Netflix-ication of print media in India?

Monetising online readership, a deeper focus on content and getting revenue from the reader are ways to make the business future-proof, observes Vanita Kohli-Khandekar.

Girish Agarwal, director, DB Corp, is a dyed-in-the-wool newspaper man.

After decades of building the circulation (copies sold) of Dainik Bhaskar and its other dailies at throwaway prices, he reckons the tide has changed.

"We need to make money from subscribers," says he.

Anant Goenka, executive director, The Indian Express Group, agrees: "The best way to future-proof our business is to see that 50 per cent of the group's revenues come directly from the reader."

Dozens of publishers agree. This push for pay revenues is the first, most profound change the pandemic has forced upon publishers in India's Rs 29,750 crore (Rs 297.50 billion), heavily ad-dependent newspaper industry.

"The second is the doubling and tripling of the reach and readership of newspapers online during the pandemic year.

"Print is growing neatly every year, but digital is exploding," says Goenka.

The Express Group has seen unique visitors go up from 97 million in 2019 to over 170 million currently.

Out east in Bihar and Jharkhand, Prabhat Khabar has seen page views jump from 6-7 million to about 60 million.

In Kerala Mathrubhumi saw its visitors jump from 8 million a month to 12-13 million, says Managing Director M V Shreyams Kumar.

The third, possibly subtler change is the shifting of the readership action to small-town India.

"Overall, 80-82 per cent of the February 2020 circulation is back. Where the problem continues is in the metros," says R K Agarwal, chief financial officer, Jagran Prakashan.

"Before Covid ad spends were split 60:40 in favour of metros. Now it is 60:40 in favour of Bharat (small-town India)," says DB Corp's Agarwal.

A higher penetration of the Internet and greater density of population and housing in the metros mean getting papers back into entire building societies has been tough.

On the other hand in spread-out, single-home-dominated small towns with lower net penetration, readership is almost back to normal.

Has the pandemic done for Indian newspapers what Netflix did for Hollywood studios -- forced them to look at the future and act quickly?

The pandemic palpitations

The national lockdown was announced on March 22 last year.

The next day publishers woke up to find that over 70 per cent of their business had been wiped out.

"It has been a nightmare," says Jagran Prakashan's Agarwal.

Like dozens of other newspapers Dainik Jagran almost halved the pages it printed (since there were fewer ads), slashed costs across the board, and consolidated printing.

When the pandemic hit, "ad rates were down already. But in the last nine months they plummeted from, say, Rs 500 per square cm to Rs 100-200," says K K Goenka, managing director, Neutral Publishing House (Prabhat Khabar).

More than 70 per cent of the industry's revenues come from advertising.

Not surprisingly then, the top line declined 50-70 per cent and operating margins went from 15-20 per cent to a devastating loss for listed (and unlisted players) in the first quarter of 2020-2021.

While the numbers are crawling up, it has shaken the industry's faith in advertising.

"The media industry has to have a sustainable business model and that is subscription. Advertising is equivalent to other operating income. Covid made us realise that," says Agarwal of Jagran.

Publishers across the country, including rival Dainik Bhaskar, agree.

Across the 12 states, 65 editions and almost 5.5 million copies DB Corp has steadily taken cover prices up.

From an average of Rs 2.80 in 2013-2014 for all DB newspapers it currently stands at Rs 4.30 a copy.

This helps cover some of the Rs 10-20 that it takes, on average, to produce a newspaper.

That is where digital comes in.

The push for pay

"The big challenge is monetising digital," says Kumar.

Most publishers get 5-7 per cent of their top line from digital.

The physical product continues to grow and the rate that a newspaper gets per thousand readers is about six times that of digital.

Therefore, publishers didn't bother much with it.

However, in the past two-three years both readership growth and the economy (and, therefore, advertising) have slowed.

Of the 662 million Indians online, 395 million consume news online, up from 278 million in 2018, says the Comscore data.

Now add the evidence from both entertainment (Netflix et al) and news (The Ken) that users are willing to pay for differentiated and high-quality content.

The direction then is clear.

And the Indian industry has both brands -- ones that have investments in place and those that are making them.

"Our fixed cost as a proportion of revenues is much higher. We invest in the finest writers on defence and diplomacy. This model of investment in quality content worked after Covid," says Goenka.

Adds Agarwal of DB Corp: "We have a 3,500-strong edit team across India. We have invested in having a reporter cover every galli and mohalla. The next four-five years are the golden years for journalism. Advertising cannot come from digital. And why would users pay for digital: It has to be worthwhile."

This is where the big challenge comes in.

"The readership of print is mature but on digital it likes light content, largely entertainment, Bollywood, lifestyle and such stories," says Goenka of Prabhat Khabar.

The fluff that serious newspapers put in supplements is what gets views online.

This then brings the ball right back to reach and advertising, a game where the large platforms win hands down.

Over 70 per cent of the Rs 22,100 crore that advertisers spent online in 2019 went to Google and Facebook.

Can subscription work only for specialised or business publications a la Wall Street Journal? Globally The Financial Times is one of the biggest successes online.

Its Chief Executive Officer John Ridding told Business Standard in 2019: "I don't believe that you can only charge if it is some kind of business publication. The Guardian (a general paper) is an example of the reader revenue model. It says that readers value news and information."

"Everybody should be served quality journalism. Advertising cannot sustain you because you can't beat Google and Facebook on reach. Publishers need to develop reader revenues," Ridding explained.

"The barrier is technological expertise. There is a lot of hard work involved in building your readership (on digital). Once you get it, it is a virtuous circle."

Indian publishers are just stepping into it.