On Saturday, I was on a panel on the newspapers business, with BCCL (Times of India Group) CEO Ravi Dhariwal, ZEE Group CEO Bhaskar Das, HT Media CEO Rajiv Verma, the Editor of The Hindu Sidharth Vardarajan, and Prof S. Raghunath from IIM Bangalore.
Some points I had jotted down for my macro-level views on the newspaper business online, given that I have no experience with newspapers and I rarely read them:
1. On Credibility: If I take 12 really good journalists for 12 different beats, and start blogs, they can build online brands that will challenge the newspaper business. We’ve built a credible brand in five years, and the notion that credibility is only in print (or mainstream media) is a misnomer. One shouldn’t forget the incredible self correcting mechanism that the Internet brings in, with publications and stories under immense scrutiny. Your credibility is all you have.
2. The biggest myth that exists about the online medium is that distribution is free. Distribution is a means for reaching the consumer, and on the Internet, distribution is through search engine optimisation, and building subscriptions on social media and newsletters. Social media is particularly tricky because updates on social media are transient, and it’s not easy to figure out what works, and what catches a readers attention; it needs a certain skill to manage well, for which there are continuous costs. There is no stability here, and the rules of the game, especially with SEO, keep changing.
3. To think that print is going to be persistent and not struggle against online is hard to believe because there will be users who skip print and move straight to mobile. Android is growing at a frightening pace, and data consumption for (some) mobile operators is increasing at around 15 percent per quarter. I’m someone who only reads newspapers on flights, and has his morning cup of tea while reading news on the phone. My discovery of news is via Twitter, and I curate (follow) my curators.
4. The cost of running an online business might be lower than that running a print business, but the revenues will be lower as well: so even if you take a hybrid approach and view web as incremental revenue for the time being, be aware that the switch in advertising will mean that only a part of the money goes to publications, and the cost of a print business can never be justified by online revenues.
5. The only way you can play the advertising game at scale is at massive scale, and even then, you will be dwarfed by the likes of Google and Facebook. This is because platforms like Google and now YouTube are building their businesses on increasing fragmentation: it’s unlimited competition because guys like me find it easy to start. But the whole is always greater than the sum of its parts, and it extracts its 45% commission for aggregating advertising. In India, a majority of online advertising goes to Google. Mind you, this is great for the consumer, because they have greater choice, but even as it is easier for content creators to create content online, the monetization will never be the same as with exclusive platforms. You’re fine with advertising only as long it is about incremental revenues.
6. The payment cycles on the web are crippling, and there are, as of now, no agreements to ensure payments are made on time. This isn’t too much of a concern for big brands that are always in every media plan, because the threat persists that an advertiser can get blocked, but for relatively smaller players, it is much trickier. This is why you don’t have many startups in online publishing, because they don’t have that kind of working capital.
7. Paywalls are difficult to execute at scale: it’s complicated because it depends on exclusivity, which is very difficult to maintain online. Information cannot be copyrighted, and it eventually gets out. As a reader, I would pay for two things – one is where speed matters, and seconds make a big difference. That is the space that Bloomberg and Reuters play in. The other is where I get exactly what I need – highly targeted, segmented and personalized information, so that I don’t have to go through a vast amount of information that I don’t need. Politico does something like that with sector specific coverage, and the Economic Times is doing something like that with sites a subscription based service like ETRetail.
Note: we’ll update with some of the talking points from the discussion