In the online publishing space, the main competition is from Google and Facebook that get 75% of all revenues, said Business Standard's President Akila Urankar and Executive Vice-President Shivendra Gupta in an exclusive interview with BestMediaInfo.com.
“The growth is 100% driven by mobile but the ad rates are so low that no business can sustain barely on advertising," they said during an interaction with BestMediaInfo.com.
Business Standard is the first mainstream Indian paper to have a paywall and the company feels that in India, it is only logical that a business paper leads the others to the paid route.
Business Standard is the first mainstream Indian paper to have a paywall for readers. What percentage of total revenue comes from digital subscription?
SG: It is too early. We went paid hardly a year back. Since no one else has gone pay, we can’t share the numbers with you. But generally, we are happy with our decision to go pay.
Our decision was fuelled by the fact that BS is a niche product, only in the business segment. The principle of journalism that we follow is that we don't diversify into areas that are connected to general news and things like astrology and nature, treating them as news. We do not do that, we focus on business and that’s why for a very deep focussed site like ours, making money through pure advertising is just not possible. The metrics of the digital world is such that even the bigger players are not able to make sense out of pure advertising.
So, for a niche player like us to do it would have been even more difficult. We had to go pay, it was just a matter of timing.
Even globally, Financial Times and Wall Street Journal led the pay model, in fact The New York Times followed what FT and WSJ did. In India, it is only logical that a business paper will lead the others to the paywall.
Our editors choose what content goes behind the paywall. Most of our opinionated pieces and analytical pieces mainly go behind the paywall. Close to a little over 10 per cent of the newspaper content generally goes behind the paywall. Editors take the call on it; there are sometimes stories in the public interest which we open even if they are analytical.
AU: It will be incorrect to look at percentages also because we are still testing the market, and price points are really low. It is like comparing one little candy with a whole bar of chocolate.
It is growing gradually and we are happy with the way it is growing. We expected it to grow faster but this is a new concept. Indians are not generally used to paying but we are trying to create a new market. There are challenges in the journey.
And how much does online revenue contribute to the total revenue?
SG: We are quite on par with the rest of the industry, in fact we are better than a lot of other general newspapers. As a business paper, our metrics are better but I don’t think it will be fair to comment on the numbers and percentages. These are very small and nascent business still in India. We are at a healthy number when it comes to Indian publishers but to achieve what the global brands have done is still a little distant goal.
Especially for a niche paper like yours, institution-led deals get more subscription. Is the same approach being taken to digital subscriptions?
SG: Institution-led deals are what we are working on for the online subscription too. That is on our agenda. It is too early in the Indian context to comment on how the market and others will take it because that is obviously something that we target. But for our main paper too, institutional copies hardly account for any copies. Bulk of our copies are stand/ trade copies. The real bread and butter that we want to do is to let the individual readers come and subscribe. For both – online and hard copies.
But the paywall model also reduces the reach of your content, giving a natural advantage to your competition.
AU: We are happy with what we have seen so far. Are we getting huge numbers? No. But are we doing whatever we thought of? Yes.
When do you see getting significant revenues from online segment?
SG: If the rest of the industry goes pay, we may see a spurt. Because when you are loner in a certain category, you don’t have a lot of customers thinking about it. But we are hopeful that with the kind of journalism that we do, people will make that positive choice of subscribing to our online versions.
Do you have separate teams for online and print and how do you synergise the two mediums?
SG: It is true for the industry. Everyone has a separate team for online. For content, it won't be fair to say that we have a separate team. Online content requires a certain level of curating and for that all publishers will have a separate team. A lot of publishers don’t have teams reporting into the editor, even if they are dealing with content. We are different. Both our print and online products are owned by the editors. So, it is completely an edit-driven product. That is also why we can go pay so easily because the views mentioned on our website are completely independent edit opinions. Online also demands a lot of urgency.
There is a separate team to take care of all of this, under the edit department. It won’t be fair to say that the team is 100 per cent separate. Online will have about 10 per cent of our staff strength between edit and sales.
What's holding back the online ad growth of media companies and how big a challenge is technology?
SG: Online is a very dynamic space. You are not only competing with the publishers, but you are competing with the big players like Facebook and Google. As an industry, it changes almost every month and you do see new trends emerging and there’s duopolising of the industry by Google and Facebook at one level. So you are really looking at the revenues that are left out after what the two giants get. Then within that, there are multiple chains of revenues. There are direct display, programmatic ad native advertising. These keep evolving. It changes every month. Reliance on technology is very high, even for ad buying and ad selling. A lot of companies are engaging directly with the publishers to find ways of making their brands known, which is where native advertising is fairly big. This is a challenge for people like us, because we are a highly journalistic-driven organisation. We are not into creating the content. Our editors are never involved in creating branded content.
Native and programmatic are definitely going to stay; that’s not necessarily true. We do see a surge in display advertising once in a while. A lot of advertisers engage only with display advertising. In fact, one could argue that native does go up and down, depending on the flavour of the season. Programmatic is centrally there to stay – but that is also pure display in that sense. It is just bough differently. It is encouraging for overall display market.
Are you expecting digital rates to go up?
SG: We have not seen them growing in last 10 years, I don’t expect any more. Once in a while, a certain format of advertising starts to get a premium, but overall, they all just come back to normal. In last 10 years, I have not seen digital ad rates really go up to that level. In that sense, TV and print have gone up significantly. But the unit rates of digital have not increased a bit.
AU: Outdoor too has not grown, it has actually collapsed. On TV too, I feel that the rates of the big ticket properties like IPL, Bigg Boss and KBC might have gone up but what happens to the rest of the inventory? Ultimately, the average has grown, but the regular rates are as is. You might see year-on-year growth in terms of FCT per second, but there is no increase in the day to day ad rates. We buy TV periodically and hence that’s our analysis.
Will advertising be enough to pay for huge investments companies make in their digital platforms?
SG & AU: Everyone is finding it difficult, right now. I think everyone is in investment phase in digital as on date, including us. We have done reasonably well in terms of monetising the digital property. There’s a challenge of the rates not going up, at times. What it does offer is the scale that we have for our print business. For instance, we reach out to many more readers through the digital medium. The audience is very wide, and I think advertising will follow. But I don’t think advertising will be able to pay alone for the costs that we incur. Advertising alone might not be able to meet the cost of technology, content and marketing. This is the challenge that digital is facing across, not just us. Any general newspaper, publisher, TV’s digital businesses will face that challenge. Subscription model becomes very crucial here, and for everyone. If you see TV was in the similar boat. Finally till about seven to eight years back, TV was hardly profitable. It was around this time when TV started getting digitised with DTH companies and then, government regulations. That’s where the TV companies started getting subscription monies and are now much profitable than before. Because they too have that content, technology and marketing cost and advertising alone was not able to pay for it.
How different is it from the global market?
AU: All publishers keep saying print is growing, but you have to understand which part of the print is growing – the regional press is growing; English press is not.
Whatever growth regionals are witnessing are through the regional expansion. The newer territories publishers are tapping into are promising, but you see any existing geographies, the growth is slow.
Is it that the newly educated person is coming to the newspapers, while the existing one is moving on to the digital screen?
SG: Even old people consume content on digital these days.
AU: I would think it is the other way around. The younger person is consuming everything on the screens. I don’t think the younger person is going to the newspaper and then graduating to digital.
Do you think with growth of online media, the print numbers start declining rapidly?
SG: I don’t think there is a direct connection. Though a lot of digital page views are on mobile phones. People are consuming more news while on the move. But the two can complement each other significantly. If you have a strong print readership, the same set can become a strong digital reader too. In fact, globally, in some of the cases, the print circulation has gone up after the digital publications have come up.
About 60 per cent traffic is from mobile. It might be even more for general interest. Technically, 100 per cent of the new numbers are coming from mobile, and that is true for the industry in last three years.
How difficult is it to monetise mobile advertising?
SG: That is a challenge that people have faced globally. Revenue is dependent on the screen size. If newspapers had Rs 100 revenue per page, it had dropped to Rs 10 for computer screen and has dropped to about Rs 2 for the mobile screen. What it does offer is the scale and reach, which increases by about 50 times between newspaper and mobile.
Do micro products such as auto and real estate websites make monetising easier? ET and Network 18 have it.
SG: A lot of this is driven by the need of advertising. There is advertising on certain category, they choose to focus on that category through these. We have not found much merit in sub-dividing as yet. It does require some extra effort and investment. People do it all the time but it is sporadic in most cases. To maintain it on a full time basis is very difficult. It is purely driven by ad-flow.
You don’t really need to do much for these sections because even if you see their general website, they cover those categories (beats) regularly. So, it’s all about repackaging the content and putting it under a separate section.
On an industry level, by when should online be a profitable game?
SG: It is a long time away. Most is because 75 per cent of the industry revenue goes to Google and Facebook. It is very difficult for the remaining players to accommodate in the rest 25 per cent. It is too less for the number of players eyeing on the digital pie – right from publishers like us, broadcasters, and apps like Inshorts, Storypick, BestMediaInfo etc. It is highly fragmented since everyone is carrying almost the same content.
AU: This business demands a fair amount of investment. In terms of profitability, unlike the newspaper, you launch a brand, a masthead and then there are just operational expenses. In digital, it is a continuous investment in technology. You need to keep changing.
How do advertisers look at digital as a platform?
SG: There is no premium on digital. Digital is possibly the cheapest model of advertising. Difference primarily is that print, television and outdoor is largely above the line brand communication, while digital is sales driven. In that sense, advertisers find it most productive because they measure sales versus investment in marketing.