Ten years is a long time in a person's life. And for a new venture, a decade is a long enough time to have either gone under or turned into a great success. Neither applies to the online businesses of India's newspaper publishers. To use a colloquial expression, they are neither here nor there.
Lokmat went live with its website in 1994. The Hindu has been in business online for 15 years. Malayala Manorama's website went up in 1997, the same year as did hindustantimes.com and jagran.com (now available on the Yahoo! platform). The following year saw the launch of websites from Dainik Bhaskar and Business Standard. The Times of India and The Economic Times went live in 1999.
& #BANNER1 & #Net losses
Should Indian newspaper publishers revisit the reasons they are on the net in the first place? Or, preposterous though this sounds, whether they ought to be online seriously at all? Being the first mover can no longer be a reason because everybody has been there, done that.
Just last month at the 62nd World Newspaper Congress in Hyderabad, the publisher of The Wall Street Journal and CEO of Dow Jones, Les Hinton, said in an interview with Mint, "I think the great mistake that newspapers have made around the world is to believe that it makes sense to give their product away free online with the belief that advertising will pay for everything." Americans, for example, have got used to free news online and see no reason why they should pay. Now when publishers need to charge, they face a rebellious audience. So great is the frustration of the publishing world about the continuing losses online that from Rupert Murdoch downward, Google and other aggregators have been attacked for raking in the money while the content creators are being financially emaciated.
It is easy to understand the resentment brewing among newspaper publishers about aggregators, especially Google. They have a sense of somebody stealing their meal while they themselves are starving online. To be fair to Google, the problem of western dailies losing readers predates the rise of the search engine. The web versions of dailies have never done well financially - this was true even before Google grew to monopolise the scene.
Problem of plenty
Little wonder then that barring the odd example, Western newspapers have spectacularly failed in building an independent online business. Newspaper readers are migrating online but ad revenue is not. "The newspaper business model is powerless to compensate for falling print ad revenues, and the problem is not going to go away. The print model cannot and will not migrate to the internet, where there is a "revenue black hole," Timothy Balding, co-CEO of WAN-IFRA, told the World Paper Congress at Hyderabad. To underline the fact that rising online advertising could not make up for the losses in print, Balding said that by 2013 worldwide "combined print and digital revenues will be less than print revenues in 2008." (WAN-IFRA is a worldwide association of news publishers.)
Yet, Indian publishers are reluctant to share their disappointment with the online experience. It took Aroon Purie, Chairman and Editor-in-Chief, India Today Group, courage to say at the 37th World Magazine Congress in London in May last year that he would not be investing any more in the digital business because he couldn't see where the money was. According to the website contentSutra, Purie dismissed the online approach in the West as a "pretty dumb model" which involved "spending dollars to chase cents". Harsh perhaps but that is exactly how it has been.
Indian publishers have more time on their hands than do western ones. That is why Purie said that he could afford to wait: "I hope that this model is sorted out in the West and by the time it comes to us we have it all up and running."
Easy way out
The growth of internet penetration has been somewhat slower than was predicted: an estimated 50-60 million Indians go online each month (as compared to 320 million newspaper readers and 460 million TV viewers). All the same, online advertising is growing rapidly and should touch Rs 1,500 crore in the next three to four years. That's a big pie - but newspaper publishers will get only a tiny fraction of that treat, the bulk being taken away by online specialists in some form or the other.
Have India's publishers already given up the battle for the internet? In spite of having been online for a decade or more, most of the newspaper websites - barring a few honourable exceptions - are still small. Most of them do less than 10 million page views per month and only a handful get past 25 million page views. Even assuming a (generous) ballpark monetisation of Rs 100-200 per thousand page views, a site doing 25 million page views would earn Rs 25-50 lakh per month or Rs 3-6 crore per year - too small to be of interest to any newspaper company. (Just to provide perspective, the largest advertising-based online company, Info Edge, owner of naukri.com among other sites, generated revenue of Rs 245 crore last year. In other words, it earned more than all the Indian news websites put together.)
In the name of interactivity, most news sites empower users to comment on the stories, participate in polls and play online games such as Sudoku puzzles and crossword, share news items through e-mail and social media sites such as Facebook.com, Twitter.com, Digg.com, a social news sharing website, and Del.icio.us, a social bookmarking site. Where blogs exist, they are open only to the daily's journalists.
Newspaper publishers in India have also not exploited the crowd-sourcing potential of the online medium, points out Gaurav Mishra, chief executive officer, 20:20 Social, a social media marketing agency. Crowd-sourcing is a term used to indicate that consumers are involved in the creation of either content or product.
For example, the Qatar-based TV news channel, Al Jazeera, which runs a special website called Labs.Aljazeera.net, captures and displays news items gathered from various social media sources such as blogs, Twitter, Youtube and Facebook. The site ran a notable crowd-sourcing activity titled 'Mapping the War on Gaza' in January 2009, in which it asked its readers from across the world to submit news related to the War on Gaza and displayed the stories on an interactive map.
"Newspapers usually put up their own views online, but they can make use of internet technology to incorporate - by integrating Twitter and Facebook status updates with the news pieces - the readers' reaction to any important development," suggests Kiruba Shankar, a prominent blogger and founder of Business Blogging, an online marketing firm.
Not everyone is online
Even if news websites turned hugely interactive they would continue to be a drain. But by doing a half-hearted job, Indian publishers are doing themselves a disservice. They are neither generating great traffic nor are they generating revenue. But one thing they are indeed doing: getting Indian surfers used to free news content. Ten years later, they are doing exactly what western publishers did - relying on advertising and throwing away their content.
Rahul Kansal, chief marketing officer at Bennett, Coleman, publisher of The Times of India, does not think that the net will pose a threat to print as it has in the West. "For one, newspapers have been accessibly priced," he says. "Our unique distribution system whereby a reader receives the paper at his home is habit forming, it locks you in. And lastly, most newspapers in India have aligned themselves to the youth. Their tastes and preferences, the look and feel and to top it all, its low cost. The incentive for him to dump the paper and move online is very low. In India, it will be a very different trajectory."
Kansal does have a point about the low prices of dailies in India. Dailies are typically priced between Rs 3-5 whereas the price for mainline dailies in the US or the UK would average around $1 on a weekday. On a purchase power parity basis, an Indian daily would have to be priced at about Rs 10 to make an equivalent dent in the pocket. Besides, internet access in the West is affordable whereas in India broadband penetration has yet to take off.
Not everyone in the publishing business shares Kansal's cheerful optimism. N Murali, managing director of The Hindu, says that there is time to experiment with online without too heavy an investment or risk but "this time window may not last beyond 5-10 years," adding, "In the long run, not to charge for content online will be disastrous. The free model will knock the bottom out of the newspaper's business model especially when a few years down the line, online cannibalises print and reaches a critical mass and print starts to decline in a secular, structural manner."
Just look at the figures for some random news sites, with the percentage contribution of overseas traffic in brackets: Dainik Jagran (20 per cent), Mint (25 per cent), Business Standard (28 per cent), Hindustan Times (40 per cent), The Hindu (60 per cent) with Malayala Manorama and Divya Bhaskar getting as many as 70 per cent and 72 per cent of their traffic from outside India.
One daily that has tried to make its archives (over 90 days) pay is Business Standard. It claims to have got a few thousand people to each pay Rs 149 per year. It may be a tiny step but the daily is at least thinking beyond vanilla advertising. If it can get a few thousand to pay, there is no reason why NRI users, for example, won't be willing to pay for news from home in substantial numbers. And maybe residents will pay for something else.
It's not that pay is a panacea for the problems that plague online news sites. Whether pay or something else, Indian publishers will have to look beyond the horizons painted by their counterparts in the West. We know where the path they took has led them.