Indian Newspaper Congress: Publishers agree to differ on advertising vs. subscription revenue

Does the print industry really need to worry about subscription revenue, when there is Rs 20,000 crore of advertising revenue to take care of

In any business, is it ever necessary to bother about the source of revenue, as long as it's a legal source? However, that seems to be the favourite topic of discussion on different media forums. At the Indian Newspaper Congress organised by the Indian Newspaper Society and exchange4media, the post lunch session was a debate on what's more important for the publications – advertising or subscription revenue.

Hosi Ghaswala, president, publishing, Cyber Media, who was moderating the session, started the discussion by saying that he was in a confused state of mind as the print industry needs to find out who it is fighting.

The first speaker was Arvind Kalia, head, marketing, Rajasthan Patrika. Kalia said that the subscription model was difficult because of the people's mindset. People are ready to spend Rs 15 a day for sending dirty SMSes, but are unwilling to spend Rs 3.50 a day on newspapers.

According to him, this is also because content is available free of cost through blogs, which can never be termed as a credible source of news. On the contrary, newspapers and magazines spend money to source each and every piece of content.

Kalia wondered, if other markets such as Ukraine and Mongolia can have a strong subscription model, why India can't have it. He presented a few statistics, according which in Mongolia, 99 per cent of the print revenue comes from subscription, where as a mere 1 per cent is advertising revenue. Similarly, in Ukraine, 93 per cent is subscription revenue, while 7 per cent is advertising revenue. Even an advanced market such as Sweden has a higher share of subscription revenue vis-à-vis advertising revenue.

In India, publishers are scared that an increase in the cover price would affect the circulation. However, does it affect the readership? Kalia raised his doubts.

KU Rao, chief executive officer, Diligent Media, was totally in favour of advertising revenue - to the extent that he declared that he would have turned DNA into a free newspaper if it was possible.

Rao affirmed his belief that the print media had taken the right decision a few years ago when it decided in favour of advertising revenue over the subscription revenue, and the Times of India (TOI) had done a great job by deciding for the industry.

His rationale was – why should someone else pay to read the newspapers' point of view, and why shouldn't advertisers pay to reach out to the consumers?

He said, "We are discussing about the subscription model in this forum because of our past six months' experience."

Rao was of the opinion that the print industry should stop following the television industry, and the west in particular as they have lost control over distribution. As for the television industry – it's still struggling with the subscription model.

Sunil Mutreja, president, marketing, Amar Ujala, asserted that one needs to redesign the product to increase subscription revenue. He said, "For the regional newspapers, the future growth will come in from the rural areas as they need to penetrate deeper. Consumers in these markets are not willing to pay Rs 5-6 per day for a newspaper. So, the solution is to decrease the number of pages and sell it at a lower rate. This will drive volumes and achieve better results."

However, he was of the opinion that for the print industry, it wasn't possible to survive solely on subscription revenue in the current scheme of things. He said, "The cost of an issue of Amar Ujala is Rs 16.35 paise, which comes to Rs 480 a month and approximately Rs 6,000 a year. It's doubtful how many people would be ready to pay such an amount for newspapers."

Maheshwar Peri, publisher, Outlook Group, said that the print industry was operating without a profitable business idea –specifically the magazines segment.

"In which industry do the losses increase with every incremental sale? In print, it happens and someone else is expected to fund these losses – and that's a serious problem," he said, adding, "This way, the print business is on other people's mercy."

Mutreja had a different opinion on this, which was very typical of a newspaper publisher. He said, "For advertisers, media is a necessity. Besides, there are large numbers of advertisers who need the print industry. One just has to look for these advertisers."

Peri added that if readership figure is the only parameter to get advertising revenue, then regional publications should have got 25 per cent more revenue than the TOI.

Rao of DNA added, "Just because a few small time newspapers can't earn money through advertising, why should the entire industry change itself?"

Mutreja concluded with a statistical rationale. He said, "India has a population of 100 crore and about 15 crore households. First, it's difficult for any newspaper to reach out to all 15 million households – even TOI can't possibly do it. Even if the reach is achieved and the per-copy price is increased by a rupee, the total revenue increase would be only Rs 15 crore. In that case, why should one worry about the subscription revenue, when there is about Rs 20,000 crore of advertising revenue to worry about?"