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Why the Guardian is launching a digital edition in Australia

The launch of the Guardian‘s digital edition in Australia is a milestone in the development of our global ambitions. It also illustrates the opportunities and challenges facing a newspaper industry that is undergoing a period of dramatic upheaval, brought about by rapid technological change, exacerbated by the current difficult macro-economic environment.

In the last ten years, the Guardian has moved from being the ninth most read newspaper in Great Britain to an online presence that makes it the third most read newspaper website in the world. Over the same period, print circulation has declined inexorably and, with it, print advertising revenues; this trend will continue.

At Guardian News & Media, we have a tradition of leading the way in digital. Our ‘open’ approach to journalism, which seeks to engage our readers in a much more collaborative relationship than traditional print journalism is able to do, is hugely popular with forward-looking individuals who are curious about the world and embrace technological change. This progressive audience leaves the Guardian particularly well-placed to develop its global reach; it is also very attractive to advertisers.

However, the real challenge is to find a business model that supports the transition from print to digital – and the reality is that no one has yet been able to do this, not least because we are all still working hard to define exactly what a newspaper actually is in the digital age.

While print still generates the bulk of our revenues and will continue to do so for some time to come, it is clearly in significant decline. The business model, which was unchanged for over forty years, has been totally disrupted through online replacement, and the Guardian, which relied so heavily on classified advertising, was particularly affected. Traditionally, newspaper organisations have not only created the content but also controlled the means of getting it to the consumer. That process now belongs as much to Apple, Google, Facebook and Twitter as it does to us. That is why embracing social media and being open is so important – if you can’t get your content across these platforms or let other people link and contribute to it, then your relevance will evaporate.

But it also means that having a powerful global brand that knows what it stands for is critical to survival in a cluttered digital world – that’s been proved in the US, where a year from launch, guardiannews.com’s monthly unique browsers topped 11.8m (source: comScore,October 2012), surpassing that of BBC News, and we are confident it will be the case in Australia, where we see a gap in the market for a progressive, open and independent voice such as ours.

The Guardian comScore Oct 2012

Clearly, the overriding business task is to monetize the online audience. However, let us be clear that when we talk of ‘audience’ we still mean our readers and we must remember that newspapers have always used a blend of different funding mechanisms to extract revenues for their ‘product’. That’s why I am unconvinced by those who say that the only model that works is to build paywalls. This is not an area where one size fits all. In some news organisations where growth in readership may not be so important and in particular where there is a strong existing print subscriber base to build on, a pure paywall may make excellent business sense. The Economist and perhaps the Times spring to mind here. It also makes sense in other publications which feature business-critical information – for example, the Financial Times and, in the Australian context, the AFR.  

On the other hand, if the news organisation is about growing reach and access, then a paywall is not – for the moment, at least – the answer, certainly in a UK context, where the Guardian online faces competition from organisations such as the BBC, funded by the licence fee, and Sky, where the online business is effectively cross-subsidised by the highly profitable television business.

At the Guardian we will continue to look at, monitor and offer a blend of options, including paywalls, depending on the product we are offering. But at the same time we have to recognise that digital advertising is not yet able to fill the substantial gap between any paywall revenues and the cost of the operation – not least because advertising agencies have not yet fully aligned their spend with changing patterns in media consumption. The difference in what clients are prepared to pay to advertise in print, TV and online just doesn’t make sense as these formats merge. This must surely change in the years ahead.

But how to get from where we are today to where we need to be?  The main thrust of our strategy is to invest in our digital audience and revenue growth, while optimising the newspaper’s contribution in terms of both format and pricing and, crucially, managing our cost base to a level that is sustainable in the long term. We are extremely fortunate to be backed by the Scott Trust, with significant financial resources from our portfolio of investments. This gives us a unique opportunity to manage the transition to a digital world. However, we cannot just sit back and watch the money run out. We are in the second year of a five-year plan to reduce our cost base by £25 million. We must do this if we are to have the funds to invest in our digital future.

Alongside that transformation plan we must also constantly explore new funding models and be open to new ways of ensuring that there will always be relevant Guardian content no matter what time-zone our readers are in. That’s why the launch of our digital edition in Australia represents more than an opportunity to grow our global audience, crucial though that is – by partnering with an Australian entrepreneur and philanthropist who will provide financial support, it’s an innovative and effective way of leveraging local partnerships, investment and expertise to fund our content responsibly, reinforce our global brand and harness the full power of open journalism.