Four years ago it seemed the death of The Independent’s print edition was the sad end to a brave but ultimately futile journalism story.
After running fourth in the UK quality newspaper market for a number of years it went digital-only with around 100 journalists losing their jobs.
The 60 or so who remained faced an uncertain future to say the least. No-one had ever tried running a national newspaper-scale newsroom on digital revenue alone in the UK.
As we approach the fourth anniversary of that day (26 March) the team at The Independent can reflect that the death of print was also the birth of something special.
Today the title is not only the most popular commercial digital news brand in the UK at the quality (what we used to call broadsheet) end of the market, it is also the second most profitable.
Chairman since September 2019 John Paton describes himself as a “happy warrior” – cheerfully investing in journalism and predicting surging profits.
When interviewed by Press Gazette the veteran Canadian newsman talks in headlines:
- Investment in journalism at the Independent has doubled over the last four years
- The title will “blow by” £30m in turnover this year and is targeting £100m revenue four years from now
- It has 106 staff journalists based in 13 cities around the world.
Independent Digital News and Media Ltd this week reported turnover of £27m for the year to 29 September 2019 (up 9 per cent year on year) and pre-tax profit slightly down at £2.3m (compared with £3m the previous year).
This was its third year in profit as a digital-only title after decades of losses in print.
In turnover terms The Independent is still a minnow compared to print/digital rivals Guardian News and Media, Telegraph Media Group and Times Newspapers (see graph below).
But the Independent is still a remarkable turnaround story.
Paton has an illustrious career behind him as a media executive and investor, most notably as founder and chief executive of Digital First Media (the second biggest newspaper group in the USA at the time).
Explaining his decision to join The Independent he says: “Digital-first is my term. I was very intrigued by the guts that Evgeny Lebedev and Justin (then chairman Justin Byam Shaw) showed by going all-digital.
“It’s sometimes trumped up that they were having such a bad time in print that they had to go, but that’s a really bad understanding of the story.
“Nearly ten years ago they started to separate the print assets from the digital assets and part of that was them starting to think longer term, having real vision.
“Saying this is a coming thing, there is moment coming when print won’t be as important to clients as it is today, and so they invested in it.”
The Independent has nearly doubled its turnover from £14m four years ago and Paton says the £2.3m profit for the year to September 2019 “could easily be double, but we’ve been investing – mostly in journalism, technology and marketing – since then”.
Going on performance in the first six months of this year, Paton says the Indy is on track to “blow by” £30m in revenue for the full-year with profits set to double.
Google and Facebook may be taking the majority of digital advertising, but The Independent appears to be proving that there is still space for news publishers to thrive in the online space.
According to Paton around £22m of the Indy’s revenue this year will be advertising, about £2m on subscriptions (readers paying for premium content and an ad-free experience) and £6m will be licensing and syndication of content (including a sizeable slug to the i).
That advertising revenue is a mix of bespoke advertising deals, programmatic ads served by networks, and affiliate marketing/e-commerce.
This last category is one that Paton is particularly enthusiastic about.
Much of it falls under the Indy Best section of the website which contains editorial reviews and recommendations with direct links to vendors. The Independent takes a cut of every purchase made.
Paton says: “We are focused on growth but profitable growth.
“With advertising agencies it’s important to have a dominant role in certain in certain spaces. We made it a goal and we achieved it in the last six months that we’re the leading quality online newspaper in the country.
“We’ve passed The Times, we’ve passed the Telegraph and we’ve passed The Guardian for the last three months.”
Paton is quoting Comscore figures for monthly unique users in the UK which show The Independent well ahead of the paywalled Telegraph and Times and marginally ahead of The Guardian.
UK quality newspaper market monthly unique browsers, January 2020 (source Comscore):
- Independent.co.uk: 24.7m
- TheGuardian.com: 24m
- Telegraph.co.uk: 19.6m
- Times Online: 10.7m.
UK news digital pure-play titles monthly unique browsers, January 2020 (source Comscore):
- Independent.co.uk: 24.7m
- Buzzfeed.com: 9.2m
- Huffingtonpost.co.uk: 3.9m
- Vice.com: 3.3m
- Vox.com: 1.6m
- QZ.com: 1.3m.
Overall The Independent claims 95m unique users per month, 30m of which are in the US.
In 2017 Press Gazette highlighted concerns about a “ripping culture” on Fleet Street whereby titles were chasing clicks by industrialising the rewriting of ‘trending stories’. This ‘churnalism’ approach seemed to be a way to game Google and deliver high-traffic sites with low-quality journalism.
Asked whether these tactics might have ever been used to get the Independent to its current number one spot, Paton says:
“There’s 106 full-time journalists in that newsroom based in 13 cities around the world. I don’t know if there is a churnalism site that has peopleon the ground in Syria or people on the ground in Beirut… that might have been the past but it is not the present or the future.”
“It’s becoming a truly global enterprise,” Paton adds, and he has a big vision for the future of journalism at The Independent.
“It’s an enormous amount of fun to work with the theories I’ve been working with for a long time and putting into practice in other places.
“It shows a way forward that I think is important to think about. I still believe that scale within context and scale with data is a successful route to pursue for quality news organisations.
“In the last few years there has been a retreat from that with a focus on premium subscriptions as being the answer. I’m wary of that.
“My joke about that when people have asked me is: ‘OK Financial Times, Wall Street Journal, New York Times – I’ve got a thousand quid if you can name the other three that are doing it at scale’.
“Everybody is selling premium subscriptions in some form but is it really moving the dial for them?”
Paton believes that the commercial pot of gold for The Independent lies not with subscriptions but with what he calls an “A2K” strategy – “anonymous to known”.
“That’s to capture third party data through emails allowing you to enter e-com and affiliate marketing budgets that dwarf advertising budgets worldwide. You can still offer a parallel free subscription service that is largely around an ad-free environment versus just premium content.”
This use of reader data to fuel e-commerce combined with global expansion is what Paton believes will take The Independent to revenue of £100m in four years time.
Paton says: “I understand the digital ecosystem as it relates to news deeply. I’ve talked about this a lot, I’ve written about it and spoken about it. I have never met a team that is so well versed in how digital news is actually dispersed, distributed and monetised than the team at the Independent.
“They work very well together so that you can take fantastic beats like Shaun Lintern the health correspondent – he’s just been kicking ass on the NHS scandals, particularly in the maternity wards and the infant mortality rate.
“The traffic on those stories is off the hook because The Independent knows how to take those stories and put that into the digital eco-sphere as if maybe it was Harry and Meghan.
“There’s a term that they use in Silicon Valley. People always talk about the tech stack. There’s also a term called the thought stack meaning the technology can be robust, it might not be particularly unique, but it’s how you use it, the understanding of it. The thought stack at The Independent is really quite remarkable.
“The Indy is proving that you can move to a digital-only format which is going to be the future. Ecological concerns alone are going to turn the newspaper industry into a digital industry, beyond the demand of consumer habits and beyond the demand of accountability that the ad world wants: who read what, where and when.”
Paton says that on any given day 50 per cent of The Independent’s programmatic advertising income comes from clicks to content produced that day, whilst the rest is archive material.
“That’s a testamant to the monetisation team that is constantly combing the site and looking for those articles that might be of interest to people who have just read a serious story that has been broken and then might read a related story.
“They are constantly behind the scenes working the system tagging and promoting so they can monetise real news.”
On the Duopoly question, the fact that 90 per cent of new digital advertising money is going to Facebook and Google, Paton is reluctant to criticise the US tech giants.
“While there’s legitimate concerns about the amount of advertising that’s going into a very small group of organisations around the world, one of the things the Independent team has done is work out how we get as smart as them at monetising content on the web.
“They work really well with those platforms. They understand them well. They meet constantly with their counterparts on those platforms and they are ready to maximise any change for the benefit of The Independent.”
In years of interviewing editors and chief executives of publishing companies I have never yet met one who is not publicly optimistic about the future of news. How could they not be?
But Paton seems to mean it when he says: “I’m the happy warrior. I realise it’s a battle every day but I think the combination of investing in quality journalism, investing in technology, investing in the training to join up both those things for the benefit of monetising that quality content – they are worth the effort.
“We now have 12 years of the hard learnings from that big downturn that started in 2008. We’ve seen the ups and downs of social media and the large platforms. The smart outfits have learned how to use that system.
“Some companies have got to the point where they have invested so little they are struggling to make that transition.
“It’s much harder in small local market than it is for a company based in London with a global outlook that’s for sure. But I am very optimistic for the future of news particularly the way the Indy approaches it.”