INMA 2009: Moving to a more realistic cover price

By Sumantha Rathore , afaqs!, New Delhi | In Media | August 28, 2009
The theme of the conference was 'Solutions: Building audiences, revenues and our futures in a challenging environment'

The first day of the third Annual South Asia Conference of INMA saw stalwarts of the Indian print industry discussing how to drive new initiatives in the economic slowdown to make the newspaper business lucrative.

The two-day conference is being held at Le Meridien, Delhi.

& #BANNER1 & #In the first session of the day, 'Growing audiences' profitability', Devendra Darda, associate editor and executive director, Lokmat group, presented a case study on building circulation. This was followed by a discussion among publishers on whether the cover price should be increased.

The first round table discussion of the day, titled 'Moving to a more realistic cover price' chaired by Pramath Raj Sinha, founder and managing director of 9.9 Mediaworx, included the movers and shakers of the print industry: Girish Agarwal, director, Bhaskar Group; Ravi Dhariwal, chief executive officer, The Times of India; Sanjay Gupta, director, editor and CEO, Jagran Prakashan; Jacob Mathew, executive editor, Malayala Manorama; N Murali, managing director, The Hindu and Ms Kasturi and Sons; DD Purkayastha, managing director and CEO, Anand Bazaar Patrika; and Rajiv Verma, CEO, HT Media. The panel debated the pros and cons of the issue, which has been haunting the newspaper industry for some time now.

Sinha started the discussion by taking the audience back to the 80s, when newspapers were starting to expand beyond their home markets. "The issue of whether cover prices should be more realistic can be dated back to that time."

He posed a few questions to the panellists: "Some say that readership is low and has a long way to go and advertising in India is yet to pick up. So, why worry about cover price of the newspaper? Also, when the internet is free, why charge for a newspaper? Is the fundamental economics of this model, which we have been following for ages, workable?"

He went on to ask, "Since the price of every commodity has increased, why aren't we increasing the price of this model (newspapers)? Do we need to increase the prices of this model in stages?"

Mathew of Malayalam Manorama stated that low pricing is good for the model when the market is booming. But the reader can pay a penny more for credible content. "Especially for a market like Kerala, which is editorially driven, the prices can be kept in accordance to that. Also, English dailies can still command a higher cover price, without creating a significant dent in their readership. But the case of regional offerings is a little different," he stated.

Murali emphasised that it is time to correct the highly skewed pricing structure of the print model. "The newspaper industry, over the last five to six years, has built up a bubble, which is about to burst. The (print) industry is guilty of following certain practices. The time has come for a serious wake-up call for all of us."

He said that cover prices of most of the newspapers in the country don't even cover part of the single news coverage, forget about the entire edition. "Why dump a model which is sound and successful and make way for something free (read digital)?" he questioned.

Murali added that unlike the standard 20 per cent growth in print advertising, which has been the norm for a while now; in future, advertising is expected to witness single-digit growth.

He said that if the print industry needs to reel out the unrealistic cover prices, they should increase the cover price every month by at least 50 paise, till they reach the Rs 6-7 mark, "so that we reach the right price soon, and not succumb to other media like internet and television."

Disagreeing with the pricing strategy suggested by Murali, Gupta said, "Increasing the cover price is a difficult decision to take. If you increase the prices, readers might shift to other models."

Verma, on the other hand, recalling what happened some 15 years back, said, "When The Times of India entered the market, it adopted penetrative pricing, which forced us out of our slumber. It's neither the question of 'either-or', but about what readers want and how to generate profits."

Competition and maturity level of the market are factors that can drive this decision. He said that he was unapologetic about the low cover price, but added that "We are undergoing a change now and there are two ways in front of us. Either continue with the path of low price or rebalance ourselves."

Purkayastha, taking a middle path, said "It is not easy to answer this. But to a large extent, market dynamics play an important part. Also, pull of the content is important while commanding a certain price."

Sitting in the audience, Tariq Ansari, managing director, Mid Day Multimedia -- who is also the volunteer president of the INMA Asia Division board of directors -- raised a point in favour of increasing the cover price.

"We are unreasonably dependent on advertising. If we do not increase the price, then with media buying agencies getting deeper into the editorial, our content credibility will go down."

Putting across his views on the issue, Agarwal said, "Increasing the cover price is not the solution; it will only lead to a decrease in advertising." He added that in some markets, differential pricing can also play an important role. He cited the example of Bhaskar group. The group has different pricing strategies for different markets. "For example, in the market where the group is at the entry-level phase, the cover price ranges from anywhere between Rs 1.50 to Rs 2. In the established markets, the pricing is mainly at Rs 3."

Murali again stressed that the industry needs to take mini-steps in the direction of increasing prices, "but it should be done in such a way that it does not affect the readerships or advertising in the long run."

The INMA conference saw a mix of practical case studies and discussions relevant for the newspaper industry in India, Pakistan, Bangladesh and Sri Lanka. More than 150 newspaper executives from across 30 companies in India and South Asia are registered for the INMA South Asia conference.