Carv­ing a new rev­enue model

The Pak Banker - - OPINION - Sri­ram Srini­vasan

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.

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