Long before votes are cast in modern presidential elections, elite donors narrow the race by picking a few acceptable candidates, who are then crowned frontrunners for leading the “money primary.” But wait–wasn’t the Internet supposed to change all this? Now thousands of people can pool relatively small donations to boost a candidate into the first tier, while bloggers promote their favorites to audiences rivaling those of major newspapers. Yet a funny thing happened on the way to the revolution. Internet fundraising has made the competition for early money not only fiercer but even more influential in handicapping the race, because donations are revered as proof of electability and grassroots enthusiasm.

When Barack Obama raised a whopping $25 million in the first quarter, for example, MSNBC headlined the news as confirmation of his “grassroots power.” After Obama pulled in an unprecedented $32.5 million in the second quarter, he said the money proved his team had “built the largest grassroots campaign in history.” Never mind that most voters and activists never donate to presidential candidates, and that grassroots campaigns are supposed to emphasize issues important to local activists, not national fundraising. Now if candidates fail to raise big money quickly, they are disregarded before the public ever hears about their positions.

But one powerful group is challenging this system with an alternative to the money primary. MoveOn.org, the organization that pioneered low-dollar Internet fundraising and showered Democrats with more midterm campaign donations than almost any other liberal PAC, is advocating a primary campaign that is downright old-fashioned. A primary based on the issues.

“We have this presidential campaign process that’s starting earlier than ever before and in some ways is less about the issues than ever before. It’s all horse race all the time,” explains Eli Pariser, MoveOn’s executive director. Instead of fixating on fundraising or electability, the organization is convening three “virtual” town halls for candidates to address the group’s 3.3 million members via YouTube and podcasts. Each event is devoted to a single topic. Candidates field questions directly from MoveOn members, providing “real depth on the issues they care about,” Pariser says.

After each gathering, MoveOn members appraise the candidates on the issue at hand. After the Iraq town hall the question was not whom people might vote for on election day–the horse race query that drives most polls and campaign coverage–but simply “which candidate do you believe would be best able to lead the country out of Iraq?” Obama and John Edwards led with 28 and 25 percent, followed by 17 percent for Dennis Kucinich.

In July the second town hall tackled global warming, with 1,300 gatherings around the country coinciding with Al Gore’s Live Earth concerts. More than 100,000 people participated, making it the largest MoveOn event since 2004. One-third of participants favored Edwards’s approach to the “climate crisis,” while Kucinich, Clinton and Obama each drew 15 percent. The final town hall, in October, is on healthcare, coordinated with Michael Moore’s documentary Sicko, and then MoveOn will help its members put some muscle behind their policy preferences.

Pariser says that in October, the group will run a virtual primary for MoveOn’s endorsement–the closest any Democrat can get to becoming the official netroots candidate. Campaign operatives agree that the endorsement could transform the race, cementing a prominent candidate like Edwards, catapulting a liberal underdog like Chris Dodd or igniting and funding a late entry by Al Gore. Unlike the famous out-of-state activists who flocked to help Howard Dean in Iowa, MoveOn’s membership, which has almost doubled since 2004, wields the power of voting at home. Take the first two states on the primary calendar: MoveOn boasts 25,000 members in Iowa–about 20 percent of caucus turnout–and 17,000 members in Nevada, where only 9,000 people voted in the 2004 caucus.

Yet the last time MoveOn went down this road, when Dean’s antiwar, anti-establishment campaign united the nascent netroots more than anyone has since, the group never issued an endorsement.

Four years ago this month, MoveOn held its first virtual primary, heralded at the time as a breakthrough for participatory politics. Dean dominated with 44 percent, but he did not break the group’s 50 percent threshold for an endorsement, and no runoff was held.

Zack Exley, an organizer who worked on MoveOn’s first primary, said the goal was not to endorse one candidate but to challenge the focus on high-dollar fundraising with an alternative indicator of viability. “The money primary, driven by big donors, was the most important first test for candidates,” he explained recently, so MoveOn designed its 2003 primary to show that grassroots support could trump monetary support.

John Stauber, an activist and author who has criticized MoveOn for getting too cozy with Democratic leaders, predicts the group will never endorse a presidential candidate, instead opting to avoid any action that could undermine Democratic unity or the party’s chances in 2008. Stauber argues that the primary and town halls are basically a brilliant “political marketing” operation to harvest e-mail and raise money, while MoveOn will continue to be “primarily oriented to bashing the Republicans, whipping up support for Democrats and getting online petitions and funding appeals going to keep the netroots alive and the money flowing to Democratic candidates.”

Pariser says he hopes MoveOn will endorse a presidential candidate, since this cycle there are “much broader” opportunities for its members to have an impact on the race. But an endorsement is possible only if a strong consensus emerges. He is admirably frank about the limits of decentralized power. “We don’t have a lot of resources that aren’t our members,” Pariser explains, and if they endorsed despite a split in membership, “we’d end up pissing off 49 percent of our list.”

None of the candidates in the race look poised to rally such overwhelming support, judging by the town halls and blog straw polls. If MoveOn’s process does not culminate in an endorsement, it is unlikely to challenge the influence of the elite-driven money race. Still, the MoveOn primary is shaping up to be more substantive, thoughtful and participatory than the actual presidential primary–even if it’s a contest without a winner.