Indian Newspaper Congress: Free newspapers can work if they are niche

While in countries such as Bangladesh and Pakistan, many daily newspapers are sold at a cover price of Rs 6-8, there are countries such as Singapore, where the second largest read daily, Today, goes free. How viable would it be, in a huge country like India, to make the newspaper free? The post-lunch session at the Indian Newspaper Congress 2008 (INC), organised by the Indian Newspaper Society, on May 16 in New Delhi, debated the issue.

Hormusji N Cama, director, Bombay Samachar, said that in that scenario, the costs of a newspaper would have to be covered by the advertiser. And each and every advertiser he’s met, he said, had asked him at some point of time for free space. He said that newspapers will have to ask themselves what they are selling – an advertorial or news. “A free newspaper is nothing more than an advertorial,” he said.

Sunil Mutreja, president, Amar Ujala, said that for any business house to come up with a free newspaper, it had to start with free newsprint. “Will anybody give me that?” he asked. However, he added that free newspapers could work if they were also niche targeted. For example, there could be a paper catering to the youth and backed by advertisers from youth brands, which could be distributed free at places such as McDonald's, Barista and Cafe Coffee Day.

Mutreja raised the issue of advertisers’ perceptions of a free newspaper. Giving the example of Compact, a daily started by Amar Ujala at a cover price of Re 1 to expand its readership base, he said, “Advertisers felt that a Re 1 daily would be read only by rickshawalas. Just imagine what the perception of a free newspaper would be!”

Rajiv Jaitley, president, marketing and ad sales, Dainik Bhaskar, stressed that there are no free lunches. “It’s about gross subsidy. For a country like India, which is humungous, something that does not have value to it will not do well.”

The real question, he said, was whether the free newspaper would be going to the right segment and whether the advertiser would be getting the right value. “If you are going mass, it will be just wasted.”

Agreeing with Jaitley, Vikram Sakhuja, chief operating officer, Group M, South Asia, said that even though cover price was irrelevant for many publications, “the moment you go free, the consumer discounts the brand value. Once you make the paper free, the entry and exit barriers go away. The cover price, however low, works as an entry barrier.”

Speaking to afaqs! on the sidelines of the INC, Mutreja said that the cover price was relevant to big organisations like Amar Ujala, Dainik Jagran and The Times of India. These companies have circulations in excess of 20 lakhs. A reduction of even 50 paise on the cover price would mean a loss of Rs 10 lakh a day.

Paulomi Dhawan, vice-president, media and corporate communication, Raymonds, dispelled the myth that a free newspaper is funded by the advertiser and said, “The advertiser is not paying for the editorial. The advertiser is paying for the value he gets. He is paying for segmentation and the response he gets.”

PN Balji, editorial director of MediaCorp, which runs the free daily, Today, in Singapore, disagreed with Dhawan. The eight year old Today, which has a print run of 300,000 copies, has been making a profit for the last four years.

Balji gave five reasons for the success of Today’s business model. The first, he said, was that it was competing with The Straits Times, which had been in existence for more than 160 years and which controlled the entire vendor market. “So, a paid model would not have worked. It would have been difficult to break the news vendor associations. That’s why we decided to go free,” he said.

The second reason, he said, was to provide quality content that “had the look and feel of paid content”.

The third reason, he said, was to put up a double agent model at the top level. “A person who is the editor should be the publisher/chief executive officer as well, so that one knows where to draw the line in the marketing and editorial pull.”

Today, according to him, has a 50-50 mix of editorial and advertising, and while 60 per cent of the distribution is done through the public transport system, the rest is done outside.

The fourth reason, he said, was “while other newspapers gave the ‘what’ of news, Today decided to give the ‘why’ of news”.

The fifth reason, he said, was the distribution, which went beyond the underground train system. “We decided to go to universities, offices and homes.” Today created its own distribution network. Asked how they prevented people from taking copies in bulk, Balji told afaqs! on the sidelines of the INC that they had their own men giving away copies at strategic points. These men worked on a salary basis, rather than on a commission basis.

However, Balji reiterated the point raised by the others that in India, any “paid model going free would not work. Business houses would have to find niches.”

The session was conducted by Pramath Raj Sinha, managing director, 9.9 Media.