Saturday, April 4, 2009

News as Utility

Somewhat simplistically put the problem of newspapers in western countries (especially the US) has been that, fearing mass migration of readers to the web – they have actually accelerated the process without being able to monetise the readership of the net editions.

Finally American Print Media Industry are coming to terms with the fact that, their old model of high dependence on advertising doesn’t work and, therefore, they are now desperately seeking ways to charge for content – turning to Television and other media for inspiration. But, none of it seems to work for newspapers and magazines.

The paradox – however - is that, it isn’t as if the market is not growing. But, the revenue is going in different directions.

Just a few days back, the National Press Club in Washington held a symposium to debate the issue with top industry leaders (like Tom Curley of AP, Jon Klein of CNN, Alberto Ibarguen of Knight Foundation, Vivian Schiller of NPR). All of them – doyens of the industry – were unanimous on the fact that, the old Business model of newspapers is obsolete. But they were not clear about the answers and felt they have to experiment a lot before a new business model emerges. (To read full report click here).

Paradigm Shift or Psychological Shift

The problem they thought was a psychological shift of readers from being “consumers” of news to becoming “users” of news – who interact with the information across media platforms. There may be a way to charge for news – if it becomes “utility” – just as a light and a cable bill. But, all this is fuzzy thinking at the moment.

One thing was clear though’ – costs have to be kept under a tight leash and media must learn effectively the tools of target advertising. But, the forum ended on an optimistic note. The panelists felt that, the next couple of years will be tough but once they get thru’ the valley – there would be enormous growth ahead. Wishful thinking some may say.

Apocalypse Postponed (for now)

In India ( and Asia) we might see things very differently. With internet penetration – despite the exponential growth – still lagging miles behind newspaper readership, that is poised to increase further with an exploding rising middle-class and rising literacy rates – the apocalypse would seem someway off.

But increasing print circulation could lead us to the same cost trap that devoured the big papers in the US. However, the bigger problem – to my mind – could be that, while in the West readers actually migrated from print to web – in India the per-capita “consumption” of news (even as an utility) could actually fall. This is already apparent in the falling readership amongst the youth. Much of this fall could actually be for good and irretrievable even in the long run, as they might be lost permanently to TV and other media such as cell-phones (and not necessarily the ‘web editions’ of newspapers and magazines).

Flight or Migration, Consumers or Users

Following the international trend, most Indian newspapers and magazines have launched their e-paper or e-magazine editions in addition to the internet editions. And, almost all of it is free content as on date. That was inevitable and unavoidable – I agree. But, do we have a clear fix on how many unique readers it has added in the domestic market. My guess is that most of the traffic is generated from overseas readers – and the migration from print to web would still be quite nominal and is likely to remain so for a long time to come. Those youth who turn to the web for news – get it from Yahoo, Google and other services and not as much from electronic editions of newspapers.

Thus, the challenge – unlike in the West, where it is to monetise readership – would be how to get readers back or increase the “consumer” ( or “user” – any which way you like to put it) base to grow the market.

So going forward, the Western model – even if they were to find one – may not work for India.

I am not sure if these issues are finding attention, as we begin to rejoice on the fall of newsprint prices and the imminent return of the good times.

1 comment:

P Mukherjee said...

Very good explication of the issues at the heart of "who pays for all this content" debate (nothwithstanding Rupert's war cry that he will make everyone pay for content!).

My experience, thinking and analysis of the situation indicates that there are two other factors that the "Newspapers" need to consider both in India and the West.

One of these is what I call the "Facebook (read social networking) epiphany of the accidental publishers" and the other (particularly in India) of the "News/Info Consumption Device War".

Facebook ephiphany - I believe that in any society the amount of time a certain individual dedicates to news/information consumption-production is a constant (for an individual) and with droves of consumers(users) - India included - becoming publishers(accidentally) - by virtue of Facebooking.This implies that that such consumers(users) are then "consuming" classical news - progressively less of the time and consuming "accidental publishing" from their networks rather that the classical press.I do not know what this means but even Facebook has not figured out how to monetise this yet.

News/Info Device War - This one is even more interesting, particularly in India. We have a situation where mobile phone diffusion has outstripped and I believe will continue to outstrip PC/Broadband (essential to consume all those beautiful online papers and indeed e-papers!) penetration for a long time to come. Actually, I think that the "taken for granted" Broadband-PC penetration demographics that the West has predicated so many of its online services on, may actually never happen in India. There are good social - not socio-economic - just social reasons (privacy as a function of per capita physical space at home even for higher middle class for instance) - why the Mobile Phone will dominate the device of choice (particularly at prices available in India). So the question I ask is - Where are the Newspapers (and other traditional media) in taking advantage of this device of choice? I would have thought that the Newspaper businesses for whom the newspaper was merely a platform to collect ad rent - would jump on, innovate on and own a platform that offers a targeted unit of "touch"(an SMS) for as low as 7 paisa now.

When I think about this carefully, I conclude that the newspaper industries everywhere have a meme that makes it very difficult for them to consider trying to leverage what they "have" in a platform that they do not "own" and this meme has got them with a bad case of the Innovators Dilemma.

All this of course is an opportunity for a path breaking "social-market-paper" enterprise to emerge.