The push for online pay revenues
About a dozen firms are discovering users are willing to pay not just for entertainment, but also for news online
~30-40 is the price that will work in small towns, because that was the money people pay for pirated content,” says Malhotra. The challenges of online pay “The big problem is collections. The average rural guy doesn’t have a bank account, or credit card. The market operates only in cash,” says he. Both Fastfilmz and Rocket Post operate in small towns and coupons work best there. They sell coupons (like prepaid cards) to any regular shopkeeper. When he sells one Rocket Post Live coupon for ~100, he keeps ~30 (split among various parts of the trade) and passes the rest to the brand. The coupon is usually a scratch card with a number that allows the user to access Rocket Post Live or activate Fastfilmz (which lapses after a two-week trial period). Fastfilmz uses several channels — like bulk sales to factories, bundling with a broadband provider like ACT or telecom operators.
Collecting small amounts is the problem that several start-ups such as Orcsnet are trying to solve for publishers. Launching this month, Orcsnet offers an ‘online royalty collection’ service. If a reader likes an article, he can click on a button to pay ~5. Of this money, ~4.50 goes to the publisher, fifty paise to Orcsnet and there is an additional 12 paise charge by the payment gateway, say Paytm. Once a reader has totted up ~10 or more across articles and publications, he can pay via card, net banking et al. Orcsnet currently has four major regional publications such as the Tamil news site, Ippodhu, using its button.
Globally, except for a handful of publications — say The New York Times or Financial Times — few have cracked the pay market. Can a push for pay help hold back the inevitable fall in margins and revenues that online brings? Only if pay brings in a profitable 60-70 per cent of the industry’s revenues. If you add up the cover price of newspapers, money paid to cable or DTH and for film tickets, Indians pay close to ~63,100 crore for their media. That is roughly half the total media and entertainment industry’s revenues. But not all of it comes back within the business. In online, the payment is usually direct and there is little scope for leakages. So there is hope.
This then puts on its head the oft-repeated argument that Indians, especially the younger ones, don’t want to pay for content. “Millennials are all right paying for news. They don’t have an institutional memory of not paying, of disposing of stacks of newspapers as rubbish. They pay for Netflix or Gaana, so they are okay with paying for news,” points out Dharmakumar.