COVID 19: Impact on newspaper industry
Table of Contents
FACTS ABOUT INDIAN NEWSPAPER INDUSTRY –
The first newspaper in the country was started in 1780 by the British and was known as Hicky’s Bengal Gazette.
- From a little over 200 dailies published in the post-independence India, to over 100,000 registered newspapers and periodicals as of 2015, the print media in India has matured to its full capacity.
- Indian newspapers are primarily made from recycled newsprint, while also being aided by government subsidies. This makes newspapers in the country far more affordable when compared to other parts of the world.
- Print is still the second-largest advertising medium in India but is likely to be overtaken by digital in 2021.
- Print is the only industry, which has a wage board and the Government decides how much the employees should be paid. This being the only industry where market forces don’t decide salaries, the Government has a responsibility towards the industry
- The country’s most widely circulated newspaper, Dainik Jagran.
CHALLENGES FACED BY NEWSPAPER COMPANIES –
- As the younger population is increasingly embracing news on their screens, it cannot be denied that some of the print sectors have taken a hit in the country compared to its growth trajectory from a few years ago. Moving on, the challenge for India’s newsprint industry is to be able to retain their audiences through digital platforms, while still maintaining enough advertising and subscription revenue to continue the print editions.
- The Indian newspapers are going through tremendous technology transformation and are adapting methods and means to fight electronic media in the matter of news presentation and physical deliverance of the newspaper each day to the reader.
- Increases in newsprint prices, the depreciation of the rupee, and the government’s new customs duty on newsprint all add more pressure.
- Coming to digital news, this industry is an even more extreme version of print newspapers and news channels. Here, the reader doesn’t pay anything at all. The organization is solely dependant on ads. Distributors like Facebook and Google take most of the ad revenue and a very small fraction is left for the organization.
- According to the Indian Readership Survey (IRS), the overall readership of newspapers had grown from 407 million readers in 2017 to 425 million readers at the end of the first quarter of 2019.
- According to the data available, more than half of the world’s adult literate population reads a newspaper — more than 2.5-billion in print and more than 600-million in digital form, which happens to be more than the global users of internet.
- The Reuters Institute for the Study of Journalism surveyed English-speaking Indians with internet access earlier this year, 38% of those over 35 identified online media as their main source of news, compared to 27% who identified print.
- Those under 35 years, 56% identified online as their main source and just 16% print – easily overtaken by the 28% who identified social media platforms like Facebook, Twitter and/or YouTube as their main source of news.
- Google and Facebook together account for an estimated 70%-80% of India’s digital advertising
- For every day that passes, another 200,000 Indians go online for the first time. Many will get the impression that newspapers are print products for old people
- 88% of global publishing executives expect to miss their business goals this year due to the outbreak
LANGUAGE WISE MARKET SHARE OF NEWSPAPER
SOURCES OF REVENUE OF NEWSPAPER INDUSTRY –
- The primary source of revenue for a newspaper company is advertising and subscription.
- 70% of newspaper industry revenue comes from sales of advertising space.
- 20% from subscription and single-copy sales.
- Other sources include providing news to other agencies sale of scrap paper.
- There are increasing signs of several governments asking the tech giants such as facebook and google to compensate traditional media companies for using their content. It will be the first time that major digital platforms have been required to pay for news anywhere.
- Australia announced that it will begin forcing Google and Facebook to pay news companies for content, in a landmark move aimed at shielding traditional media from the tech giants’ digital dominance.
IMPACT ON NEWSPAPER INDUSTRY –
- The newspaper industry has lost over Rs 4,000 crore and is likely to suffer further losses of up to Rs 15,000 crore in the next six to seven months if relief is not provided.
- The prospects of a prolonged economic slowdown and a decline in advertisement revenue have aggravated the weaknesses in the business model of the print industry, which has been hugely dependent on advertisement revenue.
- The news industry survived against all the odds in the past two decades with the digital onslaught and the rise of Twitter and Facebook. But with this crisis, the industry has entered uncharted waters.
- India’s top newspapers are trying to adapt in real-time, dropping online paywalls and offering free PDF versions of the print publication to try to keep their audiences intact. But none of that’s helping earn revenues at a time the economy is in the doldrums and advertising is low.
- After the Great Recession of 2008, ad spending growth decelerated in India, and as in other parts of the world, younger audiences have moved to access their news digitally. But, he says, “the elite and the elderly still like the touch and feel of paper,” and they continue to be drivers of the industry in India. “It’s not as if people stopped reading.”That’s what makes the coronavirus a particularly significant threat. It’s the affluent neighborhoods that — fearing the spread from vendors or the newspapers — are turning away. And the elderly — loyal readers otherwise — are the most vulnerable against the virus.
LOSSES SUFFERED BY VARIOUS NEWSPAPER COMPANIES –
- The main reason the media industry has been affected so severely is over fears of a sharp cutback in advertising expenditure by companies.
- Our print advertisement revenue, which is 80% to 85% of our total revenue, is almost zero post lockdown,” said D. D. Purkayastha, chief executive of ABP.
- The Times of India, among the world’s largest circulating English-language dailies, has shrunk to around 16 pages with supplements, compared with 40 plus pages previously, as ads from companies have stopped, said one Times employee.
JOB LOSS –
- According to INS estimates, newspapers provide direct and indirect employment to almost nine to 10 lakh people and over 18-20 lakh people respectively.
- The 88-year-old Indian Express this month also announced pay cuts of up to 30% for some staff and warned of more sacrifices to come.
- NDTV too announced salary cuts between 10% and 40% from April 1 for three months. The pay cut is applicable for employees earning more than Rs 50,000 per month.
- The Quint has sent almost 50% of its staff on leave without pay besides enforcing pay cuts for the rest.
- The Times this week laid off its entire staff on Sunday magazine team
- The Express Group informed its employees that the organization was going for a temporary salary cut.
A BROKEN BUSINESS MODEL –
- Our newspapers were eternally on the lookout for short-cuts. Thus, when the economy was thrown open in the 1990s, a couple of them saw it as a great opportunity to grab windfall revenues from a plethora of consumer goods and durables flooding the market.
- But they needed to rapidly ramp up their subscription base and become more attractive to advertisers. They thus dropped cover price of the newspaper to as low as Re 1. This cheap subscription model, complete with gifts and other incentives gave them an instant boost in circulation. But it also locked the newspaper down to an eternally low cover price.
- To put this low pricing into perspective, a comparison in pricing of English language newspapers in India’s neighbourhood is an eye-opener. Dawn’s (Pakistan) cover price is Rs 25 while The Island (Sri Lanka) is priced at Rs 30 per copy. Sri Lanka’s Sunday Observer sells for a whopping Rs 60. On the other hand, India’s market leader, The Times of India, is priced at Rs 4.50.
- There is little doubt that this sort of predatory pricing has led to the print media being boxed into a corner. Had it increased its costs gradually, like toothpaste, cigarettes, beer or soft drinks (selling newspapers was often equated with selling toothpaste in the 1990s and 2000s), these papers would not have been in the state they currently find themselves. Any attempt at course correction and suddenly taking the price to a more equitable Rs 25 or 30 will almost certainly wipe out their subscription base.
- A long newspaper, like The Times of India, has 48 pages. The newspaper is sold for around Rs 5 and about 40 per cent is taken by distributors. The media organisation gets around Rs 2.40. Now each page costs Rs 0.25 to print and printing 48 pages costs Rs 12. A very conservative cost of paying employees and news agencies etc is Rs 3.
So if newspapers are produced at Rs 15, how are they sold at Rs 5 and how is profit still generated? The answer is ad revenue.
- In short, the over-dependence on advertising is deeply encoded and flawed.The print media industry needed to stop depending on advertisements for revenue and, instead, make it a “user-must-pay” model.
Q. WHAT DOES EXPERTS HAVE TO SAY ABOUT PEOPLE DENYING TO ACCEPT NEWSPAPERS HAVING A FEAR THAT VIRUS CAN BE ON NEWSPAPER?
- Experts say there’s little evidence that newspapers actually contain the virus. A study published in The New England Journal of Medicine found that the coronavirus loses half its potency every 66 minutes, and that potency drops to 2 percent after six hours. The study further states that it lasts longest on smooth, nonporous surfaces and can stay alive on plastic and stainless steel with steadily lowering potency for two to three days. The virus does not last on cardboard after 24 hours and lasts even less on newsprint, which is far more porous than cardboard.
- The virus could be anywhere — but that’s not stopping you from eating food bought from outside, right?” Experts believe hand hygiene is of utmost importance. “If you’re worried about newspapers containing the virus, make sure you wash your hands after as a precaution,”. People should be doing that whenever they “touch anything foreign at all.”
STEPS TAKEN BY INDIAN NEWSPAPER SOCIETY (INS) –
- The Indian Newspaper Society (INS) has urged the government to provide a strong stimulus package to the newspaper industry has lost over Rs 4,000 crore and is likely to suffer further losses of up to Rs 15,000 crore in the next six to seven months, if relief is not provided.
- They have requested for withdrawal of five percent customs duty on newsprint. Newsprint cost accounts for 40 to 60 percent of the total cost for publishers. Benchmarks show that on an average newspaper are left with around a third of their circulation revenue after costs are deducted, in spite of that subscription rates of any newspaper, may it be regional or national daily, are astonishingly low compared with figures of all western countries.The removal of the five percent customs duty on newsprint will have no impact on domestic manufacturers or any ‘Make in India’ efforts.
- The imposition of customs duty on these grades does not offer any support to domestic industry and only burdens the publishers,” adding that newsprint consumption in India is estimated at 2.5 million tonnes and the capacity to produce in India is only around one million tonnes. “Hence, more than 50% demand has to be necessarily met through imports. Most of the indigenous newsprint capacity is of swing in nature, which allows the manufacturers to shift to other paper grades on the basis of demand and price.
- It has also urged the government to provide two years tax holiday for newspaper establishments
- 50% increase in advertisement rate of Bureau of Outreach and Communication
- 100% increase in budget spends on print media.
- It called for immediate settlement of payment towards all outstanding bills of advertising, from BOC as well as various state governments. (The Bureau of Outreach and Communication (BOC) Iis the agency of the Government of India for advertising by various Ministries and organizations of Government of India, including public sector undertakings and autonomous bodies.)
Q. Has anyone else rolled out any help?
Tech giants like Facebook and Google have rolled out measures intended to help the media industry but the jury is still out on whether the scale of help offered is adequate. Facebook announced it would invest $100 million to support media businesses during the coronavirus pandemic, with $25 million in emergency grants going to local outlets and $75 million more for marketing to help those struggling to survive the current decline in advertising. The New York Times reported that this money comes in addition to the $300 million that Facebook already committed to local news by the end of 2021.
“THE ABILITY TO TOUCH AND FEEL, WHICH WAS EARLIER AN ADVANTAGE, HAS BECOME A LIABILITY TODAY”