Case Study: The Guardian experimenting in the lab

Like most of the publishing and media industry, Guardian Media Group has had a tough time recently, and spent much of last year working out which methods will provide the right media model for a successful future.

It reported an operating loss of £53.9m in the year to March 2010, and made 200 staff redundant. Although it doesn’t reveal its online revenue, web numbers are buoyant, with 24% more users than last year and more than 2 million daily browsers on average, according to June’s ABCe figures.

It is currently pushing its membership service, Guardian Extra, which is free this month, but will in future cost £25 a year. Members get access to extra content and brand offers, while The Guardian gains access to customer data.

Its app, which costs a one-off fee of £2.39, has had more than 100,000 downloads since its launch last December. A second version will soon launch.

Former Guardian marketing director Marc Sands says that charging a one-off fee for the first app rather than charging for a regular subscription to the service was a “big mistake”, but adds: “At the time it was difficult to understand why anyone would buy an app.”

Sands, now director of audiences and media at Tate, describes the way the market in general is changing dramatically. “It’s not a logical rational market. They are making it up. It is trial and error. The app is a massive success but it is under-priced,” he says.

Adam Freeman, director of consumer media for Guardian News and Media, says money-making methods may change over time. “Whatever decision we make now is likely to be wrong. We have lots of  feedback saying ‘we love it, but it’s too cheap and we want to pay more’ and equal numbers saying ‘we would never buy a subscription’.

“I would rather take a large base of single purchasers and talk to them about additional ways of up-selling than cut it off at the start with an aggressive price point,” says Freeman. Tellingly, he won’t confirm whether the second version of the app will require a fee, nor will he rule out a subscriber model.

But while The Guardian’s online content is currently free and the Times has put its behind a paywall, Freeman claims his strategy is, in fact, very similar to that of News International.

“I want to have as many direct customer relationships in all my platforms as I possibly can, and package that relationship up for advertisers, which is what News International is trying to do. Our only fundamental point of difference is that News International decided to close off one of those platforms on the PC, and we still think it’s best to remain open,” he says.

“You’ve got to test, fail, move on and do again. Who knows what it is going to look like in a year or two,” Freeman says.