Journalistic Success, Economic Failure Can Free Web Content Save The Guardian?

The Guardian has been losing money for years. But whereas the New York Times has begun charging for online content, the British daily has staked its future on giving away its journalism for free. The media world is watching with bated breath.

The Guardian has a reputation for quality journalism. It was one of the newspapers that published the US diplomatic cables obtained by WikiLeaks.

The Guardian has a reputation for quality journalism. It was one of the newspapers that published the US diplomatic cables obtained by WikiLeaks.


Alan Rusbridger could hardly be accused of being old-fashioned. The editor-in-chief of the Guardian loves the Internet. The website of the British daily is considered one of the industry's best. Yet Rusbridger, 57, has chosen to preserve his greatest journalistic triumph in good old aluminum: in the form of a matte gray exposed printing plate with light-blue lettering; the front page of the July 5, 2011 edition. The souvenir stands on the desk of his London office.

A large part of the page is given over to a photo of a young girl, 13-year-old Milly Dowler, who was abducted on her way home and later killed. On the July 5 in question, the Guardian revealed that a reporter at Rupert Murdoch's tabloid News of the World had tapped the cell phone of the murdered schoolgirl.

Although this was only one of many scoops by the Guardian in the wiretapping scandal surrounding the Murdoch paper, it was undoubtedly the most momentous. The story shook the Australian media tycoon's global empire, scandalized the British public, and prompted the British parliament to openly discuss curbs on the yellow press. Murdoch closed the News of the World and police opened investigations into 16 reporters and managers at the paper. And all because of Rusbridger's "guardians."

The paper has made something of a name for itself with such revelations. In fact it has become the symbol of independent journalism. But in purely economic terms, it's a complete fiasco.

Offsetting the Losses

The Guardian has been losing money every year since 2004. Last year alone, it and its sister newspaper, the Observer, lost more than €47 million. It's only thanks to the farsightedness and generosity of its former owners, the Scott family, that the paper hasn't gone bankrupt.

Since 1936, the paper has been funded by the Scott Trust. This structure has but a single aim: "To secure the editorial independence of The Guardian in perpetuity."

Many newspapers would like to be based on such a business model. The Scott Trust owns a number of lucrative companies, including the used-car magazine and portal Auto Trader. The profits generated on these are used to offset the heavy losses incurred by The Guardian.

"Our mission is to be profit seeking rather than profit finding," says Deputy Editor Ian Katz. Even CP Scott, the paper's owner in the early 20th century, believed it was more important to be influential than to turn a profit.

However, the Guardian's losses have become too big to absorb -- and in 2007 the Scott Trust was forced to sell some of its assets to refill its coffers.

Andrew Miller, a former consumer-goods industry manager and for the past year the managing director of the newspaper's parent company, the Guardian Media Group, recently warned that if the Guardian continued to make such heavy losses, the company would simply run out of money within five years.

An Attempt to Solidify Finances

Belt tightening at the paper has become a must. Current plans foresee it and the Observer slashing their budgets by £25 million (€28.8 million, $39 million) by 2016. Almost 300 employees of a total workforce of 1,800 have been let go since 2009. Earlier in September, the publishers furthermore announced that the price of the print edition would be increased by 20 percent to £1.20 an issue in an attempt to solidify finances.

"We are not a sort of charity," Rusbridger says. "We are allowed to spend a lot of money on investigative reporting although that does not pay off immediately. But our current financial situation is not sustainable."

Rusbridger has asked his readers for forgiveness over the price hike. He says the Guardian is not in business to make money. We are a "news company that is taking on some of the jungle's biggest beasts -- and winning," he wrote in his plea for support.

Even so, the publishers have now given up any hope of ever earning good money with printed paper. Although the daily circulation of the 190-year-old newspaper increased by 12,000 after the Milly Dowler story, the general trend continues to be downward.

Rusbridger has therefore bravely if desperately sought solace on the Web. Even so, he still doesn't think online readers should be charged for the privilege. The Guardian's website is one of the most popular around, yet its content is available free of charge -- in contrast to content on the New York Times website, for example.

The New York Times Philosophy

The New York Times also repeatedly dipped into the red in recent years and was forced to seek new shareholders and loans in the triple-digit millions. The "Times" also believed in an online future, and wondered how it could make money on the Internet. It, however, chose a completely different tack to that adopted by the Guardian: It asked its users to pay up.

From one day to the next, its readership figures collapsed. Yet surprisingly, some readers returned, and they now obediently pay to access the paper's online content.

The Guardian and the New York Times are two giants fighting on the same battlefield, yet with completely different strategies. On the one side there are the Americans, who dared to charge for their content, on the other the Brits, who prefer to rely on advertising revenues for fear of scaring their readers away.

Both are fighting a battle of principle on behalf of the entire press, which is awaiting the outcome with bated breath. So far, it's unclear which approach will prevail.

Thanks to the backing of the Scott Trust, the Guardian can afford to be more patient than the New York Times and most other newspapers. "To choke off digital growth now would be a very bold decision," says Rusbridger.

With his large, black, horn-rimmed spectacles and tousled, dark hair, the Guardian's editor-in-chief looks like a grown-up version of Harry Potter; like a man who likes to cause trouble. When Rusbridger and his departmental heads flop down in a sea of bright-yellow sofas for their daily 10 a.m. editorial conference, a hush falls over the room. Rusbridger then proffers a few choice words of praise about the previous day's edition, speaking so quietly you could think he was talking to himself. By contrast he takes little part in the discussion of the program for the current issue.


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