Indian Print Media - Comparative advantages and challanges

The paper has been published in the journal published by EGADE Business School, Mexico & Institute of Public Enterprise (IPE), Hyderabad.

Indian print media is one of the largest print media in the world next only to China.

History

The history of the Indian print media started in 1780, when the first newspaper was published by James Augustus Hickey. The name of the newspaper was The Bengal Gazette and it was published in Calcutta (now Kolkata). Hickey is considered as the "father of Indian press". In 1789, the first newspaper from Bombay, the Bombay Herald appeared, followed by the Bombay Courier next year (this newspaper was later amalgamated with the Times of India in 1861).

The first newspaper in an Indian language was the Samachar Darpan in Bengali. Today a large number of newspapers are published in various languages like Hindi, Marathi,Malayalam, Kannada, Tamil, Telugu, Oriya, Assamese, Urdu and Bengali along with other regional languages. It is estimated that around 62,500 newspapers are circulated in India every day according to RNI figures of 2006.

Indian newspaper industry from the very beginning had a very narrow viewpoint. The media focussed on the content of the newspaper. Commerciality was never in the picture primarily because of India being a closed economy, almost zero presence of foreign groups and because of no competition. It was mainly after the economic reforms of 1991 that newspapers adopted a commercial viewpoint and it is at this point that marketing interests overtook editorial priorities. The newspaper industry completely took a turn around and became one of the most aggressive and competitive market so much so that the competition is very much alive and continuing today also.

Supremacy of regional language papers

The Indian language papers have taken over the English press as per the NRS survey of newspapers. The main reason being the marketing strategy followed by the regional papers. Another reason is the growing literacy rate. Increase in the literacy rate has direct positive effect on the rise of circulation of the regional papers. The people are first educated in their mother tongue as per their state in which they live for e.g. students in Punjab are compulsory taught Punjabi language and hence they are educated in their state language and the first thing a literate person does is read papers and gain knowledge and hence higher the literacy rate in a state the sales of the dominating regional paper in that state rises.

The next reason is localisation of news. Indian regional papers have several editions for a particular State for complete localisation of news for the reader to connect with the paper. Malayala Manorama has about 10 editions in Kerala itself and five outside Kerala and two abroad (Bahrain and Dubai). Thus regional papers aim at providing localised news for their readers. Even Advertisers saw the huge potential of the regional paper market, partly due to their own research and more due to the efforts of the regional papers to make the advertisers aware of the huge market. Also the structure of the Indian print media industry is highly fragmented with importance to regional dominance.

But it has also been observed that this trend of regional newspapers being the forerunner is more popular in rural areas. In urban areas like Mumbai and Delhi English newspapers though don’t take a lead as compared to regional language papers but still their readership figures are quite high.

Fragmented Industry

The regionalism aspect is clearly visible in the newspaper sector. The print media is further divided on the basis of the languages. Of the daily newspapers, about 46% are vernacular, 44% are in Hindi and 10% are English. Hindi and vernacular language newspapers offer a local and regional flavour to their readers. The content and circulation of English-language newspapers, on the other hand, are largely focused on the primary urban centers. Approximately 7% of the population in urban areas read English-language newspapers, compared to a readership of only 0.3% of the population in the rural areas. In contrast to this, Hindi-language newspapers have a proportionately larger readership in rural areas, in addition to their strong presence in urban areas, with a readership of approximately 15% and 5% of persons in urban and rural areas, respectively. The newspaper industry is regionally divided, with existing players enjoying strong brand loyalty. For e.g. Times of India follows strong brand loyalty in Mumbai and it was difficult for Hindustan Times to enter Mumbai.

The newspaper industry has relatively high entry barriers due to the strong brand equity of existing players. Also, existing players have strong control over the distribution network, making it difficult for new players to enter.

Measurement

Newspapers in India are measured on two parameters, circulation and readership.

Circulation

Circulation is certified by the Audit Bureau of Circulations which is an industry body. It audits the paid-for circulation of the member newspaper companies.

The total circulation of newspapers in India is around 5,00,00,000 copies per day with Hindi newspapers leading with 3,76,42,520 copies and English dailies following at 1,29,14581 copies.

The Times of India has six English dailies with circulation of 25,42,075 copies

Readership

Readership is estimated by two different surveys, The Indian Readership Survey (IRS) and the National Readership Survey (NRS). In 2007 both NRS and IRS joined hands together for a single survey of newspaper readership. According to NRS survey of 2006 there are around 222 million readers of newspapers. That constitutes around 22 percent of the population. The growth rate has been roughly around 3 % per annum. According to these figures the average readership in 2011 will be around 255 million readers. Press reach in urban areas hover around 50 % and in rural areas it is around 20 %. The number of readers in urban and in rural areas are almost the same. The average time spent on reading newspapers is 39 minutes.

The size of India newspaper industry is about Rs. 200 billion which has a CAGR of around 13 %

Growth drivers

Higher literacy levels: The literacy rate has reached close to around 75 % as compared to around 63 % in 2001. There has been a huge shift in the literate population. People like reading and spare time to read for their own benefits. Indian print media still just serves 35 percent of the population as against global average of 55 percent. There are tremendous chances for growth in the country.

Lower cover prices: Earlier, due to strong hold over a region, the newspaper had higher cover charges. However, with increasing competition and venture into newer regions the companies have reduced the cover prices to augment more sales. Many English dailies are sold for as low as Re 1 or Rs 2. Today you can get a two year subscription for Hindustan times in just 249 rupees that translates to Rs. 10 per month. The prices are so low that even the people living in the lower strata of the society can easily afford it. This is contrary to the fact that in western countries the same newspaper is sold at cost price which is much higher than the price at which the customer gets paper in India. The western paper like The Wall Street Journal has adopted the same American Strategy in India and is sold at a price of Rs. 25 per copy. An average Indian can’t buy this newspaper due to cost. Though the market for the paper are the business class people who keep a watch on US economy.

Higher ad spends: Print media accounts for 48% of the total Rs 190 billion advertising spend in the country. However, the ad spend in India is just 0.4% of GDP as against 0.5% in China, 1.3% in the US and a world average of nearly 1.0%. With rising consumerism and growing interest from domestic and global brands in Indian market, the growth in ad segment is expected to be strong. Economic prosperity, localisation of news and the potential of Indian print media to penetrate deeper into the market is slated to increase India’s ad spend-to-GDP ratio. The rise in domestic demand is surely increasing the marketing spend of companies, even in relatively low-ad sectors like DTH, retail and insurance. The strong economic boom is also giving rise to new businesses which, in turn, would turn mega advertisers in the time to come. While regional advertising will act as the main driver, ad spends in English are also picking up. For an industry which depends on advertising revenues, more than subscription revenues, the overall trend will keep the Indian print media industry in good stead unlike its global counterparts.

Economic boom in semi-urban and rural India: The Indian consumption story is no longer an urban prerogative. The rural monthly per-capita consumption expenditure has outpaced the urban figure - thanks primarily to potent government schemes like NREGA and higher minimum support for crops and the percolation of overall economic boom in rural areas that has brought about a surge in consumption growth. This shift has prompted advertisers to focus on semi-urban and rural areas. As newspapers are the only cost-effective media in this belt, as much as 50 per cent of small advertisements now appear in regional newspapers. Not surprisingly, this new wave acts as an enabler for profitable newspaper launches in rural India. But competition would be more prominent in the Hindi language space given the scope in terms of penetration levels, revenue growth potential, expected capex and pre-breakeven period and cover prices. English and other language publications in comparison are likely to see less competition, given the prohibitive high-entry costs and reasonably high penetration levels.

Growing content localization: Local content, hitherto, has never seen a place of pride in the national media coverage. Traditionally, English have ruled the roost. The English newspapers, focused on top 20 cities, account for 50 per cent of the print media’s ad spend. With time, local content is being placed at a premium, more so by the advertising community, to reach out to a large untapped market. As newspapers hold the edge in the rural segment, local content-based regional newspapers (led by Hindi) are increasing readership in regions with low media penetration and, in the process, developing local advertising markets. They will also enhance their value in terms of price, visibility, content, design and aesthetics. Slowly but steadily, they will outpace the English language publications. The gap in ad rates, between English and non-English newspapers, was down to 9x in 2009 from 12x in 2003. This gap will further reduce in the years ahead.

Upside potential of print media penetration: The average penetration of newspapers is just 38 percent of the total population. So there is huge potential of an upswing in the readership. Moreover, the total readership which includes several fringe consumers looks potentially inflated. The average readership, the relevant parameter in the context of print media advertising, stands at a mere 16 per cent. Seeing such a low number one could imagine the market potential of Indian print media. The days have just started for this industry. Appropriate actions, techniques and methods will surely give results to the newspaper corporations. ‘Of course, players in the print media will have to be agile and responsive to the emerging challenges of tomorrow to be able to sustain their growth’ as said by Mr. Shankar Narayan, CFO, Bennett & Coleman Group.

Strategies of newspaper companies:  As a result of economic reform in 1991, the India newspaper industry started thinking globally. They learnt to increase the size of their newspaper. Various supplements for women, on cars, careers, technology etc. come along with the main newspaper. These are printed on glossy newspaper. Many people just see the newspaper for reading these supplements. For example, Delhi Times, the daily supplement of The Times of India in Delhi is very popular amongst the youth. This attracts a huge audience/reader group. Also the classified pages in the newspapers receive the maximum hits. A reader can search for anything and everything from the newspaper. Classifieds range from car sale, real estate, wedding classifieds, job hiring, and government tenders, etc.

“Over a period of time, competition will lead to consolidation and the marginal players will disappear. The strategy would be to constantly innovate, thereby providing a compelling value proposition to both advertisers and readers”

Rising newspaper-reading population in India: Although the literacy rates are rising in India, they have little relevance for the newspaper reading population of India. A more appropriate parameter is the enrolment ratio for secondary school education that’s rising at a steady rate across the country. This parameter paves the foundation for newspaper reading habit among the students of 10-15 year age group. As we can foresee a leap in this ratio even going forward, the addressable market for print media is set to rise significantly in the coming decade.

Mentality and viewpoint of people: Worldwide the news is that the internet has dented the profitability of the print media. Readers increasingly want their news free, causing loss of circulation and through it, of ad revenues. Some people saw it as a threat and quickly turned on to internet business. This was done by most of the western businessmen. But in India there is a different story.                                                                                                                   Today a newspaper in India sees the internet only as an archive, or to give an e-paper edition of their existing print paper. The time to panic for Indian media companies has not come yet and isn’t expected to come in the near future. This is basically due to the mentality of the Indian population. Indian people are not very tech savvy and also the reach of internet is not widespread. It is difficult to get media sites in local languages and even if they are in local language it is not very convenient to browse through these sites. However the print media companies should not take this for granted. They should start their way towards digitalization so as to be prepared in case of a total turn around which is unlikely to happen.  
India has the second highest circulations of newspapers in the world next only to China. Unlike west where internet and television have proved to be grave threats to the print media in India these threats are still at a nascent stage.

FDI in Print Media

Most Indian print players continued to dominate the local regions and did not enter new territories, mainly due to lack of funds. However, foreign investment regulations were relaxed in 2002. Currently, up to 26% foreign direct investment (FDI) is permitted in newspapers and periodicals dealing with news and current affairs. In non-news publications, 100% foreign investment is permitted. Since the changes in the regulation many foreign investors have taken strategic stakes in the domestic print media companies.

The first company to take the leap was Business Standard. Various foreign companies entered into agreement with Indian magazines like Autocar.

Costs

The major costs that newspaper publisher faces in the newsprint cost. It accounts for 40-50 percent of the total operating costs. If the prices of newsprint rise it directly affects the profitability of the firm as it is not possible to increase the price in such a competitive market and pass on the hike to the customers. Also the companies can’t hike the advertisement rates until a uniform step is taken by the whole industry. Factors like US recession, natural calamities in countries who are the major suppliers like China affect the price. This gives an advantage to the domestic newsprint firms who charge high prices for the same.

Companies go in for marginal hike in advertising rates in such situations and advertisements account for more than 70 percent of the revenues. The price of newsprint is around 700 $ per tonne.

The average cost for any newspaper is much higher than the price at which it is sold in the Indian market. In India dailies like The Times of India and the Hindustan Times are sold at a price of just Rs. 2.5 while their printing and distribution costs sum up to around Rs. 14 per newspaper. This clearly shows the dependency of the print media industry on advertising. It is no surprise that media revenues in China are eight to ten times than that of India. Till today the largest media group is yet to touch $ 1 billion revenue mark. The Times of India Group lead with revenues hovering around Rs. 20 billion. Gross margins are expected to be in range of 25-30 %.

Internet the biggest threat

In the west considerable damage has been done by the internet to the print media. People are tech savvy and this has taken its toll on the print media. More and more people are shifting from reading newspapers physically to the E-paper format. This has led to lower revenues for the media agencies not only in the form of sale revenue but also in the form of lower advertising revenue. Media houses in the west have moved to the electronic format having no choice left for them.

In India, though at present there has been no major threat posed by the internet but the literal doom of print in the west is an indication that someday or the other it will hit our industry also. At present few groups have forayed into the internet field. And mostly who have stepped in this field has done this with the sole motive to adding to the revenues and the trick is working. TOI group website www.timesofindia.com is the most visited site and earn a sizeable amount of revenues for online advertising.

But this format is short lived because one day will come when the journalists will have to tune to the internet tone. It will be the day when internet will be stronger than the traditional print media. The journalist at that point of time will see himself not just as a writer but also as multimedia personnel who dabbles with written record, photographs and videos. He will have to assume a multi dimensional role which requires a complete change an up gradation of mindset. This entails that the print media industry will have to change the way they are doing things currently and do a lot more than what they are doing just now.

Here we quote an example. Suppose a newspaper publishes an interview of a renowned person. The article is always edited and only a part of the interview is printed owing to the space constraints. Now to cover this gap the newspaper company puts the interview transcript on the internet and provides the information regarding the same on the newspaper. So the interested readers can log on to the net to get the full article. Also what a newspaper can do is to provide the video of the interview on the net which is currently being done by very few organisations.

There is dual benefit for such a step by the newspaper company. Firstly it benefits the consumer by giving him complete information and thus increases brand loyalty. Secondly it also allows the newspaper company to foray into new markets one being the online market and the other being the electronic media market. The newspaper company can also as for payment for the full article or for the video which again will generate revenues.

 Obviously there’s a lot more that the Indian newspaper industry can do. Lionel Barber says what he made his team of journalists do. “We told the journalist to create more value. They had to go in front of the camera and speak about the big stories, do short and long commentaries, team up with cable companies to provide TV programs etc.”

Mint, a business newspaper of the Hindu group in collaboration with the Wall Street Journal, posts all the interviews on its site and at the end of the day it also provides a wrap up of all the important news of the day just as a television news channel. It also has its own application which can be downloaded on the computer network and then all the major news gets reflected on the desktop without opening or refreshing the site again and again. The times of India group in collaboration with its business news channel ‘Times Now’ and entertainment channel ‘Lehren’ posts videos all day round on its newspaper website. TOI also has a mobile application in which the user can download read the paper online through mobile again without using the mobile browser.

It is true that initially it would be task to translate the benefits of the same to the advertisers since they are not just unaware, but unsure of the web’s potential, it is but a matter of time when they would come around. Also using interesting strategies, like giving a package deal for both the print and the web edition that is cost effective and maximizes reach, would help warm up unaware brands to the webs potential.

Globally, convergence in print is happening out of necessity rather than strategy. In India there is hardly any focus on convergence as of today. However, the time is not far when even for the Indian print media it would become a matter of necessity. The ones who begin now would be the ones who would benefit sooner and longer. 

Overview

The spectacular growth of newspapers in India in the first decade of 21st century is perhaps the most gladdening and surprising story for media world. Particularly, because the phenomenon was witnessed when America and Europe witnessed drastic fall in readership and several newspapers stopped print editions to switch to just online versions. Ten years ago there were few papers and just a couple of standard magazines. Until 2000, the newspaper industry appeared saturated and no new players were emerging. Perhaps the only exception was Times of India that was growing exponentially. It was no different for the regional language media either. But the situation has changed dramatically in the decade 2001-2010. New mass circulated daily newspapers emerged on the scene and established newspapers also grew. Besides, more magazines are now available than ever.

The circulation of magazines may not have increased dramatically but the overall reach and their impact has gone up. In terms of special and investigative stories The Week, and of course Tehelka, have consistently scored over India Today. Among the major positive changes that occurred in this decade include:

1. A new daily newspaper DNA ‘Daily News Analysis’ was launched from several cities.

2. New financial daily, Mint, makes its mark and now has multiple editions across the country

3. TOI goes down South and becomes a pan-Indian newspaper

4. Tehelka, first as weekly paper and later in magazine format, makes a mark

5. MJ Akbar's Covert is launched but when it closes down, he launches The Sunday Guardian weekly.

6. Arindam Chaudhuri launches The Sunday Indian.

7. Invent of foreign newspapers and magazines like The Wall Street Journal, Forbes, The Economist, etc.

The circulations of newspapers continue to grow. While industry pundits predicted doom for print media, they forgot that in India, there is almost 40% population that is yet to achieve basic literacy.
In India revenues aren't drying up as the TV channels have reached their optimum in terms of advertising revenues. However, newspapers remain a major source for information and the classified advertisements continue to grow and fetch returns.

The soaring circulations in Bihar, Jharkhand, Uttar Pradesh and Chhattisgarh have forced papers to launch separate pull outs for districts and pages for small cities and towns. 

While New York Times and Boston Globe had a tough time continuing their print editions, in India regional dailies are selling in millions [tens of lakhs] and the readership is in crores and is rising steadily. Defying global trends and negative predictions, the Indian AKHBAR survives.

Clearly, it was a decade of media revolution and revival in India. As far as standards of journalism, the trivialization of news, the India TV phenomenon and the focus on Bollywood gossip was the main focus of the decade.

SURVEY AND FINDINGS

We conducted an online survey to see the awareness and perception of people regarding newspapers. The survey asked questions like the newspapers being read, the awareness among people regarding the fact that the newspaper is sold in India at highly subsidised costs, the likes of people when it comes to supplements and also the trend of online reading.

The survey was mostly filled by people in the age group of 21-25 (>80 %). This is a group which has members like students or budding professionals. This group is often very much aware about the surroundings and is quite active. Male – Female ratio was observed to be 6:4.

We saw that more than 85 % of the population belonged to urban India. Rural respondents were just about 15 % of the total population. This clearly states the fact that media like internet have not fully penetrated in the rural markets and thus there is a wide scope of growth in these areas.

Out of the total population each and every respondent read English daily. Hindi and other regional papers were just read by around 10 % of the population.

The Times of India was read by 80 % of the population. In the business dailies section The Economic Times took lead with attracting 50 % of the population.            Other competitors were far away from the leaders.

Around 75 % of the group doesn’t feel advertisements to be distractions in the newspapers. When later interviewed on individual basis the people responded that advertising is a great source of information. It shows the power and visibility of the brand and build image in their minds.

It was surprising to know that around 70 % of the survey takers knew that the actual cost of the newspapers is much higher than the cost at which they get to read the papers. This shows that the sample chosen was young, energetic and up to date with all the advancements. Some even cited that this is the main reason they don’t see advertisements as a distraction as advertisements help the newspaper company to charge lower price from the readers.

But the trend saw a little downward movement when asked if they know that India is among one of the few countries where newspapers are supplied at so low costs. More than 50 % people didn’t have a hint of this fact. This fact affected the psychology of people who believed that advertisements are a big distraction and as a result more than 95 % people agreed to the fact that advertisements are not distractions seeing the world scenario of newspaper pricing.

Coming to supplements as expected entertainment supplements were the most sought supplements with almost 71 % of the respondents reading these supplements. Among these supplements the regular supplement of The Times of India Group (Delhi Times, Bombay Times) scored the top rank. Some of the respondents even said that they just read newspapers to have a look at the supplements as it tell what is happening in the glam world.

Career related supplements attracted around 60 % of the applicants. These supplements are full of knowledge that a person needs to groom his/her personality and are thus quite popular among the age group our survey attracted.

Sports, Technology and Automobile supplements attracted around 50 % of the readers. We saw only 2 % of the participants reading marriage classifieds which shows that people in this group place their career above marriage obligations.

Other supplements like real estate, women related attracted around 20 % of the population.

The last portion of the survey tried to find out the trend in online reading habits. Till now almost 50 % of the population don’t read news online. They like reading news on paper. Around 8 % of people don’t read physical paper for reasons that they mind paying even Rs. 75 for a newspaper a month when it is available for free. The rest 40 % of the people read both online and physical paper. Respondents told us that while online news is important to get latest information at earliest possible time, physical paper is important as the Indian population is yet not accustomed to read a lot from the computer screen. Among the online sites www.timesofindia.com and www.moneycontrol.com took lead in general and business news category respectively.

Thus we saw the trends in the whole paper regarding newspaper readership in India. We come to a conclusion that Indian market has a lot more potential. The vast rural market is still untapped and the day companies’ start focussing that side their fortunes will be even bigger.