1. Global lessons for Indian print behemoths

Global lessons for Indian print behemoths

It’s safe to say that the print industry in the developed world has gone through the five stages of grief (denial, anger, bargaining, depression and acceptance) and finds itself either in depression or acceptance mode.

Updated: October 18, 2016 7:50 AM
Interestingly, while ad revenues in newspapers for both print and digital have fallen, as per the Mary Meeker report, internet advertising in the US is accelerating (+20% versus +16% y-o-y), owing primarily to mobile (+66%). Interestingly, while ad revenues in newspapers for both print and digital have fallen, as per the Mary Meeker report, internet advertising in the US is accelerating (+20% versus +16% y-o-y), owing primarily to mobile (+66%).

It’s safe to say that the print industry in the developed world has gone through the five stages of grief (denial, anger, bargaining, depression and acceptance) and finds itself either in depression or acceptance mode. According to the Newspapers Association of America (NAA), total newspaper ad revenues fell from $48 billion in 2000 to $25 billion in 2012. As per the Mary Meeker 2016 report, of total media consumption time in the US only 4% is spent on print against 25% on mobile. But of the total ad spend, print still gets 16% and mobile only 12%. You can see which way this is going.

Interestingly, while ad revenues in newspapers for both print and digital have fallen, as per the Mary Meeker report, internet advertising in the US is accelerating (+20% versus +16% y-o-y), owing primarily to mobile (+66%). So, where is this revenue going? Of the nearly annual $60 billion online ad revenues in the US, Google and Facebook have 64% market share.

How did things come to such a pass? The answer always lies in following the money. There are two main avenues of revenues for the publishing business: subscriptions and advertising. Unfortunately, very few media brands, thanks to the glut of advertising in the heydays, bothered with the first. So, when the audience moved online and away from print, media houses had no choice but to follow.

Not many legacy players put too much thought on the medium they were moving to — but others did. And they were not publishing companies.

A new set of players emerged who created platforms that enticed you and me with their novelty and social experience. Brands, the main source of revenues for the publishing business, look for large homogeneous groups of people they can pitch. These groups are no longer owned by publishing companies but by technology companies. The publishing industry has lost control of content distribution and of its consumers. The print industry’s value chain has been disrupted.

Will the same scenario play out in India? According to the recent Mobile Ecosystem and Sizing Report 2016, mobile in India reaches 680 million households against 178 million by print. The time spent per day on mobile is a staggering 178 minutes against just 23 minutes for print. But the advertising revenues for print at R17,099 crore are four times that of mobile. What do you think is going to happen?

The oft repeated ‘access to the net’ problem is being tackled head on by Google. The internet giant has outlined three areas on which the company is working to provide connectivity — access (connecting people to the internet), platforms (letting people and developers share and build upon the internet) and products (providing better and more relevant Google experiences for Indians). Google is free wifi-enabling our most high traffic areas.

And in other news, India has become the largest user country on the Facebook network at 195 million in May ahead of the US. The intention of Facebook is as clear as Google’s.

True, all this is not going to destroy the Indian print industry tomorrow. But one has to be blind not to see the direction. These two companies have tremendous resources (combined revenues will be over $100 billion this year) and are here for the long run.

I am not going to bet against this headline in 10 years: ‘Facebook and Google’s combined Indian digital revenues top all newspaper revenues in India’. The ones who move quickly from ‘denial’ to ‘acceptance’ and work on creating robust business models will be left standing in the Indian print industry battlefield.

Suprio Guha Thakurta

The author is chief strategy officer, The Economist Group

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