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How the Guardian Returned to the Black SMU-19-0XXX UNITED WE THRIVE: HOW THE GUARDIAN RETURNED TO THE BLACK We have to get over this journalistic arrogance that journalists are the only people who are figures of authority in the world. If you can open your site up, and allow other voices in, you get something that’s more engaged, more involved – and actually, I think, journalistically better. - Alan Rusbridger, former editor-in-chief, The Guardian1 As the Guardian Media Group (GMG) senior management team members began celebrating at their King’s Cross, London office, Chief Executive David Pemsel sank onto his chair, still trying to absorb the news. Almost three and a half years after he and Katharine Viner, Guardian News and Media (GNM) Editor-in-chief, had launched a turnaround strategy for The Guardian, it was now the most read quality news brand in the UK.2 The loss-making British media group had also finally turned the corner in May 2019. In January 2016, Viner and Pemsel had announced a three-year business plan to enhance operating efficiency, reduce costs and secure new growth opportunities.3 Some of their key objectives included reducing losses and aiming to break even at an operating level by 2018/19, relaunching an enhanced membership offer to double reader revenues, implementing an advertising model that tracked market trends, and focusing on growing its US and Australian operations, so as to raise their contribution to the overall business.4 The results were nothing short of spectacular. GMG’s revenues for 2018/19 hit £224.5 million (US$288.31 million5), a rise of 3% from 2018.6 This was the third successive year that revenue growth was buttressed by reader revenues, digital advertising and its international operations. 7 Digital revenue growth was even more robust, coming in at 15% to reach £125.3 million (US$160.96 million).8 In fact, digital revenue had outstripped print revenue in 2018, with the former accounting for 50.04% of total revenue (refer to Exhibit 1), and the trend had continued in 2019. The number of digital subscriptions had also surpassed that of print subscriptions in 2018, with digital subscribers numbering 190,000 while print subscribers totalled 110,000.9 Meanwhile, GNM, the core news business of GMG, had achieved its target of cutting costs by more than 20%, and fulfilled its break-even goal by delivering an operating profit at earnings before interest, tax, depreciation and amortisation (EBITDA) level of £0.8 million (US$1.03 million).10 In addition, The Guardian now had in excess of 655,000 monthly paying supporters spread across its subscribers, recurring contributors and members, with another 300,000 one-off contributors in the past year.11 This case was written by Professor Arnoud De Meyer and Thomas Lim at the Singapore Management University. The case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Copyright © 2019, Singapore Management University Version: 2019-10-03 SMU-19-0XXX How The Guardian Returned to the Black In stark contrast, when Pemsel and Viner had just taken over from their predecessors in 2015, The Guardian had been projected to chalk up a loss of £83 million (US$106.61 million).12 In fact, from the period 2009/10 to 2014/15, it had been registering losses of more than £20 million (US$25.69 million) annually (refer to Exhibit 2), and had not registered an operating profit since 1998.13 The dismal financial performance however contrasted sharply with the international journalistic plaudits that The Guardian had received under the leadership of Viner’s predecessor, Alan Rusbridger. In particular, the newspaper would probably be remembered for how it had turned into one of the most-read English news websites globally after it broke the news on the leaks by former Central Intelligence Agency employee Edward Snowden.14 For its ground-breaking efforts, The Guardian won the Pulitzer Prize for Public Service, an Emmy, and Scoop of the Year at the 59th Walkley Awards for Excellence in Journalism among others.15 Pemsel was no doubt more than relieved that he and his team had managed to pull the turnaround off. But one could not help but dwell on what had laid the ground for the stunning reversal in The Guardian’s fortunes. How had the newspaper managed to turn its website from a primarily British media outlet into a global one? And why had it managed to survive and thrive despite not setting up a paywall like so many of its peers? The Guardian Media Group (GMG) GMG was owned by The Scott Trust Limited, previously a non-charitable trust established to ensure The Guardian’s permanent financial and editorial freedom, and its safety from commercial or political intervention.16 In 2008, the trust was wound up as non-charitable trusts, unlike limited companies, had a finite lifespan. Its assets were subsequently transferred to the said limited company to secure The Guardian’s continuing autonomy.17 In the UK, GNM published The Guardian newspaper six days a week, as well as The Observer, the world’s oldest Sunday newspaper. In addition, it published The Guardian US and The Guardian Australia, which were only available online. In the US, The Guardian had newsrooms in New York, Washington DC, and Oakland, California. As of January 2018, it had more than 300,000 paying supporters in the US, of which over 70,000 provided financial support monthly.18 Over in Australia, The Guardian’s news bureaux were located in Sydney, Melbourne, Brisbane and Canberra. It had built up a base of over 65,000 paying supporters Down Under by early 2018.19 GMG was supported by The Scott Trust Endowment Fund, which comprised diversified medium- and long-term-focused investments that were managed by a number of specialist fund managers.20 The fund was intended to produce long-term gains, so that The Guardian could continue to enjoy financial and editorial freedom.21 In October 2017, GMG set up GMG Ventures, an independent venture capital fund, to supply additional financial income, and help sustain GMG’s game plan by investing in start-ups that aimed to grow the next wave of media technology.22 The fund primarily invested in seed and Series A- stage companies that demonstrated product market fit. In addition, these companies had to provide technology-enabled products and services, and the values of these firms and their founders had to be aligned with those of The Scott Trust and The Guardian. Among the companies that GMG Ventures had invested in were Comixify, Serelay, Signal and DirtyLemon.23 2/10 SMU-19-0XXX How The Guardian Returned to the Black The Guardian also obtained philanthropic contributions through partnerships with a variety of organisations that shared its values.24 Such content was accompanied by one of the following three labels: ‘Supported by’, ‘Paid content/Paid for by’, or ‘Advertiser content/from our advertisers’. Putting in Place a Culture of Openness Given how GMG was already atypical in that it was “supported” by a non-charitable trust, and did not have to address the typical profit and dividend concerns of shareholders, it was not surprising that The Guardian had chosen to adopt an open approach. Copyleft25 with Conditions Attached In March 2009, The Guardian, in a bold move, launched the Open Platform. This was a content- sharing service that allowed its partners to reuse its online content for free so long as they agreed to carry its advertising.26 Users had to choose which category they belonged to – developer or commercial – in order to use the platform. Developers were defined as those who used its content for non-commercial purposes.27 They could use the text of The Guardian’s online articles without paying, but the content they pulled could not be saved for offline use for more than 24 hours.28 In addition, these developers’ apps were barred from asking for information from The Guardian more than 5,000 times per day, and the content that had been pulled into these apps had to link back to the original Guardian article.29 Commercial enterprises and developers that wanted to monetise the website’s content meanwhile could gain access to not only the article text, but also images, audio and videos from the website.30 They however had to consent to running advertisements, the choice of which would be decided by The Guardian, since each of these advertisements generated revenue for it.31 The move appeared counter-intuitive, but from The Guardian’s perspective, every app that tapped on its content was publicising the newspaper’s name and brand, while at the same time expanding its advertisement network and commercial reach, thus augmenting its earnings.32 Bringing Citizen Journalism to the Fore n0tice In October 2011, The Guardian began roping in readers to top up its news output while trying to inject commercial feasibility into the process through n0tice, a three-in-one publishing platform that was both a community bulletin board and a classifieds service, and also a local news wire.33 When readers visited the n0tice website, it checked whether they were using a mobile device. If they were, it proceeded to ask for permission to read their location.34 Once permission was granted, it then used the Google Maps geocoder and Yahoo’s geo services to obtain their latitude and longitude, and thereafter displayed what had been published on n0tice near their current location.35 These readers in turn could also post what they saw around them on the site.
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