Why the Guardian is smart to bet on live events and a membership model instead of paywalls

Even as The Guardian has expanded its international readership dramatically over the past few years, critics have slammed the British news outlet for being a perennial money-loser, with no viable business model apart from the funding it receives via the Scott Trust. As it turns out, that is a pretty viable business model, but now the paper is expanding beyond that by launching a major new live-events strategy and a membership-driven revenue model — and there is a lot to like about that approach as opposed to the paywall model other papers have chosen.

As described in a piece by editor-in-chief Alan Rusbridger on Wednesday, the new focus on live events at the Guardian (please see disclosure below) begins with the renovation of a massive former railway structure that’s located near the paper’s office in Kings Cross, which the newspaper company is turning into a kind of convention center or conference venue.

This ambitious effort started with a kind of open-house for readers that the paper put on in 2012, Rusbridger says, in which it opened its headquarters up and spent the weekend having conversations about the future of journalism and society, along with food and music and other entertainment. That weekend convinced the Guardian that a membership-based strategy was a crucial part of its future, he says:

The prospect of being part of the debates, ideas and conversations we could start and host was immensely appealing. Most readers said they would happily contribute money to the ’cause’ of the Guardian – but an overwhelming majority also wanted the journalism to be free, so that it could reach the maximum possible audience. A fair number were happy to be subscribers, but the most hands shot up when asked if they would like to be ‘members.’

Friends, partners and patrons

And so, the paper has launched a formal membership model: without paying anything, readers known as “friends” get access to all of the paper’s journalism online, and can buy tickets to Guardian live events. If they become a “partner,” for $24 a month, they get a discount on tickets as well as the ability to book their tickets in advance and watch livestreams of the events. And for $97 a month they can become a “patron,” and get special access to private events and “unique experiences” not open to other members.

Guardian membership

The Guardian isn’t the only newspaper to offer a form of membership, with different benefits based on how much they contribute: the Wall Street Journal offers something called WSJ+ to paying subscribers, which gives them access to invitation-only talks by experts on various topics, as well as special events like museum tours, or discounts on a round of golf at a private course. The New York Times also offers something called “Premier,” which gives subscribers who pay extra access to special features, including behind-the-scenes interviews with journalists.

As Ken Doctor notes in a post at the Nieman Lab blog, a number of media companies are also investing heavily in live events, since some success stories such as Atlantic Media’s dramatic turnaround have shown that events can be a significant draw for readers, and can generate additional revenue.

But what makes The Guardian‘s approach a bit different, I think, is the sheer scale of what they are talking about, and how the events tie together with the membership model. It’s not just one or two events — the British paper is spending a large sum to renovate the former Midland Goods Shed because it plans to host dozens of daily or weekly events, from the small to the large. In a sense, it is going into the conference business in a big way. Is that risky? Sure it is.

Deepening the relationship with readers

What those live events accomplish, as Rusbridger notes when talking about the open-house weekend, is that they deepen and extend the relationship with readers, a relationship that the Guardian editor notes is the most important thing the paper has — more important than its relationship with advertisers, and certainly more important than a relationship with shareholders. As he puts it:

The Guardian and our Sunday title the Observer have no proprietor: the only relationship our journalists have is with our readers. We felt we had a real possibility of deepening the intense bond between the producers and consumers of what we do.

The bottom line is that this relationship with readers is the core of whatever value newspapers have in this digital age — it’s not their ability to print things on paper, or drop objects off at your house. It’s their status as a trusted source of information and content that is relevant to you and your life. And the more they get to know you, the more valuable that relationship becomes.

I’ve written a number of times before about membership-based models like the ones at Talking Points Memo and Techdirt, and how the best of those models replicates what is happening in the music industry: namely, a focus on a deep relationship with fans, and deriving revenue from that instead of focusing on selling access to a specific unit of content or a specific physical product. I think the Guardian is smart to dive into that model in a big way.

Disclosure: Guardian News & Media is an investor in the parent company of Gigaom. Post and thumbnail images courtesy of Thinkstock / Digital Vision