The Guardian’s parent company now earns more money from its digital operations than from its print newspapers for the first time in its history, aided by increased support from readers making online contributions.
Guardian Media Group (GMG), which also owns the Observer, said it had a total of 570,000 members who give regular financial support to the organisation, up from 500,000 at the end of last year. Income was further boosted by 375,000 one-off contributions from readers in the past 12 months.
The company said Guardian News & Media Limited, the core business that is publisher of the Guardian, was still on track to break even on an operating basis by the end of the next financial year, having undertaken a radical turnaround plan. GNM’s operating losses fell by two-thirds in the last two years, from £57m to £19m.
The company’s annual report, which covers the 12 months to April 2018, shows the Guardian website attracted an average of 155m monthly unique browsers, up from 140m the year before, with an increased focus on retaining regular readers rather than chasing traffic by going viral on social networks.
Digital revenues – which include reader contributions and online advertising income – grew 15% to £108.6m, as income from the print newspaper and events business fell by 10% to £107.5m.
The company has undergone several rounds of voluntary redundancies, helping to cut staff costs by £10m a year during the period covered by the annual report.
“The only reason ever to justify any reduction in headcount is to get to some kind of sustainability,” said the GMG chief executive, David Pemsel. “When you were losing the sort of money we were losing historically, combined with the challenges in the advertising market, and structural decline in readership, that legitimises trying to make sure the headcount is at the right level.”
The company has also made savings by switching its print newspapers from a Berliner format to a tabloid and outsourcing its printing facilities.
Pemsel said the Guardian’s print circulation, which stands at 138,082 a day, was “less bad than forecast” and insisted the company’s newspapers remained “a critical part of what we do”, even though print advertising now constitutes less than 10% of the group’s annual revenue.
“Because of the structure of our business and our long-term financial forecasting it allows us to retain print for as long as our readers value it,” he said. “We made the big decision to switch from the Berliner to the tabloid to save that money. People value it and you keep going until they don’t value it.”
Pemsel said he had been advised to put up a paywall when he started developing the company’s turnaround plan with the editor-in-chief, Katharine Viner, but said the Guardian’s contributions model had created a “third way to pay for quality journalism”. This has been aided by the Guardian’s Australia and US websites, which are considered critical to the company’s mission and have seen substantial increases in reader revenue over the last year.
Pemsel also said the company focus was on the Guardian’s 10 million regular online readers rather than chasing online traffic by partnering with the likes of Facebook Instant Articles or aggregation services such as Apple News.
“We went from being the ninth largest newspaper [in the UK] to being the third largest in the world,” he said. “We ended up trying to get bigger at any cost and celebrated just getting bigger and bigger. The danger of just chasing reach is you lose sense of the fact that these are just individuals.”
“Our future is dependent editorially, commercially and financially on those 10 million people.”