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April 30, 2015, 10:28 a.m.
Business Models

Newsonomics: The Guardian is trying to swing Google’s pendulum back to publishers

With two major partnership moves, The Guardian’s Andrew Miller is trying to find a stronger position for premium publishers in a Google/Facebook-dominated world.

You can’t call Andrew Miller a slacker. The Guardian Media Group CEO will complete his fifth year in charge at the end of June, when he’ll voluntarily take his leave — perhaps taking the summer off to contemplate his next career opportunities. He’s transformed the company from a still-struggling, still-wondering-about-its-future, one-among-many U.K. quality daily into a truly global news leader. Miller’s formula: The full-hug embrace of “Open” as digital business and editorial strategy and the development of a Known analytics-and-membership strategy (“The newsonomics of The Guardian’s new ‘Known’ strategy”).

That thinking — combined with a lot of determination and approximately £600 million in proceeds from the sale of GMG’s interest in digital auto classifieds leader AutoTrader — has set the company on a soaring trajectory and helped make it one of the most impactful news companies in the world.


Guardian Media Group CEO Andrew Miller. (Credit: The Guardian)

He’s not spending his final days in office doing victory laps, though. In the stretch of a few weeks, The Guardian has led two major news industry partnerships, both aimed at creating the next generation of sustainable, successful, largely digital news properties. This week, the Guardian-initiated, Google-funded Digital News Initiative (DNI) took off (“Google plans new initiative with Euro publishers”). Intended to counter legal action against its European digital dominance, Google promised a €150 million fund to promote platform and product digital news innovation, working with eight top European publishers. Just a month earlier, Guardian also led the creation of Pangaea, a new global, premium ad alliance.

Both moves display a new reckoning among top news publishers of where they fit in a Google/Facebook-dominated world. They’re also signs of a new generation of partnerships as publishers test new ways to work together. They show us that European publishers, long operating in the shadow of U.S.-led hyper digital development, are newly assertive.

Finally, both DNI and Pangaea mark The Guardian’s emergence as a leader of a new pack. Miller says that we should expect additional change-making moves to be announced before he finishes his tenure. 2015, then, marks a new bid for a Guardian ascendancy in news publishing. The print Guardian just reported the largest circulation decline of any U.K. quality daily, down 9.5 percent in a year to 174,000 daily. In the digital universe, though, it can call itself the No. 1 quality news site, with over 120 million monthly visitors. The Internet provided the U.K.’s “leading liberal voice” with a bullhorn previously unimaginable.

While not directly critical of the growing round of European legal actions against Google, Miller plainly disdains the strategy. His company has profited greatly from the wide open frontiers of the web, and he sees the DNI as an alternative path to litigation.

“It’s a positive way of tackling these issues,” Miller told me this week, in the second of two recent interviews. “There’s been too much time spent complaining about the platforms that give us tremendous reach. We are such a fragmented industry, and we are trying to frame certain issues back to Google, give some ideas to Google, and see how far we get with it.

“I sat through many meetings, and I’m frustrated that we are moving toward protectionism in the European context. For The Guardian, the digital landscape has allowed us to become a global brand from a U.K. newspaper, and I’m worried if the EU takes action that restricts a brand like us from continuing to get our journalism out there,” he says acknowledging The Guardian’s self-interest. “The politics will take one stream, and that’s very much between Google and the EU. What I was keen to do is create another stream, which is intended to promote positive engagements and drive recurring revenue back into publishers.”

Miller says he’s been working on the plan for months. Significantly, last fall he hired Google partnership exec David Gehring, who has been a key middleman in the DNI process, working one week a month in London and the rest of the time out of the Bay Area.

“It was our idea, and we proactively reached out to the titles involved and then to Google itself,” Miller said. “That’s why it took us so long to get there. It’s been done enough times that we wanted to make sure that it worked. This is about laying down challenges to Google. It will disappointing to see if nothing happens over the next nine months or a year.” The Guardian picked its partners from among like-minded publishers, most of which it had worked with previously, aiming for a fair national representation across western Europe. Those companies’ CEOs and their top digital execs form the product council that will direct the initiative. Miller emphasizes that the fruits of the work are intended to be shared widely, not just by DNI members.

How would he like to see some of the €150 million spent over the next three years? Miller offers up a wishlist:

  • Reorient the publisher/YouTube relationship, in three ways: (1) improve the revenue share deal on YouTube; (2) favor original content — “I’d like to investigate how the search algorithms could favor people who actually create and originate journalism, rather than the people who clickbait and use our content elsewhere”; (3) support, rather than disrupt, brands offering video. Miller doesn’t like “the fact that once you’ve viewed our YouTube content, it takes you to content that isn’t our content.” In other words, open a Guardian (or other news brand’s) video and then be offered more by that same brand.
  • Get content behind a paywall surfaced as well as non-paywall content in search. Though The Guardian’s strategy doesn’t include paywalls, several of its DNI partners — who include the Financial Times, Italy’s La Stampa, France’s Les Echoes, Germany’s Frankfurter Allgemeine and Zeit, Spain’s El Pais, and the Netherlands’ NRC — emphasize digital reader revenue.
  • “Getting access to data and Google thought processes” to prove the value of digital advertising against other media types. “Video content that comes from The Guardian is seen as video that comes from a publisher” and is undervalued as compared to digital video created by TV operations, he says. Miller hopes that Google’s data treasure trove can prove out the relative effectiveness of publisher-created video, helping raise ad rates. In general, Miller believes the programmatic world doesn’t sufficiently value the quality of audience that premium brands offer advertisers.

Guardian advisor Jeff Jarvis offers a good, deeper parallel list of how Google could help. Finally, Guardian international director Tony Danker weighs in similarly, making the fundamental point that success requires significant change on Google’s part:

So can today’s initiative be a genuine partnership between Google and journalism, and thereby a tide to lift all boats? This would require Google’s leadership to see both mission and method here and to realise the real benefits for users. It would see them deploy their best engineering brains to want to fix the problem. It would result in fresh thinking within the product and engineering organisation at Google around those drivers of successful content online: adaptation for mobile platforms, excellence in online video, intelligent use of data with respect for privacy, differentiation between original content and content “gamed” for Google, and new paths to monetisation and thus sustainability of journalism. And it would see this thinking and this partnership spread globally.

In short, it would mean more work in Mountain View than Brussels.

Indeed. That’s quite a list. Even if we assume the goodwill of some people within Google, the chances of Mountain View making the workplace and cultural changes that Danker suggests is unrealistic. Most likely, Google will accede on some business issues, improving revenue shares and sharing deeper analytics. Those would help publishers incrementally — but don’t buy the argument this is about transformational change.

Let’s also remember that, though €150 million may sound like a large sum, Google spent €60 million on French innovation two years ago to settle an action there, and we can’t say we’ve seen much transformation come out of it. (In fact, Frédéric Filloux just detailed a still-long list of problems with French digital innovation.)

The hope is to swing the Google pendulum a bit in favor of publishers. Axel Springer executive vice president Christoph Keese has long been a strong public critic of Google, and even he notes the two faces of the company historically: “Over the past, the pendulum within Google has been swinging back and forth between reaching out to other interested partners and trying to do it all by themselves.” DNI is intended to push Google toward its better angels.

You had to get a good chuckle out of the Guardian headline on the Digital News Initiative story, “Google admits mistakes with news outlets as it announces new partnership.” That seemed like a bit of crit/self-crit (if you’re too young to know about it, consider yourself lucky) out of the ’70s. The staging of the DNI announcement at the FT Media Summit did seem a bit comical. It’s impossible not to see Google’s commitment to the new project as a blunt political instrument — though people like Miller can rightfully argue that good can still come out of it.

Essentially, Europe is the squeaky wheel that Google decided to grease, with a sum that sounds large to cash-starved news publishers but is a pittance to Mountain View. It’s 0.001% of Google’s $14.4 billion profit in 2014 — much of it earned in Europe, where its search dominance is even greater than it is in North America. Europe’s squeaks, once merely bothersome, have now turned into a light migraine for Google, and DNI opens a new front to combat escalating opposition. That opposition is multi-faceted. Most recently, EU Competition Commissioner Margrethe Vestager (good, quick New York Times profile) upped the ante with her recent formal antitrust action against the company. That action, based in part on complaints from more than 30 companies, including Microsoft, Yelp, Expedia, TripAdvisor, and Nextag, may take six months to wend its way to some kind of conclusion. In the run up to the action, the European parliament passed a resolution calling for Google’s breakup last fall. Over time, both the German and Spanish governments have taken action trying to hem in the company. The complaints are many, mostly focused on Google’s market dominance, on the charge that it destroys news value, and on its intrusion into privacy.

We can see the complaints as righteous indignation — some of it right on, other parts misguided — and all informed by a background sense that Europe is too much a junior partner to the U.S. The behemoth growth companies stalking the globe today call the U.S. home.

Consequently, Google smartly, if belatedly, is opening multiple fronts in defending itself. Beyond its extensive legal pushback, DNI offers a hand of friendship to publishers — and very specifically European publishers, it must be highlighted. DNI rolls out in parallel to its legal contesting of the antitrust complaint. It’s a divide-and-conquer Google strategy — working with a half-dozen publishers on a “product council,” while others support action against it.

Pangaea, too, is a Guardian-led initiative. Though, there’s no direct connection to DNI, we can see the thread of thinking that connects the two: Premium news publishers’ digital advertising needs to be better monetized. Just as Miller asks for Google’s help to improve YouTube and other ad monetization, Pangaea — with its one-world imagery — portends huge scale. Why buy just the FT’s premium readers, when you can also get Reuters’, The Economist’s, CNN International’s, and the top end of Guardian readers as well? Why focus so much time and money on creating dazzling native advertising just to have it used as a one-off — if advertisers can easily place it with other top media, seeking affluent readers with a single buy and single set of creative?

Importantly, Miller says that Pangaea, which is now in beta, won’t be limited to legacy publishers. He says, for instance, that he’d welcome startup Quartz, with its higher-demo business audience. The big idea: Start with 110 million monthly affluent digital readers, and build a stronger global ad network to target them. Even if it does help The Guardian and the other top-end publishers, they know their current business models need a transfusion of next-generation ideas. Hence DNI.

If DNI works, even a little, expect The Guardian and its partners to try to extend this kind of publisher/platform relationship more widely. Next up: your friendly social network.

Says the outgoing Guardian CEO: “The challenges Google faces in Europe will absolutely hit Facebook as well.”

Photo by brionv used under a Creative Commons license.

POSTED     April 30, 2015, 10:28 a.m.
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