What ails one of the liveliest news media industries in the world? It is 33 months since the initial Covid-19 total lockdown of the Indian government was announced on the late evening of 24 March 2020. Although the first, sudden, and most comprehensive lockdown was to be in effect for only 21 days, it continued till 30 May 2020, when a series of ‘unlocks’ gradually opened up various sectors of the economy. The unlocks continued until the second wave of the Covid-19 pandemic shook-up the country in late March and April 2021.
One can say that the shutting of schools, public transport, factories, and retail business most profoundly affected low-income earners in the cities who returned to their villages on foot, on bicycles, trucks, and limited public transport. Food and pharma manufacturing and distribution were exempt from the lockdown and most supply chains were resilient. There is no report of any food or medical commodity stock-out over the three years – and notably little or no hoarding, except for the oxygen and imported drugs shortage during the second wave from April to June of 2021.
The digital backbone of resilience
A major component of the country’s overall resilience was its free flow of information and its digital communication and transactional backbone. The engine of the economy shifted from in-person economic activity to daily information, communication, purchasing, and payment over the widespread cellphone networks of the country. India in October 2021, had more than 1.18 billion cellphone connections of which 600 million were smartphones – increasing at a rate of 25 million each quarter.
The country also had 700 million internet users and average data consumption of 12 gigabytes per capita – said to be the highest in the world. One cannot underestimate or fail to acknowledge the value of India’s digital spine in the last three years. These networks also kept alive the news media of the country. The liberal benefits of mass communication and freedom of expression moved to broadcast and the internet – to digital news and social media.
Doctors responded and prescribed on WhatsApp. Intrepid journalists risked their lives for difficult frontline stories in quarantined hotspots and hospitals and reported their stories from work-from-home laptops. Print media learned to be more digital and in many cases, it was mainly digital distribution that prevailed. And as one senior news media executive said recently, “With the internet, you don’t need a TV license for audio and video.”
As we have recounted earlier, printed newspapers could not be distributed during the lockdown in most regions of the country. Housing societies and gated communities that are collectively exclusionary in the best of times, outdid each other in their unscientific madness by keeping out the underclass that formerly delivered the country’s 125 million daily newspapers before 6.30 am.
The 2019-20 financial year for the news media print industry was already in decline in the previous year, and when it lost revenues in the last quarter, it finished with reasonable numbers. However, for many leading publishers, 2019-2020 ended with significant losses, in an economy on the slide for seven quarters – and big tech chomping the biggest part of the digital revenues to which it provided content for crumbs.
Even after the first lockdown ended, advertising and pagination shrank, editions closed and circulations sunk to abysmal levels and the 2020-21 financial year was catastrophic. Especially for an industry that gave away its product for free on the internet – and for three Rupees (US$ .04) a copy in print.
By December 2020, even extensive inventories of newsprint ran out, as newsprint machines in Europe continued to be decommissioned as planned long before Covid-19. With containers being diverted to China, newsprint prices rose. The deliveries of previously contracted newsprint became unpredictable. The revenues of several larger print media companies declined in FY 20-21 by 35 to 40% while their losses increased by 30% over the previous loss-making year. The losses were minimized by the reduction in the use of raw materials for slimmed pagination and circulation, ditched editions and retrenchments, and salary cuts of their editorial teams by 15 to 35%.
The collaboration of the beauticians and the morticians
The print media industry’s recovery in FY 22-23 and its real challenges are becoming more apparent in the new normal, just as the pandemic revealed many of the shortcomings of our urban economic and cultural systems, and inversely, the resilience and strengths of our rural population who maintained and fed the returning urban migrants. The newspaper industry now admits that its collective circulation is unlikely to return to pre-Covid levels and most of its leaders admit that they have missed the bus on the monetization of their digital assets.
Investment by Indian newspapers in digital technology, with the exception of about half-a-dozen news media companies, continues to be stagnant and erratic. No reader will pay or subscribe to undifferentiated and poorly edited news. Digital is hard work based on excellence in fact-checking, illustration, explanation, opinion, quality editing, and curation. As one industry expert has suggested, apart from investment in technology and design, curation is essential. Print and digital news may have the same news gathering and editing engines but they are different products.
Print must appeal to the lowest common denominator of the audience while paid digital must appeal to the highest uncommon denominator of the audience. Here one can provide a science or business article with depth since the cost of targetted delivery is next to zero. While print has to keep its geographic reach in mind, digital news media needs to prioritize a semblance of intellectual and cultural depth.
Substantial investments of both money and time need to be made for the synergy of news media and digital distribution to be monetized. These are needed for software development, analytics, human resources, and the umpteen trials till new and creative products and services emerge. Subscriptions are hard-earned and retention of digital subscribers is even harder.
A starting point for paid digital subscription may be as low as 1% of traffic, with a semblance of justification when one reaches 1.5 to 2%. One industry leader who has made progress says, “If subscription revenues can reach 3 or 4%, one could de-risk the revenue from web advertising.”
The low cover price hinders distribution
A second challenge that is emerging is the cost of distribution of printed newspapers. The Indian newspaper industry is unable to wean itself from its addiction to advertising revenues based on low-priced copies that can be given away for boosting circulation. Ironically, the low cover price of each copy is undermining the basic strength of the industry – home delivery.
As several newspaper executives have suggested, the last-mile hawkers (still called delivery boys) are no longer willing to fling papers from their bicycles – their scooters and motorcycles require petrol at Rs 100 a liter. Many prefer to be part of the digital economy – working a full day for Amazon, Zomato, and Flipkart and the ubiquitous home delivery of every consumer product and service. And many of the so-called hawkers have not returned from their villages as they strive to build a digital economy in the countryside even if it means becoming dairy farmers.
The newspapers in the Southern Indian states realized the need for higher cover prices long ago. They raised their prices to anywhere from Rs 7 to Rs 15 (9 to 13 US cents) per copy, which still does not cover the cost of the newsprint – let alone the other costs of news gathering, processing, and production. Other national dailies still linger at Rs 3 and 4 per copy not realizing that there is no alternative but to raise the newsstand price of a newspaper.
There is no other way to maintain the human resource associated with home delivery and without this facility, the Indian newspaper will go the way of the west. The printed newspapers in large cities such as Chicago are practically invisible – all one sees are empty steel boxes on sidewalks that formerly held the morning paper.
The challenge of transparent circulation and readership data
Thirdly, there is the challenge of data. Correct and transparent information and data are anathemas to some of the leading Indian news publishers. They selectively choose editions for ABC audits and are loathe to fund research and data gathering. Media planners are unaware that the ABC audits have resumed and that the January to June 2022 data is now available. They are still living in a mythical past where the English-reading urban demographic was more likely to buy an Omega or Rolex watch or a BMW car than a Tamil, Malayalam, Telugu, Bengali, or Hindi-reading factory owner or trader in a smaller town.
Often, the media planners in advertising agencies are complicit in this lack of knowledge and research. There is a fatter commission and even the possibility of a gift for placing an ad for four times the price in an English daily compared to a substantial language daily with the same or better circulation. As a leading newspaper owner says, “We are collectively killing the vibrant Indian newspaper industry.”
Newsprint mills are now testing for upcoming demand
Lastly, there is the challenge of newsprint prices currently reigning at US$ 900 to 1,000 a metric ton but softening toward US$ 850 to 900 in the next quarter. “The double whammy has been the devaluation of the Indian Rupee against the US dollar,” says a senior industry executive.
Nevertheless, industry leaders predict this price will decline further to US$ 800 to 825 a metric ton in the second quarter of the 2023 calendar year. Newsprint prices may moderate further to US$ 750 a ton later in the coming year. A newspaper owner explains, “Currently, the paper mills are not offering quotes for newsprint. Instead, they are asking what we are ready to pay. They are testing demand.”