By Mark Watts
Exaro showed how a small start-up team can hold power to account, but it also pointed the way to make investigative journalism financially sustainable. So how could the journalistic success of Exaro be matched on the commercial side?
Launched in 2011, Exaro quickly established itself by exposing in its first few months how thousands of senior civil servants were working ‘off payroll’, through personal-service companies, allowing them to choose how much tax they paid.
We worked with BBC2’s Newsnight on the initial story on Ed Lester, then chief executive of the Student Loans Company, as well as later revelations on what became the ‘Whitehall tax scandal’. The mainstream media quickly realised that Exaro was a formidable journalistic force.
Exaro ran a wide range of stories, often working with national newspapers or broadcasters, meeting its journalistic motto of holding power to account.
We obtained a secret recording of Rupert Murdoch in which he admitted to knowing that his newspaper journalists had long been paying bribes for information.
And our reporting on evidence of child sexual abuse by MPs and other VIPs – and subsequent cover-ups – sparked multiple police operations and an overarching inquiry that is set to last for years.
As Editor-in-Chief, I was responsible for overseeing its editorial success, but had much less say on the commercial side. As a result, my colleagues on the Exaro board had to learn lessons about the evolving media industry that I well knew already.
For example, the then managing director proposed early on that Exaro put up a paywall. I pointed out that a paywall had no prospect of working at least until there was strong awareness of a brand and of what it did.
The owner who invested significant money to make Exaro happen, Jerome Booth, said that he wanted us to be bringing in revenue.
Fine, I said, but the proposal was plainly premature and would simply fail.
However, it was assumed that the MD knew what he was doing on commercial matters. So Exaro had to learn the hard way: our paywall at that point, as was inevitable, failed; and we needed people as skilled and experienced on the commercial side as it had in the editorial team.
Exaro hired an advertising salesman as a commercial director. When I asked the MD what targets had been set for the new commercial director, the answer was, none.
So what was the new commercial director’s strategy? Exaro should sell stories to trade magazines.
Members of my team shook their heads in disbelief.
Exaro’s initial model was based on three revenue strands: subscriptions, add-on data services and advertising.
There was miniscule revenue from advertising. Otherwise, the commercial side had made no progress.
Exaro’s most significant revenue stream was not even in the original model: sale of editorial content. Although it would never be enough to cover our costs, Exaro’s editorial success meant that it earned significant fees for stories from national newspapers and broadcasters.
One outlet even offered a retainer contract for a year that would have meant a significant, steady revenue stream. We undoubtedly would have been able to build on that in subsequent years, but the board decided at that precise moment to halve the editorial budget and throw away the prospects offered by the retainer deal.
My team, frustrated by the lack of progress on Exaro’s business side, began a project to carry out data journalism in a way that also had commercial use.
The first project, monitoring corporate insolvency data, provided new journalistic insight, but also generated and organised information with wide commercial application.
The commercial director’s job was to sell the service. But he did not understand the product, or even what was meant by “add-on data” services, and was unable to sell. It drove members of my team to become part-time salespeople to demonstrate that the service would attract subscribers. At that moment, the board pulled the plug on that, too.
We showed, though, that an investigative website could compile information with commercial application as a way of funding the journalism. Indeed, the journalism promotes the brand name to fuel the commercial side.
So Exaro learnt something else that I knew all along: vision is required not only on the editorial side, but commercial, too.
Despite the intentions, Exaro became an example over five years of “benevolent capitalism”, where a wealthy owner provided funding to keep it going, rather like the original model of print media centuries ago.
However, if the journalism is upsetting people in positions of power as much as Exaro did, then a benevolent wealthy owner, quietly campaigning to be made a Lord, whose wider group of companies is under financial pressure, is inevitably going to end up pulling the plug.
Mark Watts (@MarkWatts_1), co-ordinator of the FOIA Centre, is the former Editor-in-Chief of Exaro. Another version of this article appeared in Free Press.