Saturday, December 20, 2008

Without news in paper

A compromised print media portends a bleak future for India

The economics of print news business, particularly in the Indian context, has always been very intriguing. Unlike any other product, wherein the more you sell, the more you earn, in print news business the more you sell the more you lose. And the irony is that, though the fundamental economics remain extremely unconventional, the business is run like any other conventional business. This means, that in order to increase readership and to attain market leadership, most (not all) of the media houses, offer massive discounts to push both subscription and stand sales. But the question is, in the given scenario, how are these media companies able to sustain in their business?

Back of the envelope calculations indicate that the cost of newsprint that goes into any conventional daily newspaper ranges between Rs 6 and Rs 7. On top of that, the other operational expenses come to nearly the same (as per their balance sheets), i.e. another Rs 6 to Rs 7. And mind you, these expenses do not include selling expenses which takes away an average of another 50 per cent of the selling price. This means that for media house that sells any newspaper for around Rs 2.50, the net income is just Rs 1.50 (i.e. after deducting 50 per cent as selling expenses). And with a cost point hovering around Rs 13 to Rs 14, media companies incur a net loss of around Rs 11 per newspaper! Conventionally, most of the media houses cover these costs with advertisement revenues. But then considering that such advertisement revenues are constant for any given issue, more sales invariably leads to more losses. In the given context, it becomes all the more intriguing that how is it that few media companies still manage to drive sales by offering crazy price cuts.

Well, the answer definitely lies in Ad revenues. In order to push readership through conventional selling practices of offering price cuts, media houses invariably resort to more Ad revenues, per issue. This means that there is an underlying compromise of editorial space and content, simply because it makes more business sense for media houses to sell for Ad space as against editorial space. And the biggest damage is not just about the compromise and the advertisers influence on the editorial space and content, which in itself is irrevocable, but more than that the business environment thus created is making the business proposition extremely difficult for those media companies who do not wish to compromise. For, they are left with just two options – either to follow and by lowering prices to unsustainable levels, or to stick to their price points and lose their readership. Unfortunately, this dichotomy of print news business is unique for India, as it is not so in other parts of the world. Closer home, for countries like Pakistan, Sri Lanka, Bangladesh, Singapore, Thailand et al, the selling price of newspapers are way higher than that of India.

Needless to say that the way print media has shaped up, it is extremely dangerous not only for the industry but also for the readers at large. Dangerous, because news in print shapes our minds and a compromise in editorial space is bound to create an equally compromising mind, the effect of which would be felt not just for the current generation but for generations to come. In fact, it is for the readers to realise that access to reliable, dependable and unbiased news and information is invaluable and just cannot come cheap. And not just this, also to realise that it is just in our hands to completely and strongly detest this phenomenon of cheap news! If not, all that India would end up with is a whole new generation with biased (read compromised) point of views at best and no point of view at all, at worst.


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