Why the Guardian Doesn't Need a Billionaire to Thrive

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1:10From the Vox Media Podcast Network, this is Channels with Peter Kafka. That's me. I'm also Chief Correspondent at Business Insider. And today we're talking about how you deliver news to a giant global audience without making a profit. That's because I'm talking to Anna Bateson, the CEO of Garden Media Group, which is a nonprofit. We spend a lot of time on this show talking about media business models, the pros and cons. The Guardian is one I know people think about a lot. Free, big scale, primarily reader supported. And as we discuss here, there's a lot you can learn from The Guardian's success.

1:47And there's also some things you probably can't replicate, like a$1.5 billion trust that ensures that if you want money for growth or if you need money because things aren't working, you have a real safety net. but better to let you hear it directly from the source. So here's me talking to The Guardian's Anna Bateson.

2:09I'm here with Anna Bateson. She is the CEO of The Guardian. Welcome, Anna. Oh, well, thank you for having me. Thank you for coming to New York to the studio. You're here because you want to sell ads. That's correct, yes. We'll talk about the business model of The Guardian, but let's remind people that you're in the business currently currently of taking money from advertisers to show people content? We are, although I would say that we are properly diversified now, which is we do have advertising, and advertising is a very important revenue stream for us. But a much bigger revenue stream now is our reader revenue model.

2:46And increasingly, licensing is another third sort of revenue stream. I've done a terrible podcasting job by jumping us into the middle of the conversation, We'll get there. So for the few people listening to this podcast who don't have a good sense of The Guardian, maybe they know it's English. Maybe they know it's kind of left to center slash progressive. Give us the billboard pitch for The Guardian today. We are 204 years old. We originally started in Manchester in England. And then we moved to London, I think, in the 70s, 60s. So, yes, we are. Our roots are in England. But we are now a global news organization.

3:27We are the fifth biggest news site in the world. We have audiences all around the world. We have three big offices in Australia, in the UK, and in America. Big global news organization, real reach, not for profit. Not for profit. Not owned by a billionaire. Not owned by a billionaire. No, we have a very distinctive ownership structure, which is we are owned by the Scott Trust. So absolutely no billionaires, no shareholders. No one knows what the Scott Trust is. No one knows what Scott Trust is. And that's fine, by the way. I don't think anyone should know what the Scott Trust is. The Scott Trust's only existence really is to own and look after the Guardian and ensure that we can continue to do journalism.

4:09Roughly, it's about a billion and a half dollars in that trust? Yes. And so that's sort of your baseline slash safety net. It's not supposed to fund the operations, but if you need to tap it, you've got it. It's there to ensure that we can invest really in journalism for the long term. So it's not meant to be a sort of trust fund that kind of pays for our operational costs, but it does allow us to think long term and it does allow us to be very clear about what our purpose is, which is to be a journalistic organization. For the last decade or so, I've been talking to people about business models on this podcast, and a lot of the business models were owned by a billionaire or hope a billionaire buys us.

4:50And we've seen in the last few years the downside of billionaire ownership. So you guys kind of have the billionaire ownership without the billionaire. Correct. I mean, 10 years ago, we were in really quite a lot of trouble. We were, I mean, as everybody was at that point, I think, searching for a new business model because advertising was in decline and print revenues were in decline. And we were losing a lot of money at that point. And over the last 10 years, we have essentially turned it around by sort of building out this reader revenue model really around the world. And so, yes, we now have the privilege, I guess, of having a billion plus behind us, but without a quixotic or kind of interventionist billionaire owner.

5:35And yeah, it's not someone who's going to get married and change their perspective or decide that actually COVID was a hoax or whatever it is. And who is a Guardian reader in the U.S. versus the U.K.? Guardian readers in the U.S. are interested in global perspective. They're interested in independence. They're interested in the fact that we are able to have an open model. So we are, you know, broadly accessible. They are actually much more, I think, mixed in their sort of political affiliation and interests. Is that because they're finding you guys more often via search as opposed to coming directly to you?

6:13It's a mix, actually. I mean, they do find us in search because we are open, but actually we have a sort of strong direct kind of traffic. I think it's that they are valuing this global kind of sometimes described by an outsider perspective. So I think we have a very different way of telling stories than if we were a sort of more legacy U.S.-based news organization. I'll go back to the Englishness in a minute. So let's sit for a minute and talk about the business model. Yes. So again, we've got this billion and a half dollar backstop, but you don't want to tap into it. You want to run it as a sustainable business.

6:52We would like to be financially sustainable on an operational level. And so you've got a mix of subscriptions. Subscriptions, yes, which we call support. Supports. You can call them subscriptions or donations, but it's explicitly we're a nonprofit, help us sustain this business. You've got advertising. That's why you're here in studio with me today in New York. And then sort of a grab bag of licensing. and other stuff. Yes. And roughly a third, a third, a third right now? No, actually, reader revenue is now 40%, I think. Advertising is probably about 20%. And then the balance is kind of collection of print and licensing.

7:29So you've already eclipsed reader revenue. Reader revenue has already eclipsed advertising, yes. Advertising, which is, we saw the New York Times do this again about a decade ago, kind of similar. Was that sort of what you were aiming for? Well, I mean, I'd love to say yes. I'd love to say that this was all brilliantly strategic. But actually, Reader Revenue came out of an interesting insight and moment. So context was crisis, you know, the same as we were just talking, the same sort of industry-wide crisis. What we did understand was that we had built a very substantive and meaningful global audience.

8:05So we had scale. And that audience did have a very particular relationship with The Guardian. and not least because there is this sense of independence and sort of a freedom of thought and editorial independence. And what we couldn't quite work out was how to convert that relationship with the audience into essentially revenue. And the way that we did it was we essentially experimented and we started experimenting with space at the bottom of the article. And because we had the scale to be able to have rapid iteration around what worked and what didn't work from a messaging point of view, a design point of view, a sort of call to action perspective, gradually over time, we unlocked this mechanism of really asking people for support, but not forcing them to pay because we had a payroll.

8:52So we never really sort of... You didn't set out to say, we want to be an organization that's primarily funded by readers. No, we didn't, I think. We understood that we had a meaningful audience, and we understood that if we could unlock the way of of converting that into support, there would be something substantive on the other side. But we didn't sort of, I don't think we had a kind of clear strategic idea about how to do it. So it's sort of been a process of discovery and really listening to, responding, and sort of learning from the audience and what works and what's compelling for them when it comes to asking for their support.

9:30Again, I keep thinking the New York Times just because they're an example. I mean, they're the example that everyone thinks about when they're talking about this transition from advertising support to reader support. They're explicitly for profit. They're definitely a values-based company, but that's not the pitch. The pitch is, we have stuff you want. Give us money, we'll give it to you. We have news, but also we have games, cooking, whatever it is. Can you apply that sort of bundle idea to The Guardian with donations slash non-profit? So I think there is a Guardian flavor of that model, yes.

10:09I think the New York Times are interesting because they very explicitly said they want to be a lifestyle brand. I don't think we would ever say that we want to be a lifestyle brand. But I do think that if you reflect on the nature of a newspaper, you know, a newspaper was the original serendipitous bundle. And it was a collection of kind of broadly curated journalism that when combined with design and sort of that sense of an editorial voice and perspective came together to be more than the sum of its parts. It also just had stuff in it, right? Stuff. That's another way of putting it. Maybe you didn't care about news at all, but you wanted sports or you wanted the classifieds, right?

10:45That was the main engine that kept newspapers going for a long time. And you shared it amongst your family and so different sections for different people. But I do think that, therefore, if you think about leaning into your strengths, what is it that makes us distinctive and what is it that really genuinely resonates with audiences? We resonate more broadly than news because that's our kind of heritage and our tradition. So does that then allow you to create some version of the Guardian bundle in a digital form that, again, sort of taps into the broadest possible audience because different people will respond to different things?

11:19Yes, I think it does. And when you've got an audience that is explicitly giving you money, they understand that your mission, that you're not owned by a billionaire, that you're a nonprofit. How are the mechanics of acquiring and keeping those readers different than if it was a for-profit is churn different? Do you have to spend money differently to acquire those customers? Very, you know, very good questions. I don't think the mechanics are at core different. I think they're fundamentally the same. And in fact, we've recently brought into the business someone to lead Reader Revenue who came from a subscription kind of environment and background.

11:55And so I think she has an incredibly good understanding about the underlying mechanics and data and, you know, sort of the analysis that you have to think through. I do think that there is an underlying emotional kind of connection that drives different dynamics around cost of acquisition. and I think then gives you quite resilient sort of retention. And so I think our churn mechanics probably are a bit different to a sort of very transactional subscription business. You think you've lowered churn than a Times or another for-profit? I don't know about the Times. But then a for-profit? Yes. And I also think we don't really discount because it's sort of if you don't have such a transactional kind of proposition, discounting is a different sort of...

12:37So you're not bringing in people for a dollar a month and going to 25. And therefore, they're more likely to churn when they hit a kind of more expensive, you know, plan. It's something very interesting at the moment because if you think about it, we are lapping a year of a very big sort of, you know, series of acquisition moments around the election and, you know, kind of the Washington Post deciding not to endorse, etc. So, I mean, we're watching churn here in the U.S. kind of very carefully. And so far, it's proving to be lower and it's proving to be very resilient. But it's an interesting dynamic.

13:12Once you bring people in, can you kind of keep them because they care? After the election last year, there was a lot of prognostication about whether we'd see another Trump bump that lots of publications saw in 2017, 2018. And a lot of, no, they're not going to do that. People are sort of burnt out. In fact, they're burnt out on news in general. How does your audience behave? So we are not seeing that. It was very interesting in the run up to the election and in the immediate aftermath of the election that we saw incredible waves of acquisition, sort of this kind of emotional outpouring of the desire to support the journalism.

13:48Then there was definitely a lull and it felt as though people were exhausted by the cycle. But really, since then, I mean, you know, look at the news agenda and look at the sort of, you know, kind of the what people are kind of reading and consuming and relating to. And we've seen – actually, we've seen waves of sort of support on the back of the response to what's happening in the world. One of the things people talk about with the subscription model is this idea of customer audience capture, right? Where sort of you have an audience. They've come to you. They're giving you money because they expect something.

14:24And often if you're giving them something different ideologically than what they thought they were going to get, maybe they're going to be upset. So maybe you're creating stuff for them and you end up in this sort of loop. You guys, again, explicitly nonprofit, explicitly center left slash left. How do you think about – you're not running the content. You're on the business side. But, I mean, I'm sure that's a discussion you guys are constantly having. Yes, it is a discussion. And, you know, at the heart, there could be tension between explicitly campaigning messaging and the fact that editorial is independent and editorial kind of, you know, needs to be led by journalistic intent and integrity.

15:02And so I think that there could be tension between that. And we have to be thoughtful about that of not compromising editorial. I think the very clear sense that ultimately you'll be facts led and based. We're not, you know, and we're not going to ever compromise those values with the sort of fact that more explicitly sort of resistance like or campaigning messaging might be more effective when it comes to acquisition. and we would always go be led by editorial values. So that's about how you acquire it, right? So we're not going to tell you that we're doctrinaire anti-Trump, but it could be. The same would, I think, apply to this.

15:41If there was any sense of would we explicitly kind of lead our editorial because we think it's what our audience is looking for? And the answer is no. And that's, you know, very much the, it's a very important underlying, I think, principle for editorial. I think another way of thinking about it is if you end up covering something in a way that is truthful and accurate but is not what your readers want to believe, right? You could imagine it's about the environment or Gaza or anything. And again, we saw this a lot, again, focused on the Times. How dare you write the headline this way or why won't you say President Trump lied?

16:15You sort of find these euphemisms for it and they get whipped up about that. And that's not so much – I think that's sort of a long-term thing that doesn't go away. But I'm assuming you guys have the same thing. Yes. I mean I think we definitely see an outpouring or a response to certain articles or to certain sort of – if you are not kind of delivering messages that I think readers are comfortable with. um however i we haven't seen the same levels of of sort of reader anger or disillusionment that perhaps some other people have seen and and i and i do think that probably comes back to while we are i would say progressive and and i would use progressive in a sort of british way potentially more than than an american way i also tell me what the british way means i just i think it's gentler it's kind of you know it's sort of not an epithet no yeah exactly um i i think we are very you know we stand very firmly by um both our independence from an editorial perspective but also the fact that we are a pluralistic organization so we will and have always you know believed that you should be able to kind of hold you know divergent viewpoints and and opinion pieces and that part of the ability part of your relationship with your audiences is you're trying to give them the kind of the tools and the information to navigate complicated issues.

17:42And that requires kind of creating space to have divergent and disagreeing perspectives. And you've kind of referenced this, but the campaign you guys are, if you're in New York, I assume in other parts of the country, you've got to, in the US, you're trying to acquire readers and donors again. And it's explicitly not a fight back against Trump campaign. No, global, independent and free. And they were very deliberately chosen. And the other thing, of course, about the campaign is it uses the line that came from an original Guardian advertising campaign in the 80s, which is the whole picture, which I think speaks to exactly this point, which is it's about perspectives.

18:21It's about plurality. It's about only really being able to understand complicated issues if you have this sort of, you know, this variety of perspectives about them. And that's a really important principle and I think piece of The Guardian. We'll be right back with The Guardian's Anna Bateson, but first a word from a sponsor.

18:47years ago, Netflix said that its main competitor wasn't some other streaming service. It was sleep. And maybe that explains why all of a sudden Netflix has games. It has tons of reality shows. It has video podcasts. And maybe going forward, it even has YouTube videos. This week on The Vergecast, we try to figure out what Netflix is going forward and whether it's still a streaming service we want. plus the future of smart glasses, what's going on with quantum computing, and yes, we have a drunk phone. All that on the Vergecast, wherever you get podcasts. It all started with Call Me Maybe. Over 10 years ago, we created Switched On Pop to Listen Closer, uncovering the song craft behind even the glossiest of pop hits.

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20:46Now, wait, wait, wait, you can't just walk away on that. Tell us why. I know it's still early to talk about 2028, but as we build to our post-Trump future, it seems to be a big question about the Democratic Party. Kamala Harris leads all of the presidential polling. So does this mean that the person who led the ticket in 2024 is going to lead the party again in 2028? The campaign needs to be called Bye Bye Bye. It's just a tainted brand. Do you think from a donor community largely that there's any appetite for a Harris return? I don't. I'm Estet Herndon, and this is America Actually. Catch us every Saturday on YouTube or wherever you get your podcasts.

21:31There is still in lots of parts of this country real anglophilia and people really are impressed with an English accent. Really? Yeah, yeah, yeah. And I'm not so much, because my dad. Oh, well, shame. He's British, so I've gotten over it. But that is not part of the branding campaign either. We're from Britain. We see things differently or we're more sophisticated. I assume that is intentional as well. Very intentional. And in fact, it's very much part of the campaign, this global perspective. And that's both borne out, I think, of editorial insight, of actually, you know, what we see that resonates and what has built over the last 20 years as we've built a kind of global audience, but also operation.

22:15But also, I think we've worked quite hard to sort of have roots, which are, you know, we're very proud of where we come from and our history is very important. But at the same time, I think you have, there are certain stories where you tell them from a perspective that's sort of broader than a UK perspective. And I do think that that's what makes our editorial distinctive and different from sort of some others who are also reporting on a global level, but do either come at it from a very UK perspective or indeed from a very US one. And you guys are building out your operations in the US again, right?

22:54Yes. More reporters on the ground. It's not the first time you guys have tried to sort of break into the US. It hasn't worked previously. We've had various waves, I think, of investing and then pulling back and investing again. The real thing that's changed – well, there are a few things that's changed. Why didn't it work? Again, terrible job of podcasting. You've CEO since 2022, but you've been in and out of The Guardian prior to this. Yes, since 2016. You've got a long run here. And I think – well, I think that The Guardian was less sure, I think, about its place in the U.S. originally. I think it probably came in, and this is kind of 15 years ago, it came in trying to compete with very established U.S.

23:34news organizations. And actually, it just turned out, as many Brits discover, you know, you're a very big country and you've got some very effective and, you know, sort of storied, you know, news kind of papers and organizations to kind of compete with. So I think it had less of a sense of why are we here? You know, what's the purpose of being here and what can we offer to audiences in the U.S.? And, you know, originally we were very dependent on advertising. And, you know, as discussed, that already 15 years ago was a broken model and the digital advertising was never going to be sufficient. So the thing that's been transformational is the unlocking of this reader revenue model, which then sits alongside advertising.

24:15And suddenly you have a substantive enough business to maintain the kind of news operation that you need. And so tactically, are you doing this differently than in the past? Do you hire a different kind of editorial? Do you have a different focus? So I don't know about hiring a different sort of, but yes, I think we are doing it differently. Betsy Reed, who's the editor here, has a very clear view about the place and what the role and the purpose of The Guardian is, which is very much to cover America for the world and to cover the world for America. And I think that particular positioning and kind of confidence about the space that we're trying to serve here is new.

24:57And that then leads you to, I presume, hire sort of different people and profiles, but also to tell stories in a different way. What percent of your revenues the U.S. make up right now? Well, it's around$75 million. So, God, I'm not doing my math very well. 25%. So meaningful. Yes. And you'd like it to get more meaningful. Yes. Again, while you're here. Yes. I think a lot of folks who have heard of The Guardian know of The Guardian probably discovered it 2014 when you guys were doing the Snowden work and the NSA stories that eventually got you a Pulitzer.

25:35It's so long ago. I know. But Barack Obama was running the U.S. It's a very different environment in the U.S. in terms of press freedom, political climate, if you had another story like that where you're taking on the U.S. intelligence apparatus or the equivalent of that real institutional power, does that story play out differently? Does your ability to cover that story different now than it was a decade ago? I would say I think that's a question for our editorial teams. Well, some of it is about the business side saying we understand that there's real risk here financially beyond that, and we are willing to back that up?