From "Free" to "Fee": Indian Express CEO on changing consumer habits for news

New Delhi: Since their inception, generative AI tools have been a major concern for publishers, as they scrape paid content and provide free access to it.

On top of it, these tools are reducing the inflow of traffic to news websites as people are increasingly doing their searches on these generative AI platforms.

BestMediaInfo.com asked Sanjay Sindhwani, CEO of Indian Express Digital, for his thoughts on generative AI platforms eating into the revenue of news platforms. 

He replied, “It's still too early to determine the exact impact, as search traffic today makes up 50% of organic traffic, with the rest coming from discovery."

Consequently, your organic traffic is now split between these two sources. Additionally, understanding the precise impact is challenging, as it's difficult to know how many times your content appeared without resulting in a click. It will always be an estimate, and we will get a sense of it from broad overall ‘search click-through volume trends’ over time.”

When asked why Indian publishers are taking a reactive approach and not a proactive one, Sindhwani replied, “Most Indian publishers, especially members of the DNPA, have disabled bots from AI engines to crawl their content. We have also changed the terms and conditions of content access by bots on our websites to clearly state that our content cannot be used to train LLM models or for generative AI results. However, they have allowed certain bots, including those from Google and Microsoft, to access their content. We are in continuous dialogue with stakeholders to understand how this should be resolved in a win-win scenario by respecting the ownership rights of media companies over their content.

Also, as far as Google is concerned, news and politics are not part of the overview presentation layer, so we need to view the impact from a different perspective. Content like feature articles or soft content, such as kitchen recipes, is more likely to be affected than core news. These types of content bring in traffic but are not considered news per se. Therefore, it is crucial to monitor and assess the impact on such content.”

It is important to note that while Sindhwani mentioned that Indian Express has blocked AI bots from crawling over its content, AI bots can still access paid articles on the Express website.

Moving on, as digital revenue continues to be dominated by big tech companies, we asked Sindhwani if it’s time for news platforms in India to adopt a subscription model and whether small publications can survive on subscriptions.

Presenting a response to the query, Sindhwani said, “Subscriptions create a robust alternative revenue stream, reducing dependence on advertising. A large subscriber base provides more revenue from direct customers, as it represents a filtered, quality audience. In the long run, the subscription model not only creates an alternative revenue stream but also enhances advertising revenue by creating a sub-cohort of premium users.

Coming to small publishers, it's crucial to understand that advertisers want to reach specific audience profiles. Large sites offer multiple consumer segments for advertisers to target, but small niche sites need to focus on their specific audience. For example, a B2B media news website attracting martech and ad tech companies can charge higher rates because all readers are relevant to advertisers. This relevance allows for premium pricing due to minimal wastage. However, small generic sites will find it difficult to find a viable business model.

In my experience with Economic Times earlier and now with Financial Express, niche business (or other) verticals command higher premiums than general content segments. But they are also relevant to a smaller set of select clients/advertisers only. Small publishers must scale their reach within their niche to create value and attract advertisers. By focusing on industry and audience segment penetration and offering targeted content, small publishers can achieve better performance and higher returns.”

Making people pay for news

Further into his interaction with BestMediaInfo.com, Sindhwani highlighted the importance of moving onto a subscription-based model, but the question that arises here is whether Indian users who have enjoyed free content for decades are ready to pay for news.

Speaking of how consumer behaviour is shaping up, Sindhwani said, “We charge an average of Rs 1000 to 1200 for a subscription, which is about three to four rupees per day—less than the cost of a bottle of water. Despite the low cost, changing consumer habits formed over the past 20 years for getting news content for free will take time to change. As more publishers start putting their content behind paywalls, this habit change will see acceleration.

Being an early adopter to start charging for news, when most others are free, is challenging. However, as more peers follow suit, consumers will choose between different paid options. This shift will lead to higher quality, more distinct, and useful content, reducing the focus on frivolous trending stories. Subscriptions will realign publishers towards good journalism, restoring faith in quality journalism amid the spread of fake news on social media.”

As we discuss subscriptions, another pressing issue for digital news platforms is the 18% GST charged on digital news subscriptions. Sources close to the ministry have informed BestMediaInfo.com that the government may reduce this tax to 5%.

Weighing in on the discussion, Sindhwani said, “Digital news subscriptions are currently taxed at 18%, while print news is taxed at 5%, creating an unfair burden. This discrepancy needs correction. Journalism, especially responsible journalism, is crucial for democracy. Despite our 7% growth rate, India remains a price-sensitive country. To ensure access to quality, fact-checked journalism, costs must be lowered. In print and broadcast TV, strong advertising revenues subsidised subscriptions, but this is not possible in digital as a bulk of the advertising spending goes to a few large platforms, and ad rates have no correlation to the cost of producing content but are determined via a bidding mechanism where both media and non-media players are pitching audience reach in real-time price discovery processes.

Journalism has inherent costs, and without subsidies, the government should at least reduce the tax on digital subscriptions. Ideally, the tax should be zero, but reducing it to 5% from 18% would still help. However, if this is done with a disallowance on the GST credit offset, it will not have the desired impact. This reduction could lower costs by about Rs 150 annually, making journalism more accessible to the public.”

A note for small publishers

Small publishers, listen in! Pivoting back to the subject of data, Sindhwani shared insights on how even small publications can monetise their data. Giving his take on the subject, he said, “There are two ways to look at data. One way is to use it in real-time to deliver personalised ads, content, and services. This approach is more suitable for large media companies and can be cumbersome for smaller organisations. The other way is to focus on quality content and collect zero-party data directly from users. This data includes information users provide about themselves, like their profiles.

For example, if you can show advertisers that your audience is young females based on the first-party data collected, you can reach out to brands that want to target this segment and charge a premium.

It is crucial to know who your readers are, whether they are CXOs or other professionals or housewives. By understanding their profiles, you can target your content more effectively. This targeted approach improves click-throughs and keeps readers coming back. It also ensures that your advertising gets the impressions needed to deliver successful campaigns. Every business should identify the data that will help them grow and find innovative ways to collect it.”

A focus on video communication

Deeper into the interaction, Sindhwani mentioned Indian Express’s pivot towards video platforms and the new offerings.

In the words of Sindhwani, “Consumers are increasingly watching and listening rather than reading, so while we continue to invest in text, we are focusing more on video. Despite starting from scratch without a legacy TV presence, we are now airing three to four hours of video feed daily. We plan to increase this and add more channels to our lineup.”

Monetising data for news platforms

Previously, platforms would die for data, and now they are dying of data. While the influx of data has increased, much of the data that comes in cannot be used, as users often provide false information intentionally or unintentionally. Thus, cleaning a huge pile of data to use can be resource-intensive for a small publication, so how can small publishers clean their data and monetise it too?

Weighing in on the discussion, Sindhwani said, “News platforms cannot directly go to a reader and ask for their email address or a mobile number. You need to have valid reasons for collecting data. Moreover, with the new DPDP rules coming in, there is a huge compliance burden that will now come into play when collecting user data.

News platforms need to think about why someone would provide their data and what value exchange they are offering. You can't simply pop up a window asking for a name, email ID, mobile number, organisation, and level in the organisation. People will lie if they don't see a purpose in sharing that information.

First, you must assure people that the data you're collecting will not be sold or shared with any third party. Only ask for what is relevant; otherwise, people will start lying. Don’t ask anything directly. 

Secondly, there has to be a trade-off on why you are seeking that information and how it benefits the person sharing it. Once you find that sweet spot, people will start sharing the data because they see value in it.” For example, if you need to determine the age for a tax tool, where knowing the person's age is necessary to tell them their tax bracket, there's a benefit trade-off. If the person doesn't provide their true age, their tax calculation will be incorrect.”

Future plans

Summing it up, Sindhwani spoke about the offerings that Indian Express is working on. “We have recently relaunched Screen, a brand in the Bollywood and movie space, which we had previously sold to Star. After acquiring it back, we relaunched it last month and have plans for the brand. We are also doubling down on our video production capabilities. We already have subscriptions for

 IndianExpress.com, and last quarter we launched subscriptions for LokSatta.com as well. Our focus, right now, is to build and strengthen our D2C subscriptions business, which we believe will create long-term differentiation and ROI.”