Sun. May 22nd, 2022

The Guardian is to test a paywall on its news app in the latest move to re-engineer the liberal publisher’s business around reader payments while attempting to remain committed to free-access journalism.

While the Guardian will keep its website open to all, the media group will later this month start demanding a fee from a sample of regular news app users as it explores the best pricing approach to put the entire app product behind a paywall.

The measure caps a seven-year journey for the Guardian’s leadership, moving from outright hostility to paywalls under former longtime editor Alan Rusbridger to relying on subscriptions and contributions for the majority of revenues under his successor Katharine Viner. One long serving journalist described the transition as welcome but “surreal”.

The Guardian last year joined the small group of news publishers with more than 1mn digital subscriptions, but on a unique model where most of its “supporters” voluntarily contribute at least £ 5 a month for free-to-read news.

Enders Analysis estimated reader subscriptions, covering print and online, now account for more than 60 per cent of the Guardian’s total revenues, marking “the most positive turnround in English-language news provision”. Half the Guardian’s paying readers are outside the UK.

But underlying tensions remain over the Guardian’s commercial strategy and governance. These boiled over last summer when Annette Thomas abruptly quit as chief executive of the Guardian Media Group after losing an internal power battle with Viner, the Guardian’s editor since 2015. Thomas’ successor has yet to be appointed.

The Scott Trust, the Guardian’s parent company, has long subsidized the Guardian’s newsroom operations from an endowment valued in 2021 at around £ 1.1bn. The sustainability of the model was put into serious doubt in 2016 when Guardian Media Group slid to a record pre-tax loss of £ 69mn on revenues of just £ 210mn.

Viner led a turnround plan to cut costs by a fifth, in part by shedding around 450 jobs, including 120 journalists. This helped the Guardian reach its first operating profit in two decades in 2019, with positive earnings before interest, tax, depreciation and amortization.

However the Guardian’s business remained cash negative, relying on the Scott Trust to help manage net outflows, which fell to a low of £ 16mn in 2021. The Scott Trust signaled in a governance review last year that it wants to now focus “on long- term investment ”in the Guardian rather than“ meeting short-term funding requirements ”.

Staff were told last month that stronger digital advertising and reader revenue increased the Guardian’s overall revenues from £ 225mn to more than £ 250mn in the twelve months to the end of March, its highest level since 2008.

Significantly, the Guardian Media Group has returned to a positive cash flow position for the first time since it began selling AutoTrader around 15 years ago, according to one person familiar with the figures. The Guardian’s audited results for 2021/22 have yet to be released.

The Guardian currently runs a free app alongside a paid version, which includes more functionality. The paywall test, which will be “metered” in price according to the user and region, paves the way for a single paywalled app product around the world.

The Guardian said that its journalism “remains entirely free and open to all on the web, regardless of ability to pay”.

“In the coming months we are going to test a metered version of the app as part of our wider product strategy,” the company said. “Our readers know that by supporting us, they are not only helping to pay for impactful journalism they can trust, but they are ensuring journalism can be read for free on the web.”

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