London is still newspaper-centric in ways difficult for Yanks to grasp--10(!) national dailies are published there--but competition has crushed bottom lines. "In the next three years it will be very tough for any newspaper to be profitable," says Carolyn McCall, chief executive of Guardian Media Group. She adds that losses last year at The Guardian and its Sunday paper, The Observer, excluding costs related to new presses, topped $35 million.
In the U.S., where it's bad if major dailies' profit margins fall to single digits, McCall's comments would provoke aneurysms. But The Guardian has plenty of company among Britain's "quality" newspapers (as opposed to its "popular" ones, the classic tabloids). News Corp.'s (NWS
) Times Newspapers Ltd., parent of the Times and Sunday Times, lost around $90 million in 2005, according to the Times itself. Total Financial Times losses in 2003 and 2004 neared $80 million. The challenges are familiar: Younger audiences turn away; free newspapers provide significant competition; Web sites win eyeballs and ad dollars. A study by ad giant GroupM says the Web's share of British ad spending this year will top 13%, roughly double its share in the U.S.ONE KEY GUARDIAN RESPONSE is novel: If readers want to gather and chatter, let them, even if there's no obvious way to make a pound off those conversations yet. "Readers are nearly as interested in talking to each other and publishing themselves" as they are in what a paper produces, says Guardian editor Alan Rusbridger. "You have to host that space" lest your readers simply flee.
To date, The Guardian has launched three sites that lean heavily on what's clunkily termed "user-generated content." One covers travel, another the arts. The earliest and best template of such efforts, though, is its Comment is Free opinion site. It appears onscreen as a riot of author names and links. (Picture a less cluttered, more text-heavy version of U.S. blog site HuffingtonPost.com.) On Comment Is Free, Guardian columnists appear on equal footing with Central American poets and local bloggers. In other words, The Guardian has opened its doors to outsiders and done away with the privileged position that newspapers accord their writers. The front page also includes prominent navigational tools alerting readers to the most active debates and the best stories found elsewhere on the Web.
A free-for-all opinion site does not come without complications. One, Rusbridger admits, is racist comments. Another, McCall says, is that users don't take site changes lightly: "They think it's theirs." She admits it's not yet clear how to make money from Comment Is Free's back and forth, though she expects ads to appear eventually.
This point does not worry some savvy American media executives, who've long applauded The Guardian for its online moves. "The Guardian has, in my view, been way ahead" of U.S. newspapers, says Jim Kennedy, vice-president and director of strategic planning for the Associated Press. "It's about creating a new environment for your audience to come in and stay." (Gannett's early November announcement that it will restructure its newsrooms, in part to bring in more user-generated work, is intriguing but nascent.) There is some irony that a British newspaper is beating Americans in adapting to technology. Back in the late 1960s, one of the things that most impressed Led Zeppelin's Jimmy Page about America was that the telephones worked. These days, though, Britain is the more thoroughly broadbanded nation. And I suspect American newspapers will accept ideas from wherever they can find them.For Jon Fine's blog on media and advertising, go to www.businessweek.com/innovate/FineOnMedia By Jon Fine