The British are coming

The Guardian has been one of the few newspapers to make a successful transition from daily paper to online news source. Madeleine King asks whether the British giant will help or harm the frail Australian media scene.

Lenore Taylor, chief political correspondent at The Herald, is going. So are Paul Chadwick, former head of editorial policies at the ABC, and Katharine Murphy, The Age’s national affairs correspondent.

Having signed some of the bigger names in Australian journalism, you could be forgiven for thinking that when The Guardian launches its digital-only Australian edition later this year, it would be destined for unmitigated success.

Yet the Australian media landscape in general has proven poisonous, and it is uncertain whether The Guardian will be an effective antidote.

Findings from the report ‘Journalism at the Speed of Bytes’—published last year in collaboration between the University of Sydney, UNSW and The Walkley Foundation—suggest The Guardian’s new digital venture in Australia may not find the fertile southern land it seeks.

“There is yet to be any evidence that online news, whether consumed via computer, tablet or mobile platforms, is generating sufficient revenue to pay for its own content,” the report says.

Authors of the report Penny O’Donnell, David McKnight, and Jonathon Este conducted in-depth interviews with 100 newspaper journalists and news executives from the 12 national and metropolitan daily newspapers. Industry experts and academics were also consulted.

“Only 14 percent of respondents declared their full confidence in online journalism,” noted the report. “Slightly more (17 per cent) were reluctant to pass judgment, saying digital journalism has yet to establish itself in Australia.”

And this is where The Guardian comes in, with the third largest online newspaper presence—almost 39 million unique visitors, behind The New York Times and The Mail Online—in the world, and 1.3 million Australian readers.

While such figures are laudable, one question remains: will The Guardian’s online savvy succeed in an Australian market leaking revenue at the seams?

Winning the digital media battle is about more than securing good readership numbers, says David McKnight from the University of New South Wales’ Journalism and Media Research Centre.

“The problem is not having readers; the problem is finding ways to sell those audiences to advertisers,” he says. “People who read newspaper articles online often drop in accidentally to those articles, read them and move on.”

It is for this reason that the Speed of Bytes report (of which McKnight is a co-auther) found that, “even newspaper publishers estimate that if print readers are worth $1 per head to publishers, digital readers are worth 10 cents or less.”

The report quotes a 2010 Pew Centre (US) study which found the average online reader spends only 3.4 minutes per session on a news site. Traditional newspaper readers can spend up to 30 minutes with their print editions.

The established popularity of The Guardian’s website, next to the infant online strategies of mainstream Australian media, may give it the edge with potential advertisers. However, even the UK outfit will admit a thriving relationship with online advertisers is not the solution to the profit-return problem.

“Digital advertising is not yet able to fill the substantial gap between any paywall revenues and the cost of the operation,” writes Andrew Millar of the Guardian Media Group on The Economist Group website. “Advertising agencies have not yet fully aligned their spending with changing patterns in media consumption.”

Amanda Wilson, former editor The Sydney Morning Herald, confirms this in the foreword to Speed of Bytes. “So far,” she writes, “digital revenues have not reproduced the profits of the bigger, trusted, print brands, which would make this kind of [online] journalism possible.”

In this already fiscally constrained environment, The Guardian could prove a dangerous competitor for all digital publications. Having just gone ‘digital first’, it’s bad news for Fairfax. Equally so for independent websites such as New Matilda, The Conversation, The Punch, Graeme Woods’ own The Global Mail (Woods is one of the backers of The Guardian Australia) and Crikey. The small reach and advertising pull of these sites may leave them particularly vulnerable.

Local mainstream and independent media groups, however, boast one major advantage: their historically built readerships.

“Fairfax, the ABC and News Ltd all have very strong audience loyalty built, in some cases, over a hundred years,” says Fiona Martin, an academic specialising in online media at the University of Sydney.

David McKnight agrees that while The Guardian has the potential to attract a lot of advertising, it won’t dominate the market in which The Sydney Morning Herald, The Australian, and The Australian Financial Review have established their reputations.

Yet for all the challenges facing the UK outfit, it also has a number of huge advantages.

Importantly, money: from both The Scott Trust, an investment and funds pool worth around £250 000 a year that backs the Guardian Media Group, and the philanthropist investor Graeme Woods.

Added to this is the already vast amount of paid content kept in place by UK writers ready for publication here. David McKnight believes a key motivation to come to Australia is that it would, in fact, cost them comparatively little to expand operations with a small group of local reporters.

“Whatever extra readers they can get in Australia would be pure cream,” he says.

“It must make sense for them to spend a little bit in order to gain a bit more. Mainly through being able to convince their advertisers that there is a significant increase in their audience.”

Andrew Millar states a nobler reason for the expansion: “we see a gap in the market for a progressive, open and independent voice such as ours.”

An additional, independent news provider would be somewhat of a tonic to Australia’s highly concentrated, monopolistic media landscape in which News Ltd publications tend to dominate. Both Martin and McKnight stress The Guardian’s presence would be beneficial to diversity. On top of this, The Guardian may be left to fill the free-media gap once Fairfax and News Ltd are forced to retreat completely behind paywalls.

With the Sydney Morning Herald downsizing to a new compact (but not ‘tabloid’, we are assured) size just weeks ago, the changes occurring in the Australian media have never been more manifest. Press junkies must now sit back and hope the online domain becomes profitable, the newspaper format remains affordable, and the injection of The Guardian brings a new life to the sometimes moribund sector. And while the sector gets back on its feet? Well, there’s always Honi Soit.