MUMBAI: Though media baron Ruport Murdoch believes that digital is the future, Malayala Manorama executive editor Jacob Mathew believes that newspapers will put up a strong show and co-exist in the digital age.
India Today Group CEO and editor-in-chief Aroon Purie also graced the occasion to speak on the Future of Print Media in a morning session at the Ficci Frames today.
Mathew begins by narrating an experience he encountered recently with his editor friend. “I had always considered him a sober man but this time he had a wild look in his eyes, when I asked why? He said he was chasing skirts. As he had freshly entered his fifties, I thought it was a case of male-menopause. He brushes aside my instant diagnosis and explained that he was editing fashion pages and he was constantly working and thinking about skirts, frills and pleats.
“He entered journalism with the idea of making a difference to society, but, there he was condemned to writing about frilly, silly nothings. I disrupted his ranting and pointed out that he was actually facing crisis of content. There are serious stories and entertainment stories to be told, but they go reported in a fizzle form of fashion.
“It is all a matter of choice. Instead of digging for in-depth stories, editors like him are content with presenting ravishing visuals, of mass cloying words. This goes true not just for soft stories; fashion or glamour but also of hard stories; politics, economics, business, sports and human relationship,” he says.
Citing that even stories of pathos and cruelty are put under the glittering glares of glamour. Content remains the greatest challenge in the newspaper industry today.
Circulation being key, he says that it has saturated in many developed countries and advertising growth rate there is negligible. In contrast, India presents attractive windows of opportunities because of increasing literacy and purchasing power.
“Indian newspaper industry has a turnover of Rs 12,000 crore in 2005. It is expected to touch Rs 13,500 crore. Indian’s figure is just five per cent of Asia pacific region, even the Koreans are double our size. Paradoxically our size is our strength. We have a tremendous potential to grow as we are small right now.”
On the potential that newspapers have, he says, “India reaches only 35 per cent of our adult population even though adult literacy is about 65 per cent. To build this gap between readership and literacy, and due to the competition the publications kept its prices low and depended entirely on advertisers to subsidise the reader.
“This model probably was viable in India because it simultaneously developed the vibrant advertisement industry. The industry aggregate for the years 2002 to 2004 indicates that 60 per cent of our revenues come from advertising sales. While the circulation revenue accounts for 38 per cent, other incomes account for about 2 per cent. This percentage varies between the English and the vernacular publications.
“Circulation revenue covers about 70 per cent of our variable costs. The first 25 per cent of the advertising revenue goes towards covering the variable cost and the balance 75 per cent is available for fixed cost and profits. Obviously advertising drives the print media.
“When the ad revenue grows at a healthy pace, publishers invest in increasing their circulations. With bigger circulations, they are able to command higher ad rates. This business model demands that the momentum be provided by growing ad revenues. Though some say that with lower cover prices, one chases artificial numbers of circulation to justify high ad rates.
Asking if this model is sustainable and fair, he continues, “This is being debated as some believe that there is ample scope for further cover price increase. The expanding economy has brought into the market a host of new advertisers and this has made it possible for us to increase the ad rates as well.”
Looking ahead, Mathew says, “The prospects to 2006 look fairly good. With the economy of the country continuing to grow at 7.5 per cent, we may reasonably expect at least 15 to 20 per cent growth in ad revenues. This will drive the circulation at an eight per cent growth in the turnover and then can be expected to grow by 12 to 14 per cent.
“The main challenges come from Internet. Websites like Shaadi.dot come, Naukri.dot com have made major inroads for jobs and matrimonial. Real estates and second hand vehicles are two other classified ad category waited to be snapped by us webpreneurs. Baazi.dot com, now taken away by eBay has already proved its potential of internet shopping. Sensing this pattern, several newspaper publishers have forayed into the electronic media. Some have succeeded and some have bit the dust.
“Eventually, major newspaper groups will emerge as multiple media enterprises combining the strengths of electronic and print media.”
Mathew sums up, “We know the strengths of our medium, yet our challenge is to aggressively convey to our local markets nationally and internationally and in particular to opinion makers whose decision impacts our collective future.”
Quoting US comedian Jerry Seinfeld’s accidental observation on newspaper as being bang on the dot, “It is amazing that the amount of news that happens everyday always just exactly fits in the newspaper.”
Concurring with Jacob, the India Today Group CEO and editor-in-chief Purie had some interesting anecdotes as well as high points of the space and the future trends.
Purie recalls an incident that took place thirty years ago at a printing conference in Venice, the questions asked were pertaining to the future of print and will print vanish. There were printers who raised their concerns on whether the business would last or not last, as computers had started creating its presence.
Narrating the incident, Purie adds, “One of the speakers Robert Maxell, the owner of The Mirror Group in his opening statement said, “I know print will survive because you can’t take the computer into the toilet.” But now, of course, one can take the computer to the toilet.
He says, “But still print survived, it actually prospered and thrived. The eternal question keeps coming up every few decades when new technologies comes, will print survive?”
He points out an instance where Bill Gates offered his opinion on the Indian print media recently. Bill Gates, who is considered the biggest enemy of print and quoting him as saying, “I m sure, it will be more than fifty years, that somebody is still printing a newspaper and taking it to someone, somewhere.”
He continues that Gates is fifty and in all probability, newspapers will out last him. He adds that surprisingly Gates in the interview stated, “Newspaper readership is still growing in India.” Purie remarked, “This is something when a man like him has obviously noticed and has not declared the demise of newspaper or print media.”
Throwing some light on various figures, he says, “Last fifteen years, the ad revenue share in print of the total ad pie has shrunk from 70 per cent to a humbling 46 per cent due to the advent of cable and television. Internet and radio has compounded its misery. People thought that print has completely lost out. Any kind of change of this kind would have destroyed any other industry in my opinion.”
“The readership grew by 28 per cent with newspapers leading the pack; Hindi newspapers grew by 68 per cent, Telegu newspaper 63 per cent, English newspapers grew by 36 per cent. Quietly, but clearly the new growth has been in the Indian language print media.”
Citing a recent study conducted by an industry journal, he says that it estimated that the highest growing print media companies included Jagran Prakashan that grew at 26 per cent; Bennett, Coleman & Co at 17 per cent; Bhaskar publishing group at 16 and my own company Living Media at 12 per cent.
Referring to growth in advertisement with respect to last year, he highlights that the ad business grew by 15 per cent to about Rs 12000 crores setting a new trend; the print share has increased 48 per cent from being 46 per cent while the television share remained at 42 per cent. Although television has grown but one can see that there is a slight change in the trend.
“The print media has in fact staged a comeback to define all forecasts and international trends. The ad revenue growth can be attributed to the significant increase in ad spend by educational institutes, retail, real estates, consumer durables, automobiles. The revenue growth in television has been powered by FMCG sector,” says Purie.
Speaking about growing consumerism, he says, this trends will throw up new opportunities for special interest publications. The mass circulated dailies and magazines will also benefit by adding special interest both genre wise and geographically.
He cities the example of the India Today Group wherein, “We grew the topline circulation by 30 per cent from the previous year by using innovative marketing strategies including news focus offerings. The innovations included usage of digital media such as SMS and Internet besides, strong subscription campaigns.
“At present, India Today has an add -on free magazine every week, from city magazines to lifestyle to education. All this has come on the back of the cover price increase from Rs 15 to Rs 20, a whopping increase of 33 per cent. And in just one year India Today English and Hindi editions over too The Times of India and Nav Bharat Times’ national readership by over 5 million.”
Speaking on the future trends, he says, the print media will see an area of super fragmentation. It will virtually expand in every genre. While players will work towards super niche positioning, consumers will have to pay more for their newspaper and magazines. The trend may also see that the publishers will have to reduce their dependence on advertisement revenue to drive their successful models.
But, with caution he also says, “While, it may not be the accurate predictions for India. It validates opinion that fragmentation may not affect mature medium like print to the extent it affects relatively newer medium like television.”
Pointing another trend -the access to capital, he says, “The print media will be powered by many media companies tapping the financial markets, by ways of IPOs, inflow of capital by private equity and by going public enabling expansion and reducing any barriers that in the past were big constrains for any news entrants. The trend has already started and will become bigger for the businesses.
At present, the government has permitted 26 per cent foreign direct investment in news and current affairs publications, which has led to Financial Times picking up stake in Business Standard, BBC and Times of India in a joint venture company WWM.
But, Purie believes regulations are still too restricted and should be opened up and even the policy for facsimile editions and foreign publications coming here is really very confusing and unnecessary.
Picking up on another trend is digital opportunities. He says, “The 300 pound gorilla, which I think publishers don’t know what to do with it. Internet does not have to be a competitor like radio and television. It can be partner to the print media. It can only supplement the distribution of content and leverage the print brand.
Narrating yet another recent incident at Dow Jones where The New York Times publishers Sulzberger was asked, “aren’t you worried about the decline in readership and ad revenue being threatened by the Internet”.
Sulzberger explains, “In the newspaper business there are basic costs– paper, distribution and people. If Internet comes, I will get ride of the first two as I do away with the problem of paper and distribution. I still have the brand, the content and the ability to sell the advertsiment. I’m not worried.”
No wonder every newspaper may have an online presence, the challenges for the publishers is to monetise this and to appreciate unique qualities of the Internet interactivity and immediacy.
He agree with the point made by the global media barron Rupert Murdoch who opines that today newspaper is just a paper, tommorrow it can be a destination.
