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Boom or bust for digital journalism in India?

By Arijit Sen and Rasmus Kleis Nielsen


The rapid growth in especially mobile internet use in India in recent years has been accompanied by a boom in new digital journalism start-ups. With sites like the Quint, Scroll, the Wire and many others across the country, there are more new and interesting experiments in Indian digital journalism than in most other countries in the world. All of these sites are developing new forms of content aimed at setting them apart from older media, and all of them are developing a mobile-first, social-first distribution strategy fit for the internet of 2016. They seem well poised to benefit from what many digital entrepreneurs see as the biggest market opportunity outside China since the internet took off in the United States in the 1990s.

The most successful of these start-ups have built significant audiences very rapidly, published important stories, and made substantial investments in their editorial teams. These are exciting times for digital journalism in India, and we review the content, distribution, and funding strategies of some of the most interesting experiments in a new report from the Reuters Institute for the Study of Journalism. But will the boom be accompanied by a bust? Funding digital journalism has been very difficult in every other country across the world, and like their peers elsewhere, digital journalism start-ups in India risk being squeezed between large legacy media and even larger international players in the competition for attention and advertising.

The opportunity ahead is enormous, and some of these digital journalism start-ups are bound to succeed. But the market they operate in is also challenging.

First, India still generates comparatively low average revenue per user in terms of digital advertising. With around 400 million people online at the end of 2015 and estimated total digital advertising revenues of $975m, the total advertising revenues were only about $2.5 per internet user. The same figure for China is over $5 per user. Online advertising rates in India are therefore much lower than in many other markets (and legacy players and especially large technology firms capture the majority).

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Second, the reference price for news and media content in India is very low, with low cover prices for print newspapers and cheap pay television packages, suggesting that pay models for digital news may be even harder to pull off than in high-income democracies. Third, like most of Europe but unlike for example the United States, India does not have much of a tradition of domestic philanthropic support for news and media. Individual donations are uncommon and larger foundations are rare. Investments from players like the Omidyar Network and new initiatives like the ‘Independent and Public Spirited Media Trust’ are interesting, but it remains to be seen what kind of journalism they can and will support. This means non-profit media have to break new ground to succeed.

No other country in the world offers the huge opportunities afforded digital journalism start-ups in India, but it is still worth examining lessons learned from start-ups elsewhere. The first, sobering thing to note is that most digital journalism start-ups – like most start-ups – fail. A frequently repeated estimate is that 75% of all start-ups across all sectors fail, and only very few meet their own stated goals in terms of growth. Entrepreneurs should be lauded, but ‘failure is the norm’ as Shikar Ghosh from Harvard Business School says.

Looking specifically at some of the most highly visible digital journalism start-ups launched in the United States over the last decade, it is clear that, even when launched in a favorable environment characterized by rapid growth in both internet use and digital advertising, start-ups need both money and time before they break even, let alone begin to make a profit. Take-off, to use the Silicon Valley jargon, often requires a long and potentially expensive runway. The Huffington Post was launched in 2005 and reported its first profit in 2010. After it was bought by AOL in 2011, millions more was invested in expanding the site’s global reach, and the site only reported a profit again in 2015. BuzzFeed, launched in 2006, reported its first annual profit in 2013. Politico, launched in 2007, announced its first profit in 2011. The challenge is even more pronounced given the long payment cycle and problem of unpaid dues in the Indian advertising industry.

All of these sites have pursued a path of ‘users first, profits later’ that requires significant investment and patience from their backers. All have first carved out a distinct niche in the United States and then turned to the pursuit of a global audience to reach the scale necessary to break even. Not all of them survived. Some otherwise very impressive start-ups, much lauded at the time, have not made it – like the mobile-first news service Circa and the technology news site GigaOm – and other much admired digital journalism start-ups, like BuzzFeed, have reportedly missed their revenues goals in 2015 as large technology companies increase their dominance of the digital advertising market. eMarketer estimates that Facebook and Google accounts for a combined 43% of all digital advertising world-wide.

Start-ups can succeed in many ways. They can have a cultural, social, or political impact on the world around them, they can demonstrate new innovations that in turn inspire others, and individuals involved in them can succeed even if the organizations they are part of may not. But to succeed as organizations, they need to develop sustainable business models. These take time to build and it is too soon to judge the prospects of the multitude of interesting and exciting new digital journalism start-ups launched all across India. But it is clear that the combination of low advertising rates, limited willingness to pay for news, and the dominance of large older media and even larger international players means they face a challenging environment, even as they benefit from rapid growth in the number of users and in overall advertising spend.

The boom in digital journalism will animate and enrich the Indian media scene, but it may be followed by a bust.

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Arijit Sen has worked as a journalist at NDTV and CNN-IBN and now works for Amnesty International.

Rasmus Kleis Nielsen is Director of Research at the Reuters Institute for the Study of Journalism at the University of Oxford.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



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