Journalism is in an existential crisis: revenue to news organisations has fallen off a cliff over the past two decades and no clear business model is emerging to sustain news in the digital era.
In the latest in our series on business models for the news media, Caroline Cheetham and Paul Broster look at exclusive memberships.
The shock announcement that the last printed version of the Independent will be published next month was met with real sadness. The 30-year-old newspaper has remained journalistically innovative since its launch in 1986, despite facing the increasing challenges of making print pay in a digital world. Indy co-founder, Andreas Whittam Smith, admitted it was a “painful day” but he reportedly said the printed paper was no longer economically viable: “The Independent’s journalism has never been more loved or respected but the costs cannot be sustained.”
And of course he is right. Our journalism and media students never come into university clutching an armful of newspapers. And the newspapers we provide in the newsroom at our high-tech MediaCityUK campus, are practically untouched. But our students – and young people generally – are arguably consuming more news and content than ever before. It simply doesn’t occur to them that they might have to pay for it. And that’s the problem for those of us who write and produce the news. If this industry doesn’t find a viable business model, the very jobs our aspiring, talented and creative students are seeking will not exist.
Many newspapers, including The Times, have resorted to paywalls (stablemate The Sun raised a paywall of its own but returning News UK boss Rebekah Brooks scrapped the idea after little more than two years saying that the priority was to grow the paper’s audience). Others such as the Mail and Trinity Mirror titles, have stuck with the advertising-led model, rationalising that the more readers they have, the more paying advertisers will be attracted. While the Mail Online has rapidly grown revenue from its site, it has not offset losses from the decline in print advertising as the circulation of its printed papers continues to decline.
The Guardian has been the most proactive of the UK’s newspaper groups when it comes to experiments with alternative future models. Under longtime editor Alan Rusbridger the paper was a steadfast opponent of paywalls, preferring to champion the notion of “open journalism”. And, editorially at least, it has led the way: the paper was a pioneer of the “digital first” approach, publishing first to its site then in the printed form the following morning. In terms of readership this has paid dividends – the Guardian is second most visited newspaper site in Britain – just behind the Mail – and is in the top five most-read newspaper websites in the world.
But the Guardian’s business model is failing. Early this year the Guardian announced it would be making cuts of 20% – around £50m – in an attempt to break even within three years. Executives admitted that annual operating costs had reached £268m, up 23% over a five-year period, compared with a 10% growth in revenues. It’s likely around 100 jobs could go in this round of cuts. The would follow more than 70 editorial jobs which were cut in 2012 to offset a pre-tax loss of £75.6m.
Friends with benefits
So how does the paper resolve the dilemma of providing innovative content for free, while continuing to survive as a business? Persuading its readers to become Guardian members could be the answer. The Guardian insists the scheme is not simply a paywall by another name. Day-to-day content will remain free online but members, paying between £15 to £60 a month, will get a lot more – from specialist pieces from correspondents, to access to hundreds of Guardian Live events, which will include masterclasses and Q&A sessions with correspondents and editors.
It’s also anticipated that the membership scheme will eventually have global possibilities for the organisation, with events across the US and Australia. It relies on Guardian’s audience having a level of ownership of the paper, literally buying into its culture. And some argue that the Guardian, possibly more than any other news organisation, already has the brand loyalty to pull this off. Jasper Jackson, a media analyst for The Media Briefing, said: “It’s an appeal to the emotions of those who identify with the Guardian brand.”
The Guardian isn’t the first to try this approach. Slate, one of the pioneers in digital-only news and media, launched a similar programme in April 2014. This membership offered allows loyal Slate readers a chance to actively contribute to the Slate newsroom by offering special access to writers and editors.
TPM, another American online-only example, launched a similar scheme at the end of 2012, once again focusing on reader interest in the journalistic process and assuring all readers that this new approach was not a “paywall” and never would be.
As the new editor-in-chief of the Guardian, Katharine Viner, said recently:
New techniques mean readers can share expertise, help us find stories and make decisions. We host big communities and engaging conversations, whether below the line, with our professional audiences such as teachers, or between Guardian members at live events - we should build on these relationships and invite readers into our journalism at an early stage.
Ultimately, The Guardian’s new membership scheme represents a business model for media brands that have built up a loyal community of interest around their content. Whether it will be the model that solves the digital problem for news producers, is yet to be seen.
So while the demise of the printed Independent is a sad day, many will also say it was inevitable – and it is a matter of time before other mastheads follow in the same way. As the Indy’s owner Evgeny Lebedev acknowledged in a letter to his staff:
The newspaper industry is changing, and that change is being driven by readers. They’re showing us that the future is digital.
We’ll have to wait and hope that this digital future is sustainable – the alternatives are too ghastly to contemplate.