GMG releases full year profits

July 31, 2009

The Guardian Media Group (GMG) has published it’s financial results for 2008-2009.

With a turnover of £405.4 million, it would appear GMG is managing to weather the financial storm – but it also had pre-tax losses of nearly £90 million, having turned a profit o £306.4 million in 2008.

Amelia Fawcett, Chair of GMG, said

“While declining revenues were a factor in our financial performance, the reported loss is also due to the restructuring of the portfolio over the last two years – specifically the partial sale of Trader Media Group and investment of the proceeds in long-term assets

The Guardian webste is still a source of pride for GMG:

During the year achieved a record audience of nearly 30m unique users. It is now not only the UK’s largest newspaper site but also one of the biggest in the world.

GNM’s aim is to emerge from the economic downturn a leaner and stronger organisation: leaner due to a bottom-up reappraisal of the cost base to ensure it is affordable; stronger because it will continue to invest in its journalism and in maintaining its market-leading positions.

Despite this, Guardian News and Media made a loss of £36 million. However it is local and regional press, unsurprisingly, that is suffering the most. The results reveal that GMG is in fact operating these publications at a loss for the last six months:

GMG Regional Media’s operating profit declined to £0.5m (2008 £14.3m) on turnover of £94.5m (2008 £120.5m). This steep decline was driven by a 30% fall in classified advertising revenues. Recruitment fell by 34%, motors by 16% and property by 46%. Display revenues slipped by 7%.

As reported by how-do, which reports on the media industry in the North West, the drop is classifieds has been significant for GMG.

The Guardian is the advantageous position of not being required to turn a profit, thanks to it’s ownership by the Scott Trust. It has been suggested that one of the survival routes for newspaper journalism is to be administered by charities or philanthropic organisations, rather than aggressive companies. The journalism still has to be paid for, but is free experiment more widely and undertake some projects at a loss.

Umair Haque on charging online and a new business model

July 29, 2009

Via the Online Journalism Blog, Umair Haque, Director of Havas Media Lab, has a post on why charging online won’t work for papers, and why ‘nichepapers’ are a viable root out of the financial crisis for those wishing to provide news:

Nichepapers are different because they have built a profound mastery of a tightly defined domain — finance, politics, even entertainment — and offer audiences deep, unwavering knowledge of it.

Nichepapers aren’t a new product, service, or business model. They are a new institution. They’re a living example of the institutional innovation that is the key to 21st century business. They’re not the same old newspaper, sold a different way. They are 21st century newspapers, built on new rules, that are letting radical innovators reinvent what “news” is.

Nichepapers are the future of news because their economics are superior. All the Nichepapers above are “real” enterprises, with staff, offices, and fixed and variable costs. Nichepapers offer more bang for the buck: greater benefits for far less cost. Readers get more, better, and faster content — while publishers realize lower capital intensity, lower distribution, marketing, and production costs, and less risk. What is different about them is that they are finding new paths to growth, and rediscovering the lost art of profitability by awesomeness.And that’s really the point.

Profitability can’t be recaptured from a commodity. Newspapers used to be yesterday’s most profitable industry. Warren Buffett made his fortune by investing in newspapers, yesterday. Yet, today, business model innovation, aka “monetization,” is the surest, quickest path to self-destruction. Charging once more for the same old “content” — as argued for by David Simon, in an impassioned CJR article — will inevitably lead newspapers exactly where it led banks investment “banks” and automakers: into economic implosion.

To reinvent the buying and selling of news, it’s necessary first to reconceive the making of news. The AP’s latest attempt at business model innovation, for example, is a heavyweight “rights management” system for the same old stuff. But protecting yesterday’s “product” is exactly what prevented the music industry and Hollywood from rediscovering the art of value creation.

Haque provides a convincing case: why is it, for example, that local papers give over a decent amount of their pages to national news, which their readers will be getting elsewhere and in more depth? Instead, as nichepapers, they could concentrate on covering those issues and areas which are neglected by other media. Does anyone really buy their regional daily to read about goings on in Westminster and celebrity gossip?

Of course, and this becomes clearer when exploring Haque’s whole post, he is not really talking about a print product. But ‘nichepapers’, especially in the form of hyper-local papers with smaller staff, a more active community and coupled with relevant, localised advertising, could well be a successful, new business model for local papers.

Observer abandons TV guide due to falling revenue

July 28, 2009

From, news that the Observer has stopped printing it’s TV guide, and is facing a backlash from readers. This is Stephen Pritchard, reader’s editor:

The figures are stark. With advertising revenue set to plummet 26 per cent this year and circulation down 6.9 per cent on last year, the Observer, like other newspapers, is having to make painful decisions about what it can afford to print. Loyal readers have displayed remarkable forbearance recently as the news, business and sport sections have gradually slimmed down but they could contain themselves no longer when the TV guide disappeared.”

I’ve always been a greater fan of Saturday Guardian’s pocket-sized Guide, but that’s not quite the point. What other supplements will the Sunday’s be cutting back on in an attempt to reduce print costs?

New York Times surveying on charging for content

July 28, 2009

In addition to The Times asking readers whether they’d pay for content, all be it in a very small, subtle way, the New York Times is also surveying it’s readers on charging for content. In an article which also mentions the possibility of Disney, and charging online, Bloomberg mentions the NYT:

“New York Times said in a survey of print subscribers this month that it’s considering a $5 monthly fee for access to its namesake newspaper’s Web site. The company also asked whether existing print subscribers would be willing to pay a discounted fee of $2.50 a month for access to the site., the most visited among newspapers’ sites, is currently free.”

£5 a month actually sounds vaguely reasonable, and would perhaps be prolific enough to overcome the link economy – would a large enough group of people have subscriptions due to the website for linked to material not be consistently hidden behind a pay wall?

But in reality, it would probably have a detrimental effect, especially on an international website where those outside the USA would have no option but to pay the full $5. It would be interesting to see what the potential revenue would be, bearing in mind also the effect it would have on web ad revenue and print subscriptions.

Hat tip: jeffjarvis Old media moguls never die. They just keep threatening to charge.

Online poll and the Times Online charging on ‘The Bugle’

July 28, 2009

As reported by Media Guardian, ‘The Bugle‘, which is Times Online’s satirical podcast, asked how much you would be prepared to pay for access to it each week, followed by an online poll.

Coming on the back of Murdoch’s determination to start charging for content, it makes one wonder whether the Times is sending out feelers to its users regarding paid for material.

You should be able to see the poll below:

This gives me an opportunity to plug my own online poll, with all of six questions about how much you’d be willing to pay for content (and what content), and your current charging for-content-habits (if you have any). Here’s the link on Survey Monkey, it’s only take two minutes so have a go!

New ABCes figures on newspaper websites

July 28, 2009

The Audit Bureau of Circulations Electronics published their new rankings of newspaper websites for the month of June.

Obviously, the higher the number of website visitors, not to mention the amount of time they spend on the site, what they click through on and what features they use, will have an impact on online revenue through advertising.

The Daily Mail was first, with 29,373,379 unique users, an 83% boost on June last year. The Guardian was second with 28,966,942, with the Telegraph a bit further behind on 27,175,233.

The Independent, whose website is widely regarded as a big step down from its competitors, actually suffered a drop in unique users last month, at 9,352,369. However, it still gained a year-on-year rise.

These figures do not tell the whole story by no means – the differing business strategies mean that more users don’t simply translate into higher web revenue: it will depend on many adverts, how much is being charged, how smart that advertising is and whether the websites are charging for any services.

Lionel Barber, Financial Times Editor, on charging for content online

July 28, 2009

Lionel Barber, who has editor of the Financial Times knows a thing or two about a successful business model which allows a paper to charge for online material online, has predicted that ‘almost all’ news organisations will, within a year, be charging for content online.

Speaking at a Media Standards Trust event, Barber said that:

“…we must go back to first principles and make the case for journalism. This is partly because the recession and the Internet are undermining the business model that has sustained news gathering since the late 19th century. The worldwide web has disrupted revenue streams and dramatically lowered the barriers to entry to the news business. As the Economist noted: “The business of selling words to readers and selling readers to advertisers, which has sustained their role in society, is falling apart.”

‘Disrupting the revenue streams’ makes the Internet sound like an inconvenience to the news industry, rather than an unparalleled opportunity which they can’t very well prevent regardless.

Peter Preston is less certain than Barber about what line the great newspaper giants will fall on when it comes to charging for content

The [New York] Times, which invests so much in content, may be able to charge successfully for some or all of it. But its unique user count (see Ken Doctor’s warning) is bound to decline, taking online advertising down with it. If there was a widespread, concerted change, then perhaps it could be contrived without too much loss. But current monopoly law makes such an organised commercial shift impossible.

Marks Potts thinks that readers won’t pay, simply due to the poor quality and lack of diversity on newspaper websites:

Most newspapers and their sites are full of content that’s widely available elsewhere—wire copy, stories covered by competitors, etc. In the flattened world of journalism in the Internet era, where monopolies are shattered and readers are a click away from countless alternatives. it’s just too easy for readers to look elsewhere—especially if you stick a pay wall in front of them.

Think newspapers are full of unique content? Well, sit down some day with a copy of just about any paper and circle what’s truly unique and unavailable anywhere else. The result isn’t pretty. Do the same thing with the paper’s Web site, and you quickly realize that the problem is compounded by presentation that just isn’t very compelling, to put it charitably.

Now, misguided, desperate leaders like the FT’s Barber somehow think the answer is to somehow convince readers to pay for something that, sadly, doesn’t have enough value to justify charging. Readers are smarter than that, and that’s why Barber’s notion that “almost all” news sites will soon be charging for access is a hopeless dream. Sure, they may charge—but readers won’t pay, at least not in anything resembling sufficient numbers. Not unless they see significant quality and value. And based on the current track record, there’s no reason whatsoever to believe that will be the case.
Jeff Jarvis is, unsurprisingly, almost desperately unsympathetic:

In what other industry do companies feel entitled to revenue just because they used to have it or they think they deserve it because of who they are?

But newspapers think that companies that served their customers better – Google or craigslist – owe them money because they lost those customers for serving them badly and ripping them off for years.

Of course, Barber and his paper are in a rather unique position, seeing as how they are afford to charge for content. They have a rich client base who require the unique financial information which, along with the Wall Street Journal, they provide. So Barber can state that:

‘figuring out what is special, distinctive and original is the vital first step. The second is to establish an online platform capable of charging for content, whether on a payment per article basis or a package subscription.

But few papers are in a similar position: and being the only paper to cover say, a small market town isn’t enough of a unique base. Peter Preston evaluates the options for some of the main national papers:

“The Telegraph, with a huge print subscription base, has one set of possibilities. The Express, with no subscriptions and not much of a website, has none – except price-cutting and seeing its print possibilities grow. The Guardian, leading the unique user pack, has advertising possibilities to lose if its user count slides too much in a charging switch – but jam the day after tomorrow doesn’t help if the teacake is burning today.”
With any luck, someone will call on Barber in 12 months and see where we are. But editor of the FT is a privileged position to make such pronouncements from.