It feels good to be counted among the leaders

The CyberMedia group, from its modest beginnings in 1982, is now a formidable force in the technology magazines genre. It has 9 publications under print, and reaches out to 12 lakh readers across India. And, why just India? If everything goes off well, the group will shortly launch its maiden offerings for the overseas markets.

Gupta, a first generation entrepreneur, has spearheaded the group's pioneering work in the IT publishing space. Few would have imagined the grand success, when Gupta joined HCL in 1977 after a stint in IIT and IIM. In this interview with Aditya Chatterjee and Prajjal Saha of agencyfaqs!, Gupta discusses various aspects of running a niche publication business and CyberMedia's future plans. Excerpts.

Edited Excerpts

I joined HCL way back in 1977, after completing my engineering at IIT in 1975 and a two-year stint at IIM, Calcutta. The IT business was then at its nascent stage. Come to think of it, even the PC had not come out then. In certain ways, the boom was similar to that of the great dotcom boom of the late '90s and there were great opportunities for entrepreneurs.. So, after three years at HCL, I branched out on my own and with the help of a few associates, started a small infotech company, which is known as SQL Star these days.

In the late '70s and early '80s, the IT business was highly localised and players in one region had no knowledge about companies in other regions. While there was a mad rush to get into the infotech space by entities engaged in entirely diverse fields, the industry suffered from a total lack of information. As a player myself, I was acutely aware of this reality.

Around the same time, a couple of friends at Delhi's Defence Colony, were planning to bring out a newsletter, titled 'Livestock Times'. For me, it was an eye-opener. I was struck by the idea of bringing out a newsletter for the information technology industry. The newsletter turned to be a magazine, and that's how our first offering Dataquest was launched.

We are planning to launch the IPO in mid December 2004. The Securities and Exchange Board of India is yet to give its formal approval, but our offer document has already been cleared by the Bombay Stock Exchange. The National Stock Exchange has also sent in its approval.

Let me explain. The money is being raised for four new projects. First, we want to scale up our content BPO activity. As of now, we offer services for foreign publishers in the areas of content creation, production, data conversion, digital asset management and BPO services. The idea is to scale up this operation, hire more people and raise the turnover level by several notches.

Our second aim is to launch the Indian edition of Business Week, which will be targeted at senior business professionals in the Indian corporate world. The third and the fourth projects include the launch of BioSpectrum in Singapore and the launch of a global BPO magazine, respectively.

As for the permission from the Singapore government, we are in the process of forming a company in Singapore and have applied for the permission for launching BioSpectrum in Singapore.

India’s success story in software, services and BPO is legendary. The industry is $12 billion today and is expanding at a 30 per cent annual growth. We want to launch “Global Outsourcing” to address this market. The readers for this publication would be the CXOs in English speaking countries who are today looking at offshoring work to India. There is currently no media that addresses this space. We propose to distribute this publication mainly in US, UK and India.

As far as Dataquest and PC Quest are concerned, we felt that we were already too late for an international edition. The reason behind this is that there are hundreds of PC and IT magazines. But with BioSpectrum, we still have the first mover advantage. In fact we had discussed this subject internally and then we came to a conclusion that there is no point in becoming another player in an already overcrowded market, instead we can make our mark in a new genre which still hasn't been explored extensively.

BioSpectrum, as you must be aware of, has already been launched in India about one-and-a-half years back. It has been a highly successful launch and the magazine has established itself as a voice of the biotechnology industry.

We decided to launch a Singapore edition because of two reasons: First, Singapore is investing very heavily into biotechnology. And second, we have a first-mover advantage in this category in that country.

The two international publications, BioSpectrum in Singapore and the BPO magazine, will be fully owned by CyberMedia. We will launch them once the funds are in place. Of course, we’ll have distributor relationships in various countries.

By the way, I think CyberMedia will be the first Indian media house to launch a magazine overseas, which is looking at a truly global market, and not the Indian diaspora. There are, of course, existing international publications aimed at the global Indian community that have been launched by Indian media houses.

We are awaiting a formal clearance before BusinessWeek is launched in India. The matter has been referred to the Group of Ministers. The government is deliberating about what constitutes news and current affairs and what constitutes speciality magazine.

I do not have any news of rival publications blocking the BusinessWeek venture. In any case, let us assume for arguments sake that a rival creates blockages. Now, if this happens, it affects a number of media houses whose applications are pending clearance.

The question is premature. We are hopeful that the venture will be cleared by the I&B Ministry soon.

Both the international magazines will be earning a substantial chunk of their revenues through advertising. In fact, most B2B magazines have a similar business model. The advertisements mostly come from equipment suppliers for the industry and from existing players who want to disseminate details of their work to the peer group. For example, Biocon, Sartorius, etc are regular advertisers with BioSpectrum. The same holds true for the BPO industry. You must remember that these magazines will be read by international customers. Therefore, many BPO companies advertise in magazines such as ours to showcase their prowess at handling BPO jobs.

I can’t share the future targets with you. We earn 44.5 per cent through advertisements. Another 29 per cent comes through services, which includes multimedia, research and BPO. The events and online activities, that the group organises, earns about 18 per cent. The balance 8.5 per cent comes in through subscriptions.

It's good that you have raised this point. Firstly, the value chain today amongst media companies is built around content. Print, TV, events, Internet are all the distribution vehicles for content. We have already done that expansion in the past. The move to reduce dependence on ad-revenues is a very conscious decision. And for that we moved from media to media services. It was indeed the group's strategy to delink itself from the cyclical nature of the industry. When the IT boom turned into bust in early 2000, we were the least affected. We were pained to see so many organisations in our peer group going down during 2001-02. Perhaps, they did not have the requisite foresight.

I do not agree with your statement that a Rs 58 crore turnover figure is low for the media industry. For example, last year’s topline for listed companies are CNBC (Rs 43 crore), NDTV (Rs 57 crore), Mid Day (Rs 93 crore), MacMillan (Rs 103 crore), Deccan Chronicle (Rs 122 crore).

As for reaching out to our target group, we are doing very well. Our publications currently reach to a wide section of readers interested in IT. At last count, we had a readership of 12 lakhs and an online community of 7 lakhs.

Sourcing working capital is not a problem for the group. In fact, accepting brands as hypothecation is a progressive step taken by State Bank of Mysore. For a media company, the biggest asset is its intellectual property reflecting in terms of its brands. Usually, banks would only look at tangible assets. In our case, the bank has realised the tremendous value of the brands which are intangible assets.

I agree to what you say but there are few industry newsletters, which do well in India. To understand why this type of publications is not very popular, one has to look at the very nature of newsletters.

These publications are very in-depth in nature, but the problem in India is that we are still not at the forefront of technology. The industry is just coming out of a reverse engineering and a screwdriver technology mode. This limits the scope for newsletters in India. For instance, a banking newsletters in India must come out with information on new products, but by the time an Indian bank decides on its product, it already knows which product has worked where in the international market. The dust has already settled down.

I know of Indian companies who subscribe for international newletters but even that group of people is a very small community.

So, naturally there's little scope for newsletters to prosper. Having said that, let me add that the newsletter genre will definitely grow in future as the domestic industry goes for leading edge products and services. In fact, with the advent of web, newsletters do have a brighter future as it can cater to a specific group at a very low cost.

I agree to the notion that B2B magazines depend on advertisers for revenues. At the same time, the extent of their influence on editorial will depend on the publications. At Cybermedia we do not believe in allowing advertisers influence editorial decisions. In the past, we have done negative stories, raising critical issues about a company or the industry. But I also feel that negative stories shouldn't be done just for the sake of doing it. If there is some genuine industry or a company issue, it's the job of the B2B publication to highlight this issue for the better interest of the industry. But before doing a story on particular company, we also make it a point to talk to the company and include their point of view on the subject.

There have been such instances in the past. For example, an advertiser withdrew its advertisements from our publication following a so-called negative story. But after a year, the company came back on board. Knee-jerk reactions like these are increasingly becoming uncommon as most of the big companies are now mature enough to understand the publications' responsibility towards the industry.

It has been our strategy to be in the knowledge domain. Having said that, I will invite you to look at IRS numbers. That shows PC Quest's readership is more than a few business magazines. So it's not that we are very niche. In fact, PC Quest and Living Digital (previously called Computers@home) are B2C products and not B2B products.

The question of being isolated do not arise at all. The group has always faced stiff competition from the peer group, and that started right from the growing up years. Within two years of our launch, the Living Media group launched Computers Today. Soon, there were competitors in the form of Express Computers, Chip and others. Even The Times Of India had started a full page on IT in the main newspaper. Even international titles such as PC Magazine, Computer World, PC World, MIS, CIO, etc have been published in the Indian market. So we have faced competition from both national as well as international publications.

But, we soon realised that we had to offer a differentiated product to our readers. For instance, PC Magazine’s entry led to the birth of CyberMedia labs where we tested products based upon Indian conditions, and made a reputation of delivering absolutely fair and meaningful reports about these products to our target group.

After making the long journey over so many years and after fighting off competition, it feels good to be counted among the leaders.