Abstract
Membership and subscriptions help news organisations to fund original journalism. Even the pioneers of the open web are taking them up
It's been such a long time since it happened that its significance would be lost on anyone born since the turn of the millennium. Last month, 20 years after last making an annual profit, Guardian News & Media finally returned to the black. It was a modest return, just £800,000 operating profit, excluding the annual £25-£30 million handout from the Scott Trust, but having posted a £57 million loss just three years ago, the symbolism was clear for all media watchers. If The Guardian could do it, perhaps journalism in the digital age had a future after all.
The last time such optimistic news came out of King's Place was back in 2013, a year when The Guardian saw a 39 per cent uptick in digital display and sponsorship revenue and cut its annual loss by 30 per cent. UK advertising spending had returned to pre-financial crash levels that year and, with almost half of advertising spend now digital, The Guardian's rosy finances were painted as the result of committing to digital ahead of their competitors. Except that they hadn't accounted for the duopoly of Google and Facebook. Already making significant profits, the Silicon Valley giants tightened their grip on the advertising market, establishing a 50 per cent share of the global market between them in 2014. From that point on, it's been clear that digital advertising would be only a small piece of journalism's funding puzzle.
The Guardian, like other publishers, began to explore its relationship with readers as a means of plugging the hole left by advertising. Since 2016, readers have seen messaging on the Guardian site and apps urging them to support independent, investigative journalism financially. For a while, that messaging, at the bottom of every article and encased in a bright yellow box that readers couldn't miss, became something of a joke among its rivals. But as the value of news became more understood and the threat of fake news became louder, the tide began to shift.
In just three years, The Guardian has received 650,000 recurring contributions and a further 300,000 one-off donations, paving the way to hit one million members last year and reach its latest financial milestone in April. As Kath Viner, editor of The Guardian since 2015, put it in a piece to readers: “We would never have been able to achieve this without you.” And, unlike other UK national titles, all without erecting a paywall.
If nothing else, The Guardian's recent financial success demonstrates just how much can change in a decade. Back in 2010, the then editor Alan Rusbridger gave the annual Cudlipp lecture, titled “Does journalism exist?”. It was a playful talk with a serious message in which he set out his position for The Guardian “being free at the point of desktop”. Charging for content, he said, was an idea “coming down the slipway” that needed serious thought because the journalistic implications, namely being read by fewer people, were so serious. He explained how his commercial colleagues had modelled “at least six different paywall proposals” and were “currently unpersuaded”.
But Rusbridger knew the tide was turning. Five months before that talk, Rupert Murdoch, then News Corporation chairman, had set dominoes in motion by making The Times the first general newspaper to charge for access to its content (The Financial Times, a specialist business publication, had launched a metered paywall in 2002). The Economist and Axel Springer, the large German publisher that owns Bild, had also recently begun charging for content. Then, just a week before Rusbridger's Cudlipp talk, The New York Times announced that it was implementing a paywall, with readers able to access 20 free articles per month before having to pay.
This shift to a paid model ran contrary to The Guardian's ethos and Rusbridger's philosophy of “open journalism”, in which stories should be read as widely as possible. The question then became: how do you pay for quality journalism without cutting off those who don't have the financial means to contribute?
The answer to that has been membership, a model commonly found in public media in the United States but being slowly adopted by some publishers in Europe and the UK.
The concept of membership has many forms, but it boils down to news organisations talking about their mission and impact. The emphasis is as much on the values of the newsroom as the stories that newsroom produces. The aim is to get people to identify as supporters, in the way they do about National Public Radio or the National Trust, and to buy into the why and the how of journalism, rather than just the what.
In the strongest cases, membership can also mean that the audience contribute with ideas, time and expertise as well as financially. De Correspondent, the Dutch media start-up, has led the way in this respect, crowdfunding one million euros in just eight days back in 2013 by promising to move away from breaking news and focus on the context behind the daily cycle. Since then, the Amsterdam-based newsroom has soared past 60,000 members, working alongside them to decide what to cover and even utilising them as proof readers, moderators and podcast editors.
Its success has been such that, at the end of 2018, the founders Rob Wijnberg and Ernst-Jan Pfauth launched a second crowdfunding campaign to raise money for an English-speaking newsroom. Their campaign wasn't without controversy (they've recently attracted criticism for reneging on their plan to open a US office) but their message clearly resonated: more than 49,000 people from 130 countries pledged a total of $2.6 million. Not bad for an outlet that hadn't even published a story.
More than one way to bring in some cash
If De Correspondent alerted publishers to the potential of reader revenue, it's become even more attractive in the last 12 months as more print advertising revenue has gone the way of GAFA (Google, Amazon, Facebook and Apple) and news sites reliant on display advertising have had to shed journalists to address missed revenue targets.
In January alone, more than 2,000 people lost their jobs in the United States at Buzzfeed, Vice and Verizon, which owns Huffington Post and AOL, in a drastic round of industry-wide cost-cutting. “What if there is literally no profitable model for digital news?” asked an MSNBC presenter, no doubt putting into words what many editors and media bosses were thinking. Even for those organisations and individuals not affected, it felt like a big dip in the never-ending digital media rollercoaster.
Such context goes a long way to explain why, in the last six months, a number of high-profile digital players have made the leap into membership. In the UK, The Independent launched Independent Minds, billed as a scheme for those who value free-thinking journalism, while in the US Quartz, the business lifestyle site founded in 2012, Jonah Peretti's listicle-famous Buzzfeed News, and Vox, the political news site headed by former Washington Post blogger Ezra Klein, all introduced schemes offering exclusive behind-the-scenes content, access to face-to-face events and conference calls with journalists. Even HuffPost (formerly The Huffington Post) which started life as a blogging platform and still has more than 100 million monthly visitors, has created a $5.99 a month membership model under the new editor-in-chief Lydia Polgreen, formerly of The New York Times.
Two things are clear from experimentation so far. For one, no two membership offerings are the same. The Membership Puzzle Project, a research programme based at New York University and looking into the rise of membership beyond public media, found that there are “thin” and “thick” variations, which range from purely financial, light-touch contributions to denser, more interwoven relationships with readers. Secondly, there's a long way to go before we know whether membership can fill the gap left by digital advertising. Nic Newman, from the Reuters Institute at the University of Oxford, noted in last year's Digital News Report that it's “far too early to know how far [membership] can develop” as a model. Judging by what we've seen over the last 12 months, that doesn't seem to have stopped publishers from seeing for themselves.
For any news organisation coming to reader revenue in 2019, things are clearer now than when Rusbridger tried to read the tea leaves of the industry almost a decade ago. For a start, we know much more about the patterns that drive a reader to get out a credit card.
For sites with a subscription focus, the best predictor of purchase is frequency of use. In short, the more often you can get someone to visit your site and read your journalism, the more likely they are to tip over into contributing financially. The Financial Times, arguably the most successful news subscription publication in the UK, is relentlessly focused on driving consumption, even going to the length of redesigning their website in 2016 after realising that slower page loads affected how much subscribers read and thus, their bottom line. In March this year, it passed one million subscribers.
This focus on driving habit among readers has meant introducing new teams of engagement journalists into newsrooms with the responsibility to build more direct relationships with paying readers through a combination of social media, email newsletters and face-to-face events. Paid-for social media posts supplement that work by targeting casual visitors (and those who look like them on the social media platforms) with the latest exclusive story or subscription offer.
These data also become useful for trying to pre-empt subscribers cancelling or “churning”. The Times and The Sunday Times attribute a score to subscribers that estimates their likelihood to cancel based on when they last visited, what they read and the comments they left. Those who haven't read for over a month are most at risk of leaving. With some subscribers paying more than £250 a year, even the smallest percentage change to the number of readers retained can equate to substantial revenue.
But it's not only the major news producers that will change as a result of the likely shift towards subscriptions and membership. There will be side-effects, other parts of the media puzzle that will shrink and grow in time.
One such shift is the cottage industry of subscription bundling by tech monoliths such as Apple and Google, who see an opportunity to make it easier for consumers to subscribe and read all their favourite publications in one place. But while their offerings, Subscribe with Google and Apple News+, may be good for the end consumer (greater content choice, cheaper than separate subscriptions, less logging in, etc), they come at a cost for publishers, both literally (Google and Apple take a percentage of revenue) and in the fact that the relationship with the reader now lies with a third party, not the publishers themselves. The New York Times and The Washington Post passed on being launch partners of Apple News+ and, increasingly, publishers seem to be cooling on the idea of teaming up with the tech companies that have partly contributed to their recent demise. Expect to see other players try to get in on the subscription bundling market in coming years.
Producing journalism that is worth paying for
Another question surrounds the presence of advertising on subscription news sites. At the moment, users are essentially paying twice, first for content and then through their data being used to target them with ads elsewhere on the web. A recent study by Grzegorz Piechota, researcher-in-residence at the International News Media Association, found that only 14 per cent of the national publications funded by subscription offer a better user experience (including removing advertising) in return for paying for content. As the public becomes more savvy about their data and how it's used, expect that to change.
Other shifts we see are likely to be more nuanced and part of publishers' quest to differentiate themselves from the sea of content freely available online. For example, expect to see more slow journalism, much like De Correspondent produces. Tortoise, the new initiative from Katie Vanneck Smith, former president at Dow Jones, and former BBC news chief James Harding, is an example of that, as are Zetland in Denmark and the crowdfunded German digital magazine Krautreporter. Similarly, there are a host of local and regional publications charging membership but giving readers a greater say in the topics that are covered. This “engaged journalism” can be seen at The Ferret in Scotland and co-operatively owned Bristol Cable, and has already been shown to increase participation and trust.
The establishment of subscriptions as a viable business model over the last 10 years, and the subsequent emergence of membership, may provide a degree of reassurance if you happen to be a media group CEO or an editor-in-chief. Yet these are still challenging times for legacy news organisations and digital players alike. Profitability over the coming decade relies on understanding that a smaller, more loyal paying audience must be balanced with a suitably sized newsroom producing journalism worth paying for, be it with money or time and expertise.
As David Pemsel, the Guardian CEO, warned just a few weeks ago, “the significant turbulence in the global media sector shows no sign of abating any time soon”. Readers might be able to help ride out that turbulence, but it won't be every organisation's saving grace.
