Media companies are in dire straights, and therefore vicious about money

(written by lawrence, however indented passages are often quotes)

A great article about the tough negotiating, and betrayals, that now seem an automatic part of dealing with declining media companies. In this particular case, the newspaper under discussion is the Guardian, a famously left-wing paper.

Hang on a minute, I thought. This wouldn’t be the same Rewired State that the Guardian “royally screwed” (in the words of one RS employee) between 2010 and 2011, would it? Apparently so.
According to emails seen by The Kernel, the Guardian agreed to provide salaries for two Rewired State staffers between December 2010 and December 2011, desk space and an undisclosed amount of working capital in exchange for 50 per cent of the company’s revenue.
Founder Emma Mulqueeny agreed to work for the Guardian part-time, so that her wages would not be charged to the company. Two members of staff were hired on salaries of £30,000 each. Crucially, the Guardian’s sales team were to be on hand to beef up Rewired State’s earning power.
But things didn’t go as planned. Increasing their costs to accommodate the Guardian’s demand for half their revenue, the team found their leads drying up. The business was in trouble. Meanwhile, friends of Mulqueeny say she felt “pressured” into doing more work on unrelated Guardian projects as the business suffered.
“Hack days” were run at cost by Rewired State, with the Guardian raising £70,000 for the South By South West Hack Day, but only passing on £40,000, of which 50 per cent was again immediately taken as “revenue”, according to emails we have seen.
Suddenly, and, according to Rewired State insiders, without warning, Guardian News & Media’s Head of Business and Professional, Colin Hughes, ordered the Guardian sales team to stop selling Rewired State hack days and products.
“Every hack day we ran for them made a huge profit, so it just didn’t make any sense,” claimed a source close to the company last night. “No one actually told us anything. It just went dark. I guess their strategy changed, but no one saw fit to tell us.”
The Kernel understands that Rewired State had been instrumental in winning media partnerships for the Guardian, including one with Hewlett Packard that netted the newspaper £400,000.
By July 2011, the Guardian’s intentions had become clear. Mulqueeny was called into a meeting and told that although the arrangement with Rewired State was to be terminated early, in September, she was to be offered a position leading the Guardian developer network full-time – provided she severed all ties with her own company.
According to our source, she declined, preferring to go down with a ship which had been overloaded with ballast by its larger commercial partner, despite an offer of £90,000 a year from the paper.
As a consequence, the Guardian called in all revenue owed to them, effectively bankrupting the business. Mulqueeny is now attempting to crowd-source funds to keep the company alive.
Experiences like Rewired State’s aren’t restricted to newspapers that pay fawning editorial lip service to developers and data in their coverage but play hardball with terms in the background, regardless of the fact that the developers in question are single women with children to support.
The Kernel has spoken to several programmers whose relations with other media groups broke down in similar ways.
But there does seem to be growing unease in the developer community about the behaviour of a newspaper whose ideology they would normally feel most at home with; one which continues to trade on its reputation as a hacker-friendly environment.
Large media companies are in dire financial straits. That leads to more opportunities for sparky entrepreneurs who promise them easy riches. But it also means ruthlessness when things don’t work out.
The Guardian still runs hack days, for profit and using a similar business model to Rewired State, but without Mulqueeny and her team.

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