Indrani Sen: The Seismic Shift

01 Feb,2016

By Indrani Sen

 

On January 22, 2016, an announcement by the I&B Ministry hit the news media announcing a new policy effective from December 31, 2015 to streamline the business practices of its Publication Division. The headlines in newspapers and websites happily screamed that Centre plans to promote online readership.  The official statement stated “One of the key highlights of the policy includes promoting online readership by pricing the digital version of the publication at 75 per cent of the price of printed version. This would ensure that 25 per cent discount is passed on to the readers”.

 

It appears that the I&B Ministry is either blissfully unaware about the current market practices followed by most leading newspapers for promotion and retention of their print circulation or has chosen to turn a blind eye to the same. As readers are already enjoying more than 25% discount on the cover price against long-term subscription of copies in print, a 25% discount will be hardly any incentive for shifting to online subscription.

As most Indian newspapers are currently offering their online edition free-of-cost, it would be an uphill marketing task to convert the free online readership to paid online readership. So far, the metered subscription model that allows a certain number of free visits before requiring users to pay for online newspaper has proved to be most successful in getting online subscription of newspapers globally.  This model is a far cry from offering a flat 25% discount on cover price of print editions.

 

This attempt by I&B Ministry to promote online readership is perhaps a timely reminder to our newspaper industry that they need to review their policies related to combined print and online circulation revenue which was a hot topic in the last World News Media Congress. The annual World Press Trends Survey released on June 1, 2015 by the World Association of Newspapers and News Publishers (WAN-IFRA) showed that newspaper audience of print and digital combined are increasing globally. The study claimed that global newspaper circulation revenue had crossed global newspaper advertising revenue in 2014 (http://www.wan-ifra.org/wpt.). I have borrowed the title of this article from a statement made by Larry Kilman, Secretary General of WAN- IFRA at the World News Media Congress “This is a seismic shift from a strong business-to-business emphasis – publishers to advertisers – to a growing business-to-consumer emphasis, publishers to audiences”.

 

In 2013, the New York Times was the first newspaper to report that its circulation revenue exceeded its advertising revenue following its initiative of two-year-old digital subscription program. A study on Newspapers by PEW Research Centre in 2013, stated “After years of an almost theological debate about whether digital content should be free, the newspaper industry may have reached a tipping point in 2012.” The study citied various examples of paid digital content subscription or pay wall plans adopted by newspapers and alerted about the titanic shift in the newspaper business revenues.

The PwC Global Entertainment Media Outlook published in 2015, showed the global newspaper adverting revenue was marginally higher than global newspaper circulation revenue in 2014. However, PWC also predicted convergence of the two revenues over the next five years due to continuous decline of advertising revenue – “From 54.4% in 2010 and 52.6% in 2014, total newspaper advertising revenue will account for just 50.7% of total newspaper revenue in 2019.” (http://www.pwc.com/gx/en/global-entertainment-media-outlook/segment-insights/assets/PDF/newspaper-publishing-key-insights-at-a-glance.pdf). According to PwC, total newspaper circulation revenue would continue to grow despite the fall in circulation of print copies due to the increase in online subscription from a wave of subscription offerings.

 

It is evident from the various studies and live examples that a new newspaper business model is emerging in which the mix between advertising and circulation revenue would be reverse to the current mix. In India 70% to 85% of the newspaper revenue still comes from advertising in print and the online editions’ subscriptions are yet to be monetized. PwC described India and China as the growth engines of the world newspaper industry and predicted that the two countries combined share in global average daily unit of print circulation will rise to 57.3% in 2019 from 57.3% in 2014. I suspect this growth may be partially due to the shift in circulation from print to online in developed countries.

 

The writings on the wall are quite clear; the younger generations who have stopped reading newspaper in print can only be lured back through online offerings. Our newspaper industry needs to quickly revamp their online editions before promoting/monetising the online subscription. The seismic shift in newspaper business models can hardly be reversed in India where already half the country’s population is under 25 years of age and 60% of internet users access internet through their mobile phones.

 

 

Indrani Sen is a veteran media agency and marketing services professional. She is currently an Independent Consultant and Adjunct Faculty, Media Management at Symbiosis Institute of Media & Communication, Pune. The views expressed here are her own.

 

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