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Commentary: Can Covid-19 be a real awakening for media houses to fix their broken revenue model?

The media industry is forced to layoff its staff on a daily basis. The media houses claim they have no option but to be leaner to handle the economic impact of the Covid-19 pandemic. But this isn't the entire picture. The news revenue model has been broken for years and the employees are now paying for the flawed and short-sighted business sense of the promoters

Businesses across categories are facing the toughest ever phase due to Covid-19 and the subsequent lockdowns, which is adding more problems to the already struggling newspaper industry. The resultant economic slowdown has not spared any newspaper, be it large or small.

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Even established newspapers with strong P&L are forced to take drastic measures to optimise their cost in order to sail through this hurricane. On the other hand, newspapers and editions that could not become a strong pillar for the overall business of the publication houses are being shut.

Amid all this, the employees who have lost their jobs are suffering the most while others are working under fear.

A few businesses succeed while others do not. But business owners always take calculated risks in order to grow. It is also a fact that no business owner ever imagines a fate like this where the staff are let go amid unprecedented rough weather.

In the current context, the helplessness of newspapers for their drastic cost-optimisation measures could be sympathetically accepted but they cannot be discounted for their flawed and fragile business models along with the inability to be agile with the fast-changing business environment.

Most of them continued with their beliefs that they could swim against the tide as they were able to survive with whatever little de-growth they registered. They knew where their readers were going and chalked out strategies to chase them there. They made their existing content flow in the digital pipe and started earning revenues over the same content. But, largely it remained a loss-making business because the content was not monetised well. Even after spending huge amounts on customer acquisition, everyone considered the digital revenues as additional income over the already monetised content.

This was the first problem. They themselves took their content for granted and were convinced with the marketer’s argument that peanuts were enough for their refurbished content. In the meantime, the marketers continued to get the audience that moved from print to online at about 1/100 (one-hundredth) the cost of print.

Let’s do a simple math. Regular print content republished on their digital platforms were giving them say about Rs 50 per 1000 impressions. For a branded content piece they were creating, first, there was a production cost and then the views were bought. Even though they were charging the brand keeping a good margin over their cost on buying views, the margins were not enough to bear the expenses of their highly paid teams. So effectively their P&L always remained in the red.

In all this, Facebook and YouTube continued to earn from their content, of course, they shared peanuts with the publishers in the name of a revenue share model. They kept charging the publishers to reach a larger audience. Their model is: spend Rs 20 for 1000 views and earn Rs 20 from advertising on those views. Such is the power of these mighty social media platforms and the compulsion of publishers.

Last month, the Australian government said that Google and Facebook would have to pay media outlets for news content in the country, part of an emerging global effort to rescue local publishers by moving to compel tech giants to share their advertising revenue. 

A study released last year said Google made $4.7bn in 2018 from content produced by the news industry but little of that flowed to media outlets. The figure was termed inaccurate by Google, saying searches on its service may have sent users to the news outlets’ websites.

While governments across the globe have acted swiftly to save local publishers, there is no such sign from the Indian government. The Indian publishers are left to deal with it on their own. The big question is can they come together against the global tech giants masquerading as content platforms? has been raising the issue of lack of unity among news broadcasters in deciding against giving their content both live and recorded for free to YouTube, Facebook and Twitter. The news channels and newspapers are the biggest source of content for Twitter, Facebook and YouTube. If they come together and say that they would not give free content to these social platforms, they will completely dry up.

It is only possible when the industry bodies for broadcasters, NBA and NBF; INS for newspapers; and DNPA for digital news publishers, show some will to save the interest of their members. IBF had done a great job by denying their content to these platforms about 5-6 years back.

Pick up any industry body from the above and you would find it rarely working in the larger interest of their members. Rather, they remain a mute spectator when their members keep fighting each other to establish their supremacy. From broadcasters to print publishers to online publishers, everyone thinks they are safe. They were not able to improve their advertising rates beyond inflation-linked hikes because there were many competitors ready to grab the businesses at a much lower rate.

Marketers are convinced that audiences are moving to digital, which is hurting most of the mediums’ revenues. In such circumstances, the Digital News Publishers Association, formed about two years ago, has to play a critical role. It will have to bring all the players together on the same page to make them value their content and turn digital as a primary and profitable business. There is still time to resurrect and the pandemic could be the real awakening for the industry.

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