Is the Guardian’s turnaround strategy destined to fail?

The Guardian has set its sights on breaking even next year but can its membership schemes and pleas for cash work, or will it be forced to forego its commitment to quality journalism?

Despite increased revenues from its digital advertising and membership schemes, which rose 15 per cent to £94.1 million in the year to April 2017, the newspaper publisher is reported to be considering a paywall plan B. At this point in its three-year turnaround plan, this could be an early indicator that its current strategy is unlikely to succeed.

After reporting some significant financial losses in recent years, the Guardian has been striving to position its brand as a ‘protector of quality journalism’ but readers are now being challenged to pay for content by making a cash donation. A precedent for paid-for journalism has already been set by the FT and The Times and Sunday Times, but it remains unclear whether this model would work for the Guardian.

The world of journalism has diversified massively in recent times. Consumers have an array of media outlets to choose from offering everything from independent, authoritative content produced by a dedicated team of professional journalists to more populist, user-generated content, out-sourced from social media channels based on current trending topics.  Within this spectrum, the Guardian Media Group is pitching its offerings at the more high-brow end of things, but will its content meet consumer expectations?

Reports that the Guardian could be considering the introduction of a paywall, if only as a plan B, suggests that the publisher wants to hang on to the integrity of its editorial at all costs. The thought of slipping down the value chain and publishing content according to its online pull factor, is probably a step too far. However, some modifications will be necessary to ensure its operating model is sustainable.

Falling advertising revenues and rising costs affecting the price of newsprint, for example, mean media publishers are facing a perfect storm. There is an urgent need to reduce operating costs whilst continuing to provide products that consumers are willing to pay for. Despite a swing in favour of digital media, some publishers are sticking with their printed offerings because of the stronger advertising yields they generate and some digital-only models have struggled to turn a profit. In the meantime, demand for printed media, while drastically reduced, is showing signs of bottoming out.

If the Guardian wishes to continue with both its online and printed formats, it will need to find novel ways to engineer value by adapting the organisational structure of the business. As well as outsourcing its print solutions to Trinity Mirror and merging advertising sales with News UK, it could also consider mixing up its approach to content generation by including some sponsored or outsourced content alongside its core offering.

While it may not be a palatable thought, taking this approach could also allow scope for internal restructuring. Staying open minded to diversifications and collaborations, whilst focusing on delivering a high-quality offering, will be key to the publisher’s survival.

Upholding the virtues of quality journalism is one thing, but without a pragmatic and sustainable approach to reducing cost and finding new ways to engineer value, the Guardian’s outmoded business model could be on dodgy ground.

Ben Bird is the director and media sector specialist at supply chain firm, Vendigital.

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