Publishers Go Pay: Brick by brick analysis of the paywall...

In 2006, ‘The Economist’ ran a cover story, “Who Killed The Newspaper”... While in the west, the postmortem of the print industry had begun back then, in India, it was still growing quickly. Print advertising in the US has dropped from $60-plus billion in 2000 to $15 billion in 2018. During the same period, in India, print grew from a Rs 6,000 crore to a Rs 31,000 crore industry. Fact is, ink has survived the emergence of airwaves – radio, television and, lately, digital. Being the oldest medium, each time a new one emerged, the future of print got discussed as much as the excitement in the new ones.

Two-thirds of the revenue comes from advertising; the rest from circulation. Growth is now slowing down. In 2019, advertising grew by five per cent and circulation by 3.5 per cent. The slowdown in advertising growth in print and the poor advertising rates online are forcing dailies to consider online subscriptions.

Recently, Indian Express decided to put its e-paper behind a paywall. Network18’s financial news and information publication Moneycontrol released a subscription service Moneycontrol Pro in April 2018. The Times of India launched ET Prime, which one could only access after subscribing. Business Standard, The Hindu, The Ken, Newslaundry and many other web publishers and newspapers are eyeing a direct transactional relationship with the consumer.

Nuances of Pay...

The ‘Metred’ method (a mix of free and pay where publishers, like The Economist, make a certain number of stories per user available for free) and the ‘Paywall’ (nothing is available for free) are the two most commonly used subscription models in the industry. There are some publishers who offer a ‘transactional’ mode option, wherein the reader pays only for the stories she wants to read. In the case of partial pay models, the premise at play is that of the lot who read it for free, a certain number will convert to pay. This model also helps publishers retain their unique visitors and avoid a significant drop in page views.

Usually, when a paywall is in place, the search and social results plummet and traffic in terms of page views reportedly drops by 80-90 per cent. The propensity to pay in India is low. “The subscription business has been a very tough one, especially in media where we have seen very limited success so far,” says Manoj Nagpal, business head, B2C revenue, Moneycontrol.

Moneycontrol Pro, which is priced at Rs 99 per month and Rs 999 per year, claims to have 1.15 lakh active paid subscribers, which Nagpal considers to be one of the best in the industry. “The way we calculate our active subscriber base is – the ones who are actively using the subscribed service at this stage. It does not include subscribers who discontinued after a period of time,” he says.

Paid or free, online publishers are highly dependent on Google and Facebook for content discovery. Popular belief suggests Google and Facebook would promote publishers that carry their ads. So, what happens to publishers that decide to go pay? “As a matter of principle, we do not put any ads – native, programmatic or direct – on Moneycontrol Pro,” informs Nagpal. And so far, surprisingly enough, he has not noticed any problems with respect to discovery through search or social.

He asserts, “In fact, our search performance on Google improved after we introduced a paywall. Quality content is one of our promises to our subscribers and the better the quality of the content, the higher your rank on Google.”

Of Demand and the Demanding...

The moment a consumer pays for a service, her expectations from the product grow manifold, find publishers. “People are not saying ‘we do not want to pay’, but are asking us to add some elements and features that they think are good,” says Sanjay Sindhwani, CEO, Indian ExpressDigital, adding, “They force you to invest more in the product, which, once you do, takes the product to a different level... and that gets a new set of readers in.”

Jehil Thakkar, partner, Deloitte, believes Indian subscribers are only willing to pay for respectable brands or those that are in some way useful to them for business/work. “We have seen in the west how The New York Times has managed to monetise well on the back of its strong brand value. Also, people subscribe to services like Bloomberg and Financial Times because, through that subscription, they manage to drive profit – financially or intellectually,” he opines.

Considering current market dynamics, where a subscriber base of 1.15 lakh is considered to be “best in the industry”, publishers are cautious in their approach. “There are two ways to do it – you either build the entire product and then go to the customer or you launch the product and keep adding features as the subscriber base keeps increasing. We have decided to go with the latter, so we keep introducing value-added services as we rake in more subs,” states Moneycontrol’s Nagpal.

Closer Look at the Prized Subscriber...

Indian Express’ e-paper is for “people on the move, who already are our regular readers” says Sindhwani. Priced at Rs 799 for six months and Rs 1,299 for a year, Indian Express’ e-paper is targeted at the loyalists. “Then the second segment comprises people living in cities and towns, where the print edition is not circulated. Also, there are a lot of people who are now more comfortable reading on digital platforms, because of convenience, storage, access to archives, ability to search and magnify... features only the digital platform can provide,” he adds.

Times Of India’s ET Prime, which is available at Rs 999 for three months and Rs 2,499 per year, is mostly followed by business executives working in fields like strategy, consulting, M&A and business development. “We are also seeing traction with users leading, or working in, startups,” says Puneet Gupt, COO, Times Internet.

He finds a big difference in the engagement patterns of free users and paying subscribers. “Prime users spend more time in every session with ET, spending upto 3X the time normal (free) users do. They also expect higher product and user experience standards and availability across platforms – iPad, android, tablets, etc. – and are also more vocal about what they need, sharing their expectations more regularly,” Gupt explains.

If subscribed to the ET Prime yearly membership, one gets access to Times Prime, a digital membership service for premium content, and exclusive member benefits. Times Internet’s most aggressive subscription push so far, Times Prime provides a bundle offering through which one can access partners services like Swiggy, Uber, Grofers, Big Basket, Oyo, among others. Apart from the bundle offering with ET Prime, Times Prime is available at Rs 999 per year. Times Of India+, the ad free version of TOI, is part of Times Prime.

“Times Prime is a unique bundled subscription offering, where more than 80 per cent users are millennials, with over 95 per cent accessing it via mobile and more than 65 per of users coming from tier I cities,” says Gupt. Music, fashion and food-related offers are among the “most activated” products/services, it turns out. About 80 per cent of Times Prime users are below 35 years of age, we learn.

People from over 75 cities in India have subscribed to Moneycontrol Pro, informs Nagpal. However, “Mumbai, Bangalore, and Delhi are the three main pockets. Close to 30 per cent of our total subscriber base belong to these three cities,” says Nagpal.

Exclusivity Crisis...

Paying for entertainment content in India is on the rise, thanks to the popularity of video-on- demand platforms like Netflix, Amazon Prime, Hotstar, ALTBalaji and the like. The digital video subscription market in India, at this stage, is estimated to be around `1,200 crore and KPMG projects it to grow to Rs 2,200 crore in FY20 and Rs 6,200 crore by FY23. When OTT platforms market new shows on billboards and other media channels, the selling point is exclusivity – that is, the show they promote is available only on that particular platform. News publications, however, do not have that selling point. Deloitte’s Thakkar points that in an era of freely available news and news aggregator apps like Dailyhunt and Inshorts, there is hardly anything left for consumers to “catch up” on.

While Moneycontrol creates certain content which is only available on the Pro version, Indian Express carries all the news that’s printed in its paper on its dotcom, for free. Why then wouldone pay for the e-paper, we wonder. “Quality user experience,” answers Indian Express’ Sindhwani.

Climbing the Paywall...

Going forward, more and more publications will experiment with subscription revenue as a business model, believe industry experts. Deloitte’s Thakkar says, “The hope earlier was that online would become an advertising revenue generator in its own right, which did not really happen as most of it came to be controlled by Google and Facebook...”

The pay model, he opines, is publishers’ attempt at monetising their content further; the belief here is – even if a small portion of the reader pool starts paying, the online venture can start becoming profitable, provided the P&L for online and offline is separate. While many try to climb the paywall, only the big brands and the ones that can help subscribers make a profit in the real world will succeed. It’s a tough path, but increasingly it appears to be the only viable one.

Editor's Note

As OTT content becomes a staple for more and more Indians, the hitherto pressing question regarding our readiness to pay for online entertainment is answering itself... only to be replaced by another equally pressing one: will we pay for online news, something that’s been free all this while? Going by the number of news publishers that are introducing paywalls, that partially or wholly veil their content, the optimism is evident.

But the matter is more textured than just that. Through conversations with several publishers and industry analysts, we tried to understand the implications of the paywall for everyone involved. How do expectations change once money enters the equation between the reader and the provider of news? How does it impact the way consumers interact with the content – say, do they spend more time on each piece? What are the different pricing models and variations publishers can look at?

Another important factor we discuss in the story is the discoverability of paid versus free news content on Google and Facebook; I recall Wittyfeed’s Vinay Singhal unabashedly making a case for why publishers ought to be “scared” of the changing algorithms of both platforms, at Digipub World couple of years back. How does paid news content fare in this scary world? We went in with a theory or two of our own and came away with some counter-intuitive information.

An interesting aside, that’s tangentially related to the subject at hand: The process of writing this note reminded me of something Coca-Cola’s Venkatesh Kini said at a conference few years ago: ‘Twitter is the most widely read newspaper today...’ I foresee the efficacy of social platforms as sources of news falling in the days ahead.

As the world of subscription led news gets populated and publishers experiment with walls, I agree with experts who predict a brighter future for publishers of specialised, and business, news as opposed to general news.

Ashwini Gangal

Executive Editor