing the emergence of an innovative startup that is able to find the new model for funding content.

January 9, 2012
2:29 pm

By Charlotte Monte

I love your thoughtfulness and tone, however, I have questions about the “Community” of voters you mention. I very much like the way Kachinglers like me get to personally direct their donations.

January 10, 2012
1:09 pm

By lawrence

Thank you, Charlotte. But what is the main advantage of Kachingle for you? You could perhaps find a more direct way of sending money directly, if that is your main interest. Collecting money into a pot allows larger projects to be funded.

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