Recently, The Guardian, that long-struggling liberal newspaper of record, stated it has ~500,000 members and digital subscribers[i]. Not to mention another 300,000 one-time contributors. This is quite impressive. What is more, the rapid increase in members and subscribers is projected to help The Guardian cut losses to £25m this year (£45m last financial year[ii]), putting it on course to break even by 2019.
What is particularly interesting is that The Guardian is one of the few global quality newspapers to have no paywalls[iii]. That is right. You can read as much as you want of The Guardian for free. Yes, you will get prompted to become a member but you can chose to ignore and keep reading. This is very different from The New York Times (NYT) or The Washington Post (WaPo) which make it difficult to read more 7-10 articles a month for free[iv].
Up until 2014, when the membership scheme was launched, The Guardian had believed that their impressive audience numbers (then around 100m monthly uniques) would eventually lead to digital advertising revenues sufficient to deliver them to profitability. But with each year, it became clear that digital advertising wasn’t growing as fast as they expected. Across the pond, the NYT (which too was free to all then) too was coming to a similar conclusion. And why this was so, is particularly interesting.
Why Publishers Don’t Get Ad Dollars Online
From the time the web as we know it took off, to the early 2010s, the dominant belief system was that advertising would deliver. But as we know, 2 things happened. One, Google and FB sucked out much of the digital ad growth in to their walled gardens. The second reason is actually more relevant but also a bit more complex.
Let us get into the second reason. The nature of the web meant that inventory was infinite, which put pressure on pricing. True, quality inventory in the likes of NYT, WaPo was finite, but thanks to cookies and retargeting, a clever buyer could serve the ad to the same reader at a cheaper website instead of at the more expensive WaPo or Guardian. More and more ads began to be delivered on cheaper websites thus pulling down yields at the more premium publishers. Effectively this made it impossible for ad revenue growth to deliver for publishers.
Publishers who had offered their content free online, and hoped to monetize the traffic through advertising began to rethink. Much-criticized strategies[v] such as that of The Times UK, which had a hard paywall, began to look attractive. The Financial Times (FT) which had pioneered the metered model (x number of articles free per month, rest paywalled; a model later adopted by NYT and WaPo) too moved to a hard paywall.
Why The Guardian Chose The Membership Model
The Guardian has been quite resolute in not putting any content behind the paywall. The reason for this is detailed in this article announcing the launch of member’s clubs. It says “Most readers said they would happily contribute money to the ‘cause’ of The Guardian – but an overwhelming majority also wanted the journalism to be free, so that it could reach the maximum possible audience. A fair number were happy to be subscribers. But the most hands shot up when asked if they would like to be ‘members’”. More details on the membership model and the different tiers are here.
The combination of no paywall and membership fees is very interesting. It is an interesting variant of freemium pricing models that we see usually with software products these days. An analogy may also be drawn with Starbucks where we can choose to consume the higher-priced Fairtrade coffee, thus signaling our moral standards as well as our willingness to pay. I am not sure how many other brands can pull off such a model – it helps that The Guardian has a distinct left-liberal audience base, who are passionate that it survives and thrives.
That said, what about India? When are we likely to see such models or even a paywall. We do have Business Standard (BS), which has an easily gameable paywall, but they are the only ones thus far. Given that most Indian newspapers are profitable, and are seeing double digit digital ad growth, there is no pressure to go pay. BS is one exception, given they are financially struggling. Clearly the most compelling reason to subscribe to BS is the bundled WSJ subscription they are throwing in. A possible route forward is shown by the soon-to-launch ET Prime, which is a paid value-added long-form business reporting site from The Economic Times (ET). ET is free and ET Prime is paid. This is an interesting model and this could well be the model that takes off in India.
[i] As a comparison, The New York Times has ~2m subscribers.
[ii] For the year ended March 2017, The Guardian had revenues of £215m and losses of about £45m. Of the £215m revenue, £94m was digital revenue with ~£30m being membership and subscription fees. As the 500K member + subscriber number grows – Guardian wants to up it to about 1m, we will see a rough doubling of these fees.
[iii] Daily Mail, NY Daily News, UK’s The Sun and a few other tabloid titles too have no paywalls, relying entirely on ad revenue.
[iv] There are workarounds, such as accessing via search or social links, but they are slowly getting harder to hack now).