Following The New York Times' recent success, online paywalls (particularly the metered-access kind) have been popping up on newspaper websites across the globe. In the U.S. alone, nearly half of all newspapers now have some sort of online paywall, according to estimates from the Alliance for Audited Media. In the UK, adoption has been slower, though many of the country's leading dailies — The Times, The Independent, The Financial Times and The Daily Telegraph among them — now require a paying subscription for full digital access, including mobile.
As mentioned, the uptake in paywalls, particularly in the U.S., can be largely attributed to the NYT's widely publicized success with its metered-access subscription model. According to Evercore Partners, the strategy generated $91 million for the paper in 2012, helping offset continuing declines in print and digital advertising, and ensuring that the NYT's financial future is less dependent on the ups, downs and whims of the advertising industry.
The Guardian, however, is taking another route. In a refreshingly lucid statement published to The Economist's Leanback 2.0 blog, Andrew Miller, CEO of the Guardian Media Group, explains why a paywall isn't "one size fits all," and why it doesn't fit with the Guardian's current plans — namely, to significantly boost its readership and advertising revenue internationally, and to reduce its cost base by £25 million over the next five years.
Miller wrote:
In some news organisations where growth in readership may not be so important and in particular where there is a strong existing print subscriber base to build on, a pure paywall may make excellent business sense. The Economist and perhaps the Times spring to mind here. It also makes sense in other publications which feature business-critical information – for example, the Financial Times and, in the Australian context, the AFR.
At the Guardian we will continue to look at, monitor and offer a blend of options, including paywalls, depending on the product we are offering. But at the same time we have to recognise that digital advertising is not yet able to fill the substantial gap between any paywall revenues and the cost of the operation — not least because advertising agencies have not yet fully aligned their spend with changing patterns in media consumption.
But how to get from where we are today to where we need to be? The main thrust of our strategy is to invest in our digital audience and revenue growth, while optimising the newspaper's contribution in terms of both format and pricing and, crucially, managing our cost base to a level that is sustainable in the long term.
Miller's explanation accompanied the Guardian's announcement that it plans to set up an online operation in Sydney, Australia, later this year.
The move into Australia, which is being funded in part by entrepreneur and Global Mail chair Graeme Wood, follows the establishment of a newsroom in New York less than two years ago. Since then, the Guardian has grown its online American readership by nearly a quarter — from 8 million uniques in Feb. 2011 to 10.9 million in Dec. 2012, according to comScore. (The publication brought in a record 11.8 million uniques in Oct. 2012, surpassing the BBC's American audience for the first time, comScore said.) The Guardian now has 40 staffers in the U.S., roughly two-thirds of which are in editorial, according to Miller.
Why Australia, and why now? In a phone interview earlier this week, Miller recalled that when he joined the Guardian two years ago, he was struck by the fact that two-thirds of its readership was outside the UK. The largest international audience "by a long way" resided in North America, followed by Australia; so, it made sense to try to grow audiences in those areas first. The launches have also been timed to align with political elections in each country — the perfect moment for the Guardian to strengthen its voice in each region, Miller said.
In a follow-up conversation, I asked Miller if he was at all nervous that the Guardian is currently so dependent on advertising for revenue when other publications, such as the NYT, have made efforts to diversify their revenue streams through circulation income. He said he was confident in the Guardian's knowledge of its audience and its ability to "sell [that] audience properly to the advertising community."
He added that the publication is also bringing in revenue through events, as well as through e-commerce offerings (such as this one).
What's more, the Guardian may not always be "closed off to paywalls," particularly on handsets, Miller said. (At present, UK readers must have a Guardian subscription for access to its iPhone and iPad apps, but elsewhere — including the U.S — access is free.) A browser paywall simply wouldn't align with the Guardian's current aim to grow its readership.
I asked Miller what he'd learned from the U.S. launch that he now planned to apply to Australia.
"One of the most important things is to do really interesting editorial content," he said, pointing to a number of interactive graphics (such as this one on gay rights, shown above) that were built locally by the Guardian's U.S. team. To do it, "you've got to find local talent and build [that content] locally," he added.
Where could the Guardian go next? "There's obviously a few ideas, but we're building out where we can afford," Miller said. After the U.S. and Australia, the Guardian's largest foreign audience resides in Canada, and then in continental Europe and India.
"The English-speaking spine is where the audience is," he said, adding that there may also be opportunities in translated coverage, something the Guardian has experimented with in the past.
Images courtesy of Flickr, Michael Bruntonspall and the Guardian
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