British national paper The Guardian isn’t the kind of tech-savvy enterprise one would normally look to for guidance on digital issues or Internet-related topics. For one thing, it’s not a startup — it’s a 190-year-old newspaper. And it’s not based in Palo Alto or SoMa, but in London Manchester, England. The newspaper company, however, is doing something fairly revolutionary. In a nutshell, The Guardian has completely rethought the fundamental nature of its business — something it has effectively been forced to do, as many media entities have, by the nature of the Internet — and, as a result, has altered the way it thinks about value creation and where that comes from.
Enter The Guardian’s “Open Platform,” which launched last week and involves an open API (application programming interface) that developers can use to integrate Guardian content into services and applications. The newspaper company has been running a beta version of the platform for a little over a year now, but took the experimental label off the project on Thursday and announced that it is “open for business.” By that The Guardian means it is looking for partners who want to use its content in return for either licensing fees or a revenue-sharing agreement of some kind related to advertising.
To take just one example, The Guardian writes a lot of stories about soccer, but it can’t really target advertising to specific readers very well, since it is a mass-market newspaper. In other words, says Guardian developer Chris Thorpe, the newspaper fails to appeal to an Arsenal fan like himself because it can’t identify and target him effectively, and therefore runs standard low-cost banner ads. By providing the same content to a website designed for Arsenal fans, however, those stories can be surrounded by much more effectively targeted ads, and thus be monetized at a much higher rate — a rate the newspaper then gets to share in.
Open APIs and open platforms aren’t all that new. Google is probably the largest and most well-known user of the open API as a tool to extend the reach of its search business and other services, such as its mapping and photo services. Most social networks, such as Facebook and YouTube, also offer APIs for the same reason, though not all of them are as open as Google’s.
The Guardian, however, is the first newspaper to offer a fully open API (the New York Times has an API, but it doesn’t provide the full text of stories, and it can’t be used in commercial applications). It’s worth looking at why the paper chose to go this route, and what that might suggest for other companies contemplating a similar move — and not just content-related companies, but anyone with a product or service that can be delivered digitally.
For a content company like a newspaper, producing and distributing its content is the core of the business. Whether it’s in paper form or online, advertising usually pays the freight for the content, although subscription charges help, for both print papers and online versions like the Wall Street Journal, the Economist, etc. Many newspapers have regretted their decision to provide content online for free, since online advertising isn’t nearly as lucrative as print advertising (primarily because there are far more web pages to advertise on than there are newspaper pages, and therefore the supply outweighs the demand).
So why would a newspaper like The Guardian choose to provide access to its content via an open API, and not just some of its content, but everything? And why would it allow companies and developers to use that content in commercial applications? For one simple reason: There is more potential value to be generated by providing that content to someone else than the newspaper itself can produce by controlling the content within its own web site or service. You may be the smartest company on the planet, but you are almost never going to be able to maximize all the potential applications of your content or service, no matter how much money you throw at it.
As Thorpe described in a recent interview, the newspaper sees the benefits of an open platform as far outweighing the disadvantages of giving away content. By allowing developers to use the company’s content in virtually any way they see fit — and not just some of it, but the entire text of articles and databases the newspaper has put together — it can build partnerships with companies and monetize that content far more easily than it could ever do on its own.
This is effectively the opposite approach to the one that newspapers such as the Journal take, which is to up paywalls and charge users for every page they view, or charge them after a certain number of views (as the Financial Times does and as the New York Times is planning to do). It’s also the opposite approach to the one that companies like Apple take to their business — although Apple doesn’t produce content, it exclusively licenses and tightly controls the content it does handle (such as the music in iTunes), and it applies the same type of controls to its software and hardware.
Partnerships of the kind The Guardian is working on make a lot more sense for most companies that have lost the ability to control what happens to their content, something the Internet has done to virtually anyone whose product can be digitized and turned into bits, but has been particularly acute for content companies. By allowing others to make use of that content for their own purposes, and sharing in the revenue that comes from it, The Guardian takes what would otherwise be a disadvantage — the fact that it has lost control — and turned it to an advantage by becoming a platform. It’s a lesson other companies could stand to learn as well, instead of continually trying to reassert or recreate the control they have lost.
