How news doesn't interest investors, but hyperlocal news apps do

Azhar Iqubal is grappling with a problem. The co-founder and chief executive of Inshorts is trying to improve the quality of the 50,000 videos Public, Inshorts’ short video news app, gets daily.

Unlike Inshorts, which aggregates news from various sources in 60-word bytes, Public is literally a public news app. A ward representative, local politician, resident, student, housewife, anyone can upload a video of up to a minute on local happenings. It could be about a fight over water, a wedding, or a store opening, or any of the other myriad such things.

Since its 2019 launch, Public has gathered 60,000 creators from every district in India. It brings 80 per cent of Inshorts’ 80 million unique users. However, most of its Rs 150 crore revenue in the financial year ended March 2022 came from Inshorts. If the company has to monetise Public’s audience, it has to improve the quality of the videos on offer.

Way2News, another hyperlocal news brand, gets 7,000 to 8,000 stories a day and has 7 million monthly active users. Eighty of its 300 people are part of the editorial team. Way2News claims that it is profitable on its revenue of Rs 27 crore in 2021-22.

Business models in this segment are hazy, profits seem far away for most. But investors see something in hyperlocal apps.

Public raised Rs 300 crore in March 2021 from A91 Partners and a bunch of existing (undisclosed) investors at a valuation of $250 million (Rs 1,800 crore). That is at twice the valuation of its last round of fundraising in September 2020 when it raised Rs 260 crore from SIG and Tanglin Venture.

Way2News raised Rs 129 crore from WestBridge Capital and venture capitalist Sashi Reddi in June 2022 as Series A funding.

The earlier rounds of funding came from its parent company, Way2Online, an eight-year-old internet tech firm.

Clearly, the action in online news is in hyperlocal.

“Lots of regional news networks and newspapers don’t cover local news, say a specific tehsil versus a town or state. There is a need for people to understand what is going on in their neighbourhood, say a hospital or bridge being opened,” says Kaushik Anand, partner with A91 Partners, the venture capital firm that invested an undisclosed amount in Public in 2021. He says Public had 8 million monthly active users when A91 invested in it; it now has 60 million. The demand from users, therefore, is real.

News brings in a declining 19 per cent, or just about Rs 30,000 crore, of India’s Rs 161,400 crore media and entertainment business. There has been very little interest in television or print news as an investment destination, or in journalism-based news sites.

They do not have the possibility for scale that aggregators such as Dailyhunt (which has raised about a billion dollars across several rounds), Inshorts or Way2News offer. In the last two years, investors have poured a few hundred million dollars into news apps such as Dailyhunt, Quadzeta and Public, which offer aggregation and localisation in the some form.

“From an advertiser perspective there are limited ways to do location-specific advertising.

For example, financial services that want to advertise a few branches or local retailers do it in a city newspaper. That is a lot of wastage. There is a need for hyperlocal. That is the opportunity in Public,” says Anand.

Why so hyper?

Hyperlocal can deliver, for example, a Dhamawala Mohalla in Dehradun or the specific locality where Kutchi-speaking people live. That fulfils the need for the kind of sharp targeting advertisers yearn for. There are city editions of national newspapers as well as city-focused newspapers, but they do not work as well as online hyperlocal.

For instance, if you need to reach the audience in the Rajendra Nagar area of West Delhi, you will put your ad in the Delhi edition of a newspaper, which would not have a laser-sharp focus on Rajendra Nagar. Traditionally, advertisers would have turned to advertising in the local movie theatre or a local event. Online takes the same impact to a much higher scale.

“More of our advertisers are local. Half our revenues are from local brands in Andhra Pradesh and Telangana. It could be the local hospital, diagnostic centre, educational institute, or retail showroom,” says Raju Vanapala, founder and CEO of Way2News.

Homeocare, a speciality homeopathy chain with 60 clinics across Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, usually uses Google, Meta (Facebook) and YouTube to advertise. Six months ago, it started advertising on Way2News. “It has a good user base locally,” says Rohit Morlawar, deputy managing director of Homeocare.

This helps break the hegemony of Google and Meta, which together took away 70-80 per cent of the Rs 30,300 crore spent on digital advertising in 2021 in India. That leaves very little for any other digital publisher.

In the process, hyperlocal news apps are making it possible for voices from different parts of India to be heard by people who want to hear them. “We bring in untold stories from rural areas. Some contribute for money, others because they want their voices to be heard, or want the government to respond,” says Vanapala.

Iqubal of InShorts says nobody has ever produced videos at this scale: 40,000 to 50,000 a day. “We are changing news production at the ground level. In the long term, Public could be one of the biggest sources of information,” he says.

But, won’t so much user-generated content without enough moderation, curation or journalistic rigour end up making news apps a hotbed of misinformation?

“In India, audiences turn to social and messaging apps like WhatsApp, Sharechat, Instagram, YouTube and Facebook as their ‘news’ source. It is the triumph of technology and pockets over journalism, as also of atomised, bite-sized news offerings, fact-based or not,” says Ritu Kapur, co-founder and managing director, The Quint, a journalism-based online news brand.

Vikram Chandra, founder, Editorji, an artificial intelligence-based news app, says the whole promise of democratisation of news doesn’t work. “News is not cat and dog or baby videos. You need journalists to do it,” he says. In 2020, the RP-Sanjeev Goenka Group picked up a majority stake in Editorji.

In spite of the investor interest, it is still early days for hyperlocal news apps. As you read this, models are being created. Monetisation will be the next step. In all likelihood, hyperlocal will be monetised just like YouTube or TikTok — through advertising.