After a series of reports about ballooning losses at the Guardian, the British newspaper's parent company Guardian News & Media announced recently that the company is looking to cut more than $70 million in costs over the next three years, after losing more than that in 2015. The paper has spent the past several years focusing on a mission its former editor called "open journalism." Is that to blame for its losses?
In a recent column, media critic Michael Wolff said the Guardian "has been something of an ultimate experiment in the migration from paper to digital publishing," but argues its expansion and online experiments have resulted in nothing but financial ruin, a "quixotic test of digital faith."
Instead of cutting its costs and implementing a paywall like other newspapers, Wolff says, the Guardian maintained its open approach to journalism in the face of overwhelming odds, and now it is doomed. Why? Because advertising revenue alone can't support media organizations, he says—which he argues was the central digital conceit the Guardian bought into. The paper, according to Wolff, is to digital media "what Cuba is to socialism."
While Wolff might like to use the Guardian's losses to paint its strategy as a failure, and paywalls as the only solution, what's happening at the British newspaper isn't quite that simple. Like everyone else, it is trying to figure out how to get from one place—namely, print—to a different place, namely the web.
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It's true that the Guardian has been steadfastly opposed to erecting a paywall, primarily because doing so would interfere with the "open journalism" approach that former editor Alan Rusbridger argued was the paper's core value. But it's also true that many newspapers that have tried paywalls are still struggling financially. Even the New York Times' paywall is barely compensating for the decline in print advertising.
Rusbridger's "open journalism" wasn't just some digital fad or social-media driven frenzy, as Wolff and other critics like to imply, but rather a fundamental part of the Guardian's commitment to journalism as a public good. And that itself stems from the newspaper's mandate, which is to spread a liberal political and social perspective as broadly as possible. That's why it's run by a trust.
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So when the paper launches projects like the ground-breaking MP Expenses crowdsourcing project—in which tens of thousands of readers pored over expense reports filed by British politicians—or opens up its editorial process by allowing readers to contribute ideas, it isn't because crowdsourcing is hip. It's because the Guardian sees its readers as partners in creating journalism, not just content consumers.
That relationship with its readers is also critical to solving the problem that Wolff describes, namely diversifying away from advertising. It's why the Guardian has spent so much time trying to develop a membership-based revenue model based around live events and special features. Wolff dismisses this as naive, but it's arguably better than a one-size-fits-all paywall around everything.
Do the losses that Wolff is referring to—which amount to about $70 million once exceptional one-time costs are removed, or slightly larger than the loss from the previous year—mean that the Guardian's goals were misplaced, or that expanding online and into the U.S. and Australia was a mistake? In a word, no.
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The reality is that almost every media company, traditional or not, is losing money, even some of the ones with paywalls. Yes, the Wall Street Journal and the Financial Times might be making a living, but they are members of a very small group. Even the Washington Post is in what its owner and Amazon (amzn) founder Jeff Bezos describes euphemistically as "investment mode," and likely will be for some time.
Should the Guardian have been cutting costs and laying hundreds of people off, as other newspapers have been? Probably. But that wouldn't necessarily guarantee its losses would be dramatically smaller than they are now, and it might mean that it would have missed opportunities that will eventually pay off in other ways, such as the expansion into the U.S. (which won't be affected by the upcoming cuts, the paper says).
Obviously, the Guardian needs to reduce its costs and move steadily away from print to digital, just as every other newspaper and magazine company needs to—that's not an easy process, especially when the bulk of your revenue still comes from print. And the British newspaper has at least as good a chance of making that transition with an open, membership-based model as anyone else Wolff might care to look at.