The News Business Part IV: The prediction

By Vanita Kohli-Khandekar , NA, NA | In Media | July 31, 2008
The future of news belongs to media that can be adapted to India's reality

MyToday & #BANNER1 & # offers a bouquet of services on mobile phones. These include news, stock markets, cricket and health among several others. The user has to opt for this free service and he gets headlines with a text ad at the bottom of the screen. Since it was launched in 2006, MyToday has hooked 3.5 million subscribers.

News is the second most popular service at MyToday after cricket with more than one million subscribers and is one of the highest revenue earners. More than 75 advertisers such as Akai, Birla Sunlife and Shopper's Stop have used MyToday which is on its way to becoming a very profitable service. At a rate of 300,000 new subscribers every month it will hit 10 million in a year, says Abhijit Saxena, CEO, Netcore.

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The Mumbai-based company is the brainchild of Rajesh Jain. The man who launched one of India's first portals, in 1995 (later sold to Sify) has been an evangelist of sorts for the online medium. Why then did he choose the mobile for his next big venture?

"Internet growth in India has been somewhat stymied because of penetration," says Jain. The mobile he reckons is a much more versatile device, with a large penetration. Before you splutter that mobile internet is just a fraction of the total mobile population of 275 million, rest easy. Jain is keen on exploiting a service that is low on bandwidth consumption (a huge limitation in India) and is easily available - SMS. "So far all usage of the mobile media has been around ringtones, wallpapers, things that you create pull for," says Jain. The result has been an industry where the content creators have no connect with the consumers they serve. "All the VAS (value-added services) operators sit behind the mobile operators," says Jain. His idea was to speak direct-to-consumer.

Jain's insight on what can and cannot work in India is crucial to understanding where the news business is headed. If there is any lesson to be learnt from the tabloidisation of news, especially on television, it is that the imperatives of doing business in India will finally get you. The business plan that your consultants draw up could be grand.

However, all news media will have to operate within the limitations of India - electricity being the biggest one. Assuming that this will not change drastically in the near-term, the question we asked ourselves was which media vehicle has the hardiness to survive, penetrate and get big numbers - the mobile and radio stood out. (See Is growth limited by).

Who will lead?

Radio is out for now. Even if the government allows radio operators to offer news, most don't see themselves becoming full-fledged 24-hour news broadcasters. They will at best offer an hourly or daily bulletin on their stations. In large tracts of India, newspapers and television will continue to analyse what the mobile phone alerts you on. This could be through SMS or if bandwidth permits, through clips. In the metros and top 20 towns, the internet will play in combination with the mobile phone. It is not as if the mobile and radio will take over all news dissemination. They will probably have an increasing share of news consumption and therefore revenues, especially pay.

That is the media vehicle part, what about the content? From whatever one has read so far, it is clear that there are two distinct needs from news. One is the demand for commodity news on what happened, when etc. This is the bread and butter of the news business and across media the pressure on this will keep increasing. This will by definition be a high-volume, low-margin, tabloidish game.

It could mean more sting operations on TV, more user generated 'content' on the net or reams on Saif Ali Khan's affair with Kareena Kapoor in print. This is a market that can be dominated by any media that can reach faster, quicker and has a fun take on anything that happens. This kind of news will largely be ad-supported and subscription will have a smaller role to play.

The other is the demand for an editorially led product that makes sense of the babble. The kind that consumers are willing to pay for to read or watch its sharp analysis and viewpoint, a bit like The Economist. This will be a smaller, very profitable market. It will by definition be a somewhat verbose product, so this market will be dominated by newspapers, magazines and websites. The odd BBC or CNN-IBN could be part of this market, but TV will have a limited role to play here. This could be a blend of ad plus pay revenues, though considering the texture of the Indian market, one suspects it will be premium-advertiser supported.

So, the changes coming up in the news market in India, most expected to kick in by 2009, an election year, will operate at two levels.

The first is consolidation and more specialisation and segmentation especially in the more mature markets where commodity news outlets are already plentiful.

The second is the rise in penetration across India and a greater massification and commoditisation of news. Both these changes will mean more media across a bigger geography and hopefully more variety. It will be a continuation of what the privatisation of news started in India - a plug-in into the heterogeneity of the market and its volumes.

The specialised news market

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Bala Deshpande is a news veteran in a special way. In 2000, long before this genre was under scrutiny, ICICI Venture, where she is senior director, picked up a stake in TV Today Network (Aaj Tak). When it exited after three years, it had made a fivefold return on the investment. She thinks that "news is becoming a commodity especially on the electronic front." L.K. Gupta, chief marketing officer LG India, one of the biggest advertisers on the news genre agrees: "Two years back 75 per cent of our spends went to newspapers, now less than 60 per cent goes to them because we can't target sharply enough."

The answer, says Deshpande, is sharper target definition that gets into psychographics, reading/watching behaviour, time spent et al. From that perspective, "Mint has done a good job," she thinks. The business paper launched by HT Media in 2007 has the texture of a daily news magazine and a deliciously non-businesslike design. In spite of being the fifth English business paper in a market of barely 100 million English speaking people, it has certainly created a lot of buzz.

This is change number one. In markets that are well-penetrated by all media vehicles, where a lot of news brands compete for the time of a jaded audience, say the seven metros or the top 20 towns, it is more specialisation and segmentation that will work.

Some of this is already evident in both print and television. Chandradeep Mitra of Mudra Max points out to gadget shows, education supplements, foreign news supplements, auto shows and so on. Since single television homes could limit segmenting, one way of doing it is by looking at day parts more innovatively. Mitra says that, "In prime time, news is becoming entertainment; off prime time it is sharply segmented."

The commodity news will exist here but perhaps will grow faster on newer vehicles, say the mobile phone or in car radios. But from an ad spend perspective it will be a falling yield game, unless the numbers are massive. To really make money from commodity news, a brand will have to be among the top two in terms of reach.

News, the commodity
The second trend - of deeper penetration by geography, language and by being more local - will see more action. "News channels' viewership seems to be moving away from metros to non-metros," says Nikhil Rangnekar, executive director, India (West), Starcom Worldwide. He points out that in Hindi news viewership (prime time 9 pm) the growth was 16 per cent in non-metros, as against only a 10 per cent growth in metros. In the same time band, English news channels have grown by 20 per cent in viewership in non-metros and stagnated in the metros. The same is true for regional news channels that have shown a higher growth rate of over 30 per cent in non-metros, against 20 per cent for metros.

Media owners know this. Of the 67 news channels in India 23 are in Hindi, 13 in English, while other major languages have anything between 2-5 channels each. Many were launched in 2007. Earlier this year Business Standard, The Economic Times and Dainik Bhaskar launched business dailies in Hindi. Business Standard launched one in Gujarati too. Then there is a Hindi business daily due from the tie-up between Dainik Jagran-Network18. These launches, more than anything else, finally acknowledge that India's economic growth is not limited to English speaking metros.

This is true for the Internet too. Sanjay Trehan, CEO, NDTV Convergence, says that more than one-third of traffic on comes from small towns. "The next level of growth is going to come from tier 2 and 3 cities," says Trehan. To cash in on it, the company recently launched "We very firmly believe that the future growth of India is through small-towns. That is why we have embarked on private treaties," says Ravi Dhariwal, CEO, BCCL. Private treaties refers to the picking up of equity in small and medium scale enterprises (SMEs), the largest growing category of advertisers, in exchange for media. BCCL has signed on over 100 companies under private treaties.

SMEs in fact are the reason why ad spend growth has kept pace with the growth of regional editions of newspapers. The numbers and spend of SMEs has been rising. And it is to tap into this advertiser who wants to reach out to his audience in a local context that you will see the trend towards localisation increasing.

The free market for news will eventually connect up all of India and get everyone jabbering about issues, a feat a controlled news market could never achieve. That will make for a better functioning and robust democracy. That alone should be a good enough reason to cheer this babble along.

Vanita Kohli-Khandekar is an independent media consultant and writer.

The Brand Reporter Special Report on The Future of News is available in pdf format, which can be downloaded here.

afaqs! is also organising an event on The Future of News on Friday, August 1, at The Oberoi in New Delhi. To register, click here.