Carving a new revenue model
YOU need a revenue model to back your journalism in a digital age. The Indian publishers need to start thinking about devising one. One of the things worth worrying if you are an online news publisher, why, even a journalist, is: who is going to pay for the content you are generating. Such thoughts hardly ever bothered publishers, and surely never the journalists, in the era before the advent of the Internet. There was a time-tested revenue model to take care of revenues. Even today, in much of the developing world, where the traditional print industry survives, albeit with some uneasiness about the unfolding digital future, the model works.
The way to do it is simple: build a healthy readership base by pricing the newspaper much below the cost of production. Having done that, get advertisers to pay top dollar to reach out to your audience via ad slots that are limited by the number of pages published. Imagine a world without the Internet - where a lot of ad dollars will be chasing limited advertising space. In such a world, it is extremely likely that any print publication would get a bulk of its revenues through advertising.
The problem is that this model collapses online. Advertising monies are the biggest casualty. They aren't that easy to generate. Actually, advertisers might not even need the news media online as much as they need them offline. Also, tech-enabled platforms, starting from Craigslist 20 years ago, have taken a lot of advertising business off print, as they have been able to con- nect buyers and sellers far more easily. This is especially in context of the advanced markets. Further, there is unlimited inventory. Also, online ad budgets can also afford to be far smaller, as individuals in the target audience can be targeted with precision unlike in print.
So, it's a double whammy when most readers pay nothing to consume news online. According to the Reuters Institute for the Study of Journalism's Digital News Report 2015, there has hardly been any change in the absolute number of people paying for digital news since last year. "In most countries, the number paying for any news is hovering at around 10 per cent of online users and in some cases less than that," the report stated. The countries it is referring to include the U.K., U.S., Germany and France. In other words, the more advanced economies. India isn't part of the study but it is easy to guess the percentage of paying consumers of news: small enough to essentially be zero, as they say in the world of science.
It is in this context that one should view the milestone that New York Times reached last week - of one million paid digital-only subscribers. That is big. Especially, since it is in addition to 1.1 million paid print-digital subscribers. Even though revenues fell marginally in the second quarter, it managed to grow profits in a healthier fashion on the back of cost cuts.
Apart from paying subscribers, it has been able to increase online revenues through mobile, video and native advertising. But without its paying readers, New York Times would have been in trouble by now.
Before long, major publications in India would need to find an answer to the revenue model question. How would they want to monetise their business? That's important, as in an increasingly digital future, they have to find newer ways to fund the journalism efforts.
The options would have to depend on the strengths of the specific newspapers. Surely, the fact that it's a pre-eminent news brand in one of the most global cities of the world would have helped the New York Times make some of its business choices. International readers make up 13 per cent of its digital base.