The Guardian’s head of client sales says the Internet is turning digital on its head. But which publisher has the right formula to capitalize on that?

Originally published in Communicate, May 2010

Mark Finney, head of client sales at UK publishing house Guardian News and Media (GNM), spoke about “digital revolutions” at the recent Dubai Lynx. The Internet is changing the way we consume print, and publishers around the world are trying out different revenue models. Media mogul Rupert Murdoch is preparing to charge for access to online content across all his News Corp titles, but the Guardian’s online presence is remaining resolutely paywall-free.
The newspaper’s print circulation is currently around 400,000, and falling, as is the case with virtually all print dailies around the world. But Guardian.co.uk boasts 36 million readers internationally, including 12 million in the UK. Finney won’t reveal GNM’s turnover from its print titles, but says the digital side of the business makes around £25 million per year. We asked him about the changing business of print.

How much are readers migrating from print to online?
The honest answer to that is that no one knows. Some people have educated guesses, but no one knows. None of us, as far as I’m aware, has the kind of research to be able to directly track that. However, what we do know is that newspaper circulation during the week, Monday-to-Friday, is ebbing away. At the same time, rates of traffic to our sites are increasing. So there’s an obvious correlation between the two, but we actually can’t put our finger on it.

How much is spend moving in the same direction?
Again that’s a very difficult question to unpick. The newspaper industry is going through a structural and cyclical change at the moment.
Obviously, the recent recession has meant that advertising money has moved away from classified advertising, especially. The classified migration is a structural migration, as money goes online.
The cyclical events are more the ebb of display advertising, but that’s going to come back at some point. We are already seeing in the UK that our year-on-year figures are going to be pretty flat. That’s on a pretty rubbish year last year, so it’s not time to break out the Bollinger just yet, but what we do know is that advertising revenues online are in double-digit growth. It’s hard to say how much of that is migration and how much is new business. I think it’s fair to say that a lot of classified revenues are going and will go forever, and will be replicated by cheaper mechanics of doing the same job online.

How can publishers capitalize on this movement of readers and spend?
You have to accept that you are in a revolution. Being in a revolution implies certain things. The first thing is: You can be in a revolution and not know you’re in one. When we started Guardian.co.uk back in 1996, we didn’t know we were starting something that was going to revolutionize our business. Neither did our competitors. There were a few thought leaders at the time who were saying this, but we didn’t know it; it wasn’t received wisdom.
The second thing is that the nature of revolutions is you don’t know what’s going to emerge on the other side, which implies that you have to do a lot of experimenting and be prepared for a lot of different outcomes. That’s one of the things that’s enabled us to build this fantastic thing, Guardian.co.uk, with 36 million unique users throughout the world. It let us move from being the ninth biggest newspaper in the UK to being the second biggest English language newspaper in the world [after the New York Times].
My third point is: You don’t know when this revolution will end, so you’ve got be prepared for a range of outcomes. Experiment, because you just don’t know what’s going to happen.

What sort of experiments have you done?
I can tell you an experiment that didn’t do much for us, though we thought it might. Guardian 24 allowed you to download stories scraped from our sites automatically over a number of different areas, and print them as a PDF. It was our way of trying to enter the London free newspaper market but get our readers to pay for the paper and the ink and not have to pay for distribution. It was an interesting thing to do, but it didn’t really work. Not many people did it.
A great thing we’ve done recently that has worked is an app that enables you to consume Guardian content in a way that is customized and optimized for the iPhone. You can only get that beautifully designed, optimized and customized thing if you download and pay for the app. The app costs £2.39. More than 100,000 people have downloaded it in two and a half months.
We’re really pleased with that; that was an experiment that worked. £250,000 is not going to change the face of newspapers, but it’s 100,000 people who have chosen to pay for an optimized version of my content.

Did Guardian.co.uk ever charge for content?
It had registration. And you could pay for an ad-free version. It was a long time ago that we binned it. It was about £25 to £30 per year. We got something in the order of 2,000 or 3,000 people who did it. Only 2,000 or 3,000 people a year were prepared to pay £25 or £30 for an ad-free version of the Guardian, proving how little resistance to advertising there is.

How big do you have to be to make money online?
You need to be big enough to have a credible conversation about scale with advertisers. I don’t know how big that is, but I guess in the UK that means magnitudes in the order of millions.

Can paywalls work?
They are going in the opposite way to the natural traffic, the natural flow of digital, which is all about mutualization, about increasing scale, about building communities.
We don’t think the paying-for-content mechanics work for us. That’s not to say it won’t work for Murdoch. He’s got a bigger spread of different properties (he’s got Sky, Fox, Penguin Books). I don’t know how they are planning to charge for content, but I am sure it will involve some very clever packaging by the very clever guys who work at News International. And if he does turn it round, if he makes it work, then we reserve the right to change our mind.

What will News International’s paywalls mean for you?
It’s going to be an interesting time for us because it’s obviously no secret that if Murdoch starts charging for his sites in the UK, then what happens to our traffic? It goes up. We can monetize that. And gain influence. And reach out to different people. And build our communities. So it could be a very interesting time for us.

Mark Finney’s top tips for a successful news Web site
• Build communities.
• Encourage interaction.
• Experiment.
• Experiment. I’ve got to go and cheesily say that twice, but experiment, experiment, that’s the really crucial thing.
• Invest in journalism. That’s probably the single biggest thing we’ve done. Now we’re all a kind of integrated company across the Guardian, the Observer and Guardian.co.uk, but for a time, before we were integrated, for a long time we had more journalists working for us than any of our European competitors. At that time we had a team of around 100 journalists.
• Be flexible enough to redesign your site around the way people are consuming your content. That was the thing we did partly by skill, but largely by luck. When we started up, when our competitors were trying to replicate their print newspapers online, and we did something that wasn’t the most beautiful looking thing, at least it was already trying to optimize content for the way people consumed it.