The Guardian–millions of users, millions in losses

Tim de Lisle has written an excellent piece for Intelligent Life asking “Can the Guardian Survive?”–a question that, given the “soft power” this newspaper, with its millions and millions of online readers, seems to exercise across parts of the industry, has ramifications well beyond the British broadsheet market. (Alan Rusbridger, the editor, and Emily Bell, the former director of online content, are both frequent speakers at “future of journalism”-type conferences.)

de Lisle doesn’t answer the question–only time will tell–but there are plenty of warning signs in his article. Leave aside some occasionally excellent journalism, and look at the numbers.

In the financial year 2009-10, the national newspapers division of Guardian Media Group—which also includes the Observer, Britain’s oldest Sunday paper—lost £37m. The following year, it managed to cut costs by £26m, and still ended up losing £38m. In May, Rusbridger told me he was expecting a similar loss for 2011-12. So, for three years running, the Guardian has been losing £100,000 a day.

In fairness, of the three other broadsheets competing in the same national market, the Times and the Independent are also losing millions and reliant on their owners propping up the business. Only the market-leader, the Daily Telegraph, is actually producing a profit (£55 million last year).

In the article, de Lisle mentions some of the new sources of revenues being explored at the Guardian to push beyond sales and advertising–of course iPhone and iPad apps, also Master Classes, and the Guardian Open Weekend. There are also various forms of networks, that de Lisle doesn’t touch on, including Guardian Soulmates, professional networks etc, plus of course various forms of e-commerce, selling books, shoes, wines, etc. Fancy an air cooler? (See screenshot below.) The Guardian can help you, and as you enjoy the pleasant temperature, you are helping pay for Nick Davies’ next expose.

The Guardian is thus, like everyone else, trying to diversify their business. But de Lisle has talked to those who doubt the current strategy, with its emphasis on growing the freely available website, is going to work. Juan Señor, a media consultant I know from my work at the Reuters Institute for the Study of Journalism, says to de Lisle

“We are very concerned … that everybody looks at the Guardian’s success in terms of volume of traffic. That is not a measure of success, because you might as well get into pornography. … While I love the Guardian’s journalism at times, I just don’t think it’s sustainable. They’re announcing even more lay-offs, it’s a tragedy.”

And that is worth keeping in mind for those working to change news organizations elsewhere, who don’t have the kind of money in the bank that the Guardian can rely on (about £200 million at the last count–enough for five more years with losses like this).

For all its journalistic successes and its millions of users, the Guardian continues to double down on a all-or-nothing strategy that so far has resulted in millions and millions in loses. Wish them well. They need it. Think twice before imitating them. They are heading down a dangerous path.

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