In a digital age, The Times of India keeps the newsprint rolling.
The big idea: In recent decades, significant technological advances have deeply affected the news industry. Advertising revenue shifted as consumers moved to digital or mobile news access and the business changed to reach them. Many newspapers sought to replace lost print revenue with new digital revenue, but that wasn’t the approach for the world’s top-selling English newspaper — the Times of India.
The scenario: The Times of India’s print edition reached a daily circulation of over 4.5 million in 2008. Despite the paper’s long-standing history and popularity, the enterprise suffered when the global recession hit. Declining profitability had business-side executives thinking about its future growth. Although they had added staff in advertising sales to target digital advertising, the Times’s digital revenue was small compared to its print-circulation revenue. Yet by 2008, many readers were changing the channels they used to get news.
The resolution: The Times was not giving up on the potential expansion of print news. Rahul Kansal, executive president at Bennett, Coleman and Co. — the publisher of the New Delhi-based paper — believed print news was key to a new industry model. The Times wanted to focus on the pleasure of home delivery and the habit of reading the daily paper. In contrast to newspapers in other countries that increased newspaper prices, the Times was headed toward offering its paper for almost free. Executives wanted the customer to make a conscious decision to buy the newspaper.
The paper expanded its highly reliable system of free, on-time delivery into cities of 50,000 to 1 million residents. The paper also changed the way it covered stories — moving from passive to active voice — and gave a nod to digital content by building Web and mobile-application platforms. The Times’ decision to lower its cover price to blunt the appeal of free mobile and digital news worked.
The lesson: Some may be surprised how little money is earned from newspaper circulation. Economists would describe the Times as having a two-sided market (or network), with two types of users: those who depend on the paper to be informed, and those who use it to advertise their own products and services. The Times ties these subscribers and advertisers together, allowing them to interact. There are two costs and revenues for the newspaper, one from subscribers and another from advertisers. In this case, the pricing structure is skewed because one group pays a much higher cost than the other. And any decision Kansal and his team make will affect both sides — and not necessarily in the same manner.