30 November 2012


Paul Anderson, Tribune column, 30 November 2012

Management and unions at the Guardian and the Observer are set for an almighty confrontation after management this month announced the start of compulsory redundancy proceedings in order to get rid of 100 journalists out of 600-odd on staff.

Guardian News and Media management claims that it needs 100 to go to save £7 million a year – and that only 30 have offered themselves for voluntary severance. After years of job cuts that have seen some 250 editorial staff leave voluntarily, management says that GNM is losing £44 million a year.

GNM journalists say that the losses have nothing to do with editorial over-staffing and everything to do with a misguided commercial strategy. Rather than getting rid of journalists, they say that GNM needs to rethink its commitment to offering all content for free online and to reduce spending on exorbitant management salaries and expensive marketing gimmicks.

The Guardian is no stranger to financial crisis. Until the 1980s, it relied on a subsidy from its sister paper, the Manchester Evening News, to cover its losses – and in the 1960s its management got so jittery that they seriously considered a merger with the Times. Nothing came of it, the MEN continued to pay the bills, and the Guardian put on circulation and cornered the market in advertising for media and public-sector jobs. By the late 1980s, after production costs (and printers’ jobs) were slashed by the introduction of new technology, the Guardian was making money. For a good 15 years it enjoyed a commercial golden age. The Guardian Media Group bought the Observer in 1993 and took over Auto Trader, the profitable used car listing magazine, then in the mid-noughties paired up with a venture capitalist firm for a leveraged buy-out of the magazine company EMAP.

So what has gone wrong? The easy answer is the internet and recession. The internet allows us all to access what news we want online for free, so we don’t buy newspapers as much. It is also how we find out about jobs (and houses and cars) and increasingly how we buy consumer goods. All this means there’s less advertising for print publications. And in a recession advertisers cut back on spending and readers buy fewer newspapers.

This is a challenging environment for all newspapers. With print advertising and sales on the slide, they need to find new revenue streams. And that is what the Guardian has failed to do.

It embraced the internet early, and by 2000 its online audience was bigger than that of any newspaper in Britain – with the website attracting increasing traffic from the US. While other newspapers tried paywalls or limited access to their print versions, the Guardian made everything free to all. The hope was that before long the site would attract sufficient online ad revenues to make up for any fall in sales and print advertising.

But the online advertising has not materialised – or at least not in sufficient quantity. At which point, you might think, the old adage “If you’re in a hole, stop digging” might come into play. Not a bit of it. The Guardian management has stuck to plan A – pour money into online in the hope that web advertising comes to the rescue – with messianic zeal, declaring its strategy to be “digital first”, pouring cash into a new US office in an attempt to establish the Guardian as a genuinely global brand and embracing what editor Alan Rusbridger calls “open journalism”, roughly speaking the idea that the barrier between journalists and reader-contributors will be broken down by digital interactivity.

Its commitment was epitomised by its vastly expensive TV advertising campaign earlier this year, an animation showing a zippy online Guardian awash with user-generated content retelling the fairy story of the three little pigs. Much praised by the ad industry, it had no effect on print sales, but that didn’t stop the man behind it, David Pemsel, being taken on as GNM’s commercial supremo this autumn. Meanwhile, the message from the Guardian to advertisers remains that its online reach is stupendous – but advertisers just won’t pay very much for digital ads.

Of course, GNM needs to stop haemorrhaging money. But getting rid of journalists really isn’t the best way to do it. The work they produce is the main reason people buy the Guardian and Observer and visit the website – not the user-generated content or the dating agency or the coolness of the brand or the interactivity of the mobile apps. I’m not surprised that they’re up in arms and demanding a plan B.

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