Nieman Foundation at Harvard
Are you willing to pay for Prepare to be asked before year’s end
ABOUT                    SUBSCRIBE
May 30, 2024, 11:12 a.m.
Business Models

“The way we raise the money at The Guardian is different than any place I’ve ever been”

“This is truly a jointly owned responsibility among the business side and editorial.”

Steve Sachs is managing director of The Guardian U.S., a role he assumed in October 2022. He also serves on the board of the Texas Tribune, and has worked with Cityside and other nonprofit news orgs. Previous roles included leading tech start-ups and a significant stint on the business side of Time Inc. Last week we met to talk about the Guardian’s remarkable success with reader revenue. The conversation has been edited for length, clarity, and accuracy.

Richard Tofel: Steve, thanks for doing this. You’ve told me that The Guardian reported $112 million last year in smaller contributions. Of this, $33 million came from the U.S. and Canada (but mostly the U.S.), and is not even tax-deductible. That’s the part I want to focus on today. Can you walk us through how reader revenue fits into the Guardian’s overall revenue picture and business model?

Steve Sachs: About eight years ago, The Guardian really focused on a couple of new strategies. The first one was that, in 2016, we had no reader revenue program globally. And we decided to really commit ourselves to build out, globally, a reader revenue strategy. We also committed ourselves to building out non-U.K. revenue.

Globally, reader revenue now generates more than a third of our revenue, and non-U.K. revenue is about 35% of our revenue. That has fundamentally changed the financial picture of The Guardian globally. Total U.S. reader revenue is approximately 18% of all global revenue, and U.S. reader revenue is about 30% of global digital reader revenue.

Tofel: What percentage does that represent of total U.S. revenue?

Sachs: Reader revenue in the U.S. is about 57% of the total. So we are majority funded by voluntary contributions from our audience. We get about 40% from advertising, and about 3% comes from deductible philanthropy, larger contributions through

Tofel: Unusually for a news organization, you have a substantial endowment. But those numbers added up to 100%. So that doesn’t leave any room for endowment income.

Sachs: The endowment doesn’t directly fund the U.S. We put together an operating budget globally, with all the different divisions, and then our board gives us guidance as to how much we can invest [from the endowment], so how much below [expenses can revenues be].

Tofel: Okay, so when, for instance, The Guardian said recently that it lost £39 million last year on an operating basis, that is before the endowment contribution, correct?

Sachs: That is correct.

Where it comes from

Tofel: Returning to the $33 million in retail revenue in the U.S. and Canada, how do you raise that money?

Sachs: The U.S. has a culture of philanthropy and, based off our own research, has a higher willingness to pay for news than in the UK. So, in our research, about 68% of people in the U.S. say that they will pay for news, versus in the U.K. only 55% said they will pay. In the U.S., only about 10% of people actually write off deductions on their taxes, given the changes in the tax laws of the past six or eight years. But it doesn’t matter. There’s still that culture of people making donations at year end.

The way we raise the money at The Guardian is different than any place I’ve ever been. This is truly a jointly owned responsibility among the business side and editorial. What does that mean? We have a team of four people in the U.S. on the business side whose whole role is to generate that $33 million. But in addition to that, on the editorial side, we have a senior editor who reports to our U.S. editor, Betsy Reed. Jane Spencer is our deputy editor and head of strategy, and one of her primary responsibilities is to work with the reader revenue team on the business side. She has one person reporting to her who is devoted entirely to reader revenue.

What does this mean on a day to day basis? We have a daily report that tracks not just total reader revenue, but also what stories and what platforms generated the most revenue yesterday.

Let’s dive into the numbers. We have both recurring and one time contributions, of course. In terms of revenue our mix is about 80% recurring and about 20% one-time. In terms of acts of support it’s actually opposite: 68% of acts of support are one-time, only 32% are recurring. Our average value of a single contribution in the U.S. is only $34, and our average recurring gift is $51 annually. In November, we had, for the first time, more than 250,000 recurring supporters in the U.S., and we’re up to almost 270,000 as of right now. Reader revenue in general is growing; we grew it last year by 14%.

Tofel: I see, as a Guardian reader, two principal ways that you’re soliciting those contributions. One is whatever you call the text callout at the bottom of stories. And the other is email. Are those the most significant?

Sachs: At the bottom of every story we have a unit we call the “Epic” that we’re constantly testing to improve; that is our single biggest source of acquisition. That accounts for 35% of our U.S. acquisitions.


An example of the Epic.

When I got here about 18 months ago, one of the first things I looked at was email. In my experience, I would expect, as with most mission driven or nonprofit news organizations, that email is the most important channel, that’s typically 80% plus of your reader revenue. But at The Guardian, when I got here, it was 7%.

So to me, two things came out of that. Number one, oh my God, we’re getting 93% of our revenue off of the web. Nobody knows how to do that. Number two, it’s only 7% — are you kidding me? It needs to be triple that. We weren’t paying attention to email in a way that most U.S. news organizations or even most nonprofits do. We have focused a lot on building out email. We’re now up to 24% instead of 7%. But that still means that 76% of our acquisitions are from the web.

By the way, when I say web that includes Apple News. Apple News is an important channel for us; in a given month, it could be 30% of our pageviews. We do very well in Apple News, because we are not paywalled and because we are high quality, so you don’t have to subscribe to Apple News+ in order to get really great information. We’re also very good at converting those readers.

So the Epic is number one, but number two in terms of source of contributions on our web site, at 23% of total revenue, is what we call the Banner. That’s when you come to our homepage and also to some other pages, and you have what some people would call a “toaster” that comes up from the bottom. You know, “You’ve read X number of articles over the last year. Please give…” That is responsible for 23% of our total acquisitions in the U.S.

Tofel: What’s everything else? Because, if I’m doing my math, 18% remains, which is not trivial.

Sachs: We’ve got a header at the top of the site; that’s 8%.

Tofel: So the remainder are versions of a donate button?

Sachs: Yeah, exactly.

Christmas all the time

Tofel: Most organizations find that there’s a very heavy seasonal concentration of gifts. Is that true for you as well?

Sachs: It used to be the case, when we were just getting started with reader revenue, that most of our revenue came in like everybody else, between Giving Tuesday and January 1, but that is no longer the case.

Of the $33 million that we did last year, a little more than $2 million of it came from our year-end campaign.

We’ve gotten very good at converting people who are not so loyal to The Guardian, even frequently off of one story.

Then we have what we call a moment strategy. So a “moment” is basically a marketing campaign. We pick out times throughout the year that we know are going to be particularly news heavy in a way that’s important to our readers, and we build a campaign that might be as short as only two weeks, but could be as long as 10 or 12 weeks. In February and March we knew that people were going to be thinking about primaries, so we built out a primaries moment that drove more than $400,000 in contributions.

We are planning one now around the Supreme Court rulings in June, or we might do something around the conventions in July and August.

Tofel: How well do you think readers understand that they increasingly need to pay as a substitute for disappearing ad or platform revenue?

Sachs: I don’t think they understand it as a substitute for disappearing ad revenue. I think that people mostly look at it, especially if you’re giving it to them for free, that you have a clear mission that they want to support. I don’t think they look at it as “ad revenue is disappearing” or “Facebook isn’t supporting news,” and all the insider stuff.

Implications for others

Tofel: So The Guardian is far and away the leader in this. But I noted recently in its annual report that ProPublica raised almost $10 million in smaller contributions last year. For even much smaller organizations, and I know you’ve been involved with a few of those, what do you think are the key learnings from your experience with reader revenue?

Sachs: I was thrilled when I saw that ProPublica $10 million. The Texas Tribune now does over a million dollars in small-dollar contributions, and growing, so it’s fantastic to see seven- and eight-figure numbers coming in for some great organizations. I’ve worked with Cityside in Oakland, Berkeley, and now Richmond, California. Reader revenue for them is a very important source, a big part of their mix overall.

I think it needs to be integrated across the organization, in a way that we talked about at scale for the Guardian. You want to have the editorial soul of the organization and the mission baked into the process in a way that’s compelling. But you also need to do smart things on email marketing on the business side, and merge those two things together.

The second thing is you need to invest money to make money. It is going to take an investment of either hiring somebody in house or hiring one of the organizations that specialize in this, like News Revenue Hub.

The third thing, I think, is paying attention to what does your audience care about. You need to understand what it is that is causing people to want to voluntarily support you.

Tofel: Should everyone have their own version of the Epic?

Sachs: I think so. I would also encourage nonprofit news organizations to continue being great at email. But also figure out how to, in your own way, get really good at using the web; don’t just write that off. Everybody should be able to do that; there is untapped revenue.

Tofel: Last question: The Guardian has steadfastly refused to put up a paywall. At this point, how much of that would be ideological — your belief that readers just shouldn’t have to pay — and how much would be purely a business decision that this is the most effective model for raising reader dollars?

Sachs: It is a combination at this point. Nine or 10 years ago, we did a lot of work to decide whether we should have a paywall or not. And we decided that we would both fulfill our mission better, but we would also generate more revenue, if there were no paywall. Now it’s part of our DNA and we talk about it every day.

That doesn’t mean that everything we do is going to always be available for free. So, for example, in the U.K., we still print the newspaper. We don’t give that away for free. You have to pay for it. We have launched a paid food app called Feast globally; we will launch it in the U.S. and are testing that right now. We will continue to look at those sorts of opportunities, because we don’t feel like it’s in conflict with our mission.

Richard Tofel was founding general manager (and first employee) of ProPublica, and was its president from 2013 until January 2022. This post originally appeared on Second Rough Draft, his newsletter about journalism — subscribe here.

Illustration by The Guardian’s Mona Chalabi and Sam Morris.

POSTED     May 30, 2024, 11:12 a.m.
SEE MORE ON Business Models
Show tags
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
Are you willing to pay for Prepare to be asked before year’s end
The cable news network plans to launch a new subscription product — details TBD — by the end of 2024. Will Mark Thompson repeat his New York Times success, or is CNN too different a brand to get people spending?
Errol Morris on whether you should be afraid of generative AI in documentaries
“Our task is to get back to the real world, to the extent that it is recoverable.”
In the world’s tech capital, Gazetteer SF is staying off platforms to produce good local journalism
“Thank goodness that the mandate will never be to look what’s getting the most Twitter likes.”