In a dig­i­tal age, The Times of In­dia keeps the newsprint rolling.

The Washington Post Sunday - - BUSINESS - — Gerry Ye­men, Ra­jku­mar Venkatesan and S. Sri­ram Ye­men is a se­nior re­searcher and Venkatesan is a pro­fes­sor at the Univer­sity of Vir­ginia Darden School of Busi­ness, and Sri­ram is as­sis­tant pro­fes­sor at Univer­sity of Michigan’s Ross School of Busi­ness.

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.

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