The first lady of Wapping – may the force be with her?

News International’s commercial chief Katie Vanneck has a plan to revolutionise the business model of newspapers, she tells Ian Burrell

These are changing times at Wapping. James Murdoch, chairman and chief executive of News Corp Europe and Asia, has just commissioned architect Amanda Levete to transform the once dark foreboding "Fortress" into an airy working environment that includes restaurants, shops and a museum, alongside the newsrooms of its famous newspaper titles.

The public, once confronted by razor-wire, will be allowed access to parts of the site, if the plan is approved.

In this spirit of openness, James has called for internal walls to be pulled down and his own sixth-floor office looks out to an atrium ringed by hanging plants and small palms, a reflection of his famously green credentials. Twenty feet below, Sunday Times journalists sit typing at their terminals.

Murdoch fils is away in America, holding budget meetings and talking with investors. But peering through his large glass doors, I can see that, yes, it's true, he really does work standing up, burning off extra calories in the process. A giant black desk has recently been installed and it must come up well past his waist. He has a screen that enables him to video-conference with executives from around the world. And occupying a position in the middle of the desk is a plastic Stormtrooper, a symbol of unswerving loyalty to the Empire.

James Murdoch is a great fan of Star Wars. The white Stormtrooper is a dinky model but immediately outside the door is a figure as dark and foreboding as the Wapping of old: it's a seven-foot high, jet black statue of Darth Vader himself, leaning forward as if to monitor every word or action taking place at News International. It is, I'm sure, James's little joke.

Sat in the line of Darth's stare, on a stylish chair crafted from cardboard (another gesture in eco-friendliness), Katie Vanneck is posing easily for photographs and cracking jokes. Despite her apparent good humour she has been tasked by Murdoch in solving a conundrum deemed impossible by certain sages of the media industry; namely to make a commercial success of the newspaper business.

Vanneck is managing director, Customer Direct, at News International, which means she is responsible for the management of all four of its national newspaper brands, across all the platforms on which they operate.

At 35, her insight is in such demand that she has already been the subject of a tug of love between the Murdoch empire and the Telegraph Media Group, where she was hired as marketing director at 31.

"If I thought this industry was on the way out I wouldn't be working in newspapers. I believe in what we do and I'd quite like to work in this industry for another 30 years," she says, waving her hands furiously, like a bookie on Derby day. "Let's all stop being defeatist. Seriously, we all work on amazing brands."

Vanneck's vision involves rejecting some of the perceived truths that have emerged elsewhere in the industry. She dismisses the idea that advertising is the only revenue stream that will matter, and she is sceptical of the value of those mass audiences which come in their tens of millions each month to the websites of many British newspapers. Instead of regarding the web as a threat to circulation revenue, she talks of a "seamless experience" where a brand performs diverse functions on different platforms and thinks the word "digital" is divisive and should be considered "defunct".

"We've all gone slightly mad when we talk about what success looks like," she says. "Why would publications that have only ever sold 1m copies suddenly be able to have an engaged loyal audience of 23m? Realistically, in terms of paying for products and services, people pay for the things that matter in their lives."

Fundamental to Vanneck's philosophy is addressing not "readers" but "customers", people who have a transactional relationship with a newspaper brand. There is all the difference in the world, she points out, between someone who is a casual visitor to a webpage of Times Online, or picks up a friend's copy of The Sun, and someone who signs up for delivery of a newspaper and chooses to take their holidays in the company of fellow "customers" of that title.

"In newspapers we've all been guilty of not giving enough justice to circulation as a direct customer revenue stream – we've very much thought of ourselves as driven by our advertising businesses," says Vanneck. "If you keep thinking about your consumers as readers you create the ongoing belief in volume versus value and you don't mind whether they've purchased you. It's quite a big change for us because actually a customer is someone you have a transactional relationship with, someone you deal with differently, it leads you to think about their customer experience and customer service."

So, how to build that customer experience? Not, says Vanneck, by offering a discount deal on a new set of field glasses. "We won't be doing binoculars – that ad is the bane of my life. That's not a sustainable business, I don't know how many pairs of binoculars you can sell one customer in their life time. We won't be putting The Sun brand on teddy bears or Page Three jewellery. There have been lots of things that we have done in the past that have been around creating a new revenue stream, not a new business model," she says.

She has slashed the number of commercial partners News International works with from 350 to five, to ensure all of them are on brand. For The Times and The Sunday Times that means travel, wine, culture and fitness. Those titles now have 140,000 "contract customers" who take the papers on subscription.

Some 80,000 of these have activated their membership to the Culture+ programme, which offers discounts on products and services from the Royal Academy of Arts and the National Theatre as well as Murdoch businesses such as Sky Arts and Harper Collins. "80,000 doesn't make us the biggest arts organisation but we are not far off," says Vanneck. The Sunday Times Wine Club, set up 30 years ago, has a database of 300,000 customers who have purchased 80m worth of wine in the past year, making it "one of the largest direct wine businesses in Europe". The Times Health Club has 100,000 members who share tips on how to lose weight. When Vanneck studied her database of "most valuable customers", she came across one man who had entered a Sunday Times travel competition 90 times. She wrote to suggest he bought one of the paper's escorted holiday tours. "He immediately bought one," she says.

The Sun and News of the World brands are based more on entertainment and value. The daily title's Dream Team fantasy football is "the UK's biggest paid for fantasy game", and its online bingo proposition is the "fourth biggest" in the country and, not being the core business, can offer Sun customers bigger prizes than its rivals.

All these ventures, she says, must be driven by the editorial of their respective titles because the customer's engagement with the newspaper is central to the relationship. The News International database of names, says Vanneck, has surpassed the population of Belgium and now equates with that of Greece (just shy of 11m). Many customers engage with both its quality and popular brands ("a huge eye-opener"). Vanneck reveals that NI total audience across all platforms is 71% of the UK population, not a figure she would wave in front of the regulators but a sign of the strength of the business. "Don't tell me that this industry is on its knees, don't tell me that we are not relevant." But it's not all about scale for Vanneck. She doesn't want more readers, just more custom.

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