The fuss over the Internet in India is something to be seen. Across a cross-section of people within the media and entertainment eco-system — investors, young managers, media planners, among others — there is an air of the inevitable. Look at Google and the developed markets, they say. In the UK, internet advertising has already crossed TV and in the US, it is half of newspaper advertising. The Net will eventually kill these businesses. Gloom, it would seem, is imminent.
Is the Internet an ogre that will eat up Indian media?
No it won’t, for three reasons.
One, the Internet is nowhere close to other media on penetration. Going by Hansa Research’s Indian Readership Survey numbers for 2008, there are 460 million TV viewers, 320 million newspaper readers, 178 million people who listen to the radio and (using a generous estimate) about 60 million internet users.
When does the big bang happen? When penetration (ideally broadband) hits 20 per cent of the population or more, says Ajit Balakrishnan, chairman and CEO, Rediff.com. That means, till we hit at least 200 million users, the Net will not be able to realise its potential. You could argue that India has over 400 million mobile users and that mobile internet could bridge the gap. Maybe once spectrum issues are solved. Even if they are, screen size limits the richness and quantity of content that mobile users can download.
The second issue is the Net’s ability to make money from content. In recent years, study after study has shown that the Net’s unique impact on distribution of entertainment and media products has led to the rise of the long tail and, therefore, niche content. But increasingly it is also evident that in a market flush with options, consumers tend to flock around the familiar. So, the bestselling book, the blockbuster film, the top shows now get the same or larger audiences than they did a decade ago. This is medium agnostic — consumers want popular content online and offline. (See The Economist, 26 November 2009).
Yet, not too many internet companies have shown a talent for content — blockbuster or niche. The big internet successes remain aggregators or search engines which depend on free content. On the other hand, content companies have been pathetic at making money on the Net. For example, even though the top 17 news sites in the US belong to old media companies, it is their shrinking print or TV operations that fund these sites. So, much of popular online media and its growth is subsidised by old media — either because aggregators pay peanuts or because content creators don’t know how to milk it better.
When more media brands die and less and less content is produced what the Googles of the world will aggregate is not very clear. But if content is the glue that holds all of it together, then this is a question that needs to be answered fast.
The third reason why the Internet is not an ogre is that it is just another media, albeit with a different texture. The underlying logic — if more people spend more time on your site, advertisers are likely to pay more. That is how print, TV, almost every other media works.
This is not to say that the Internet is not revolutionising communication, technology and media businesses — in fact, life itself. Its effect is as far-reaching as that of, say, electricity in the last century. What could harm the $17 billion Indian media business is this total unquestioning reverence of it. I see this more often than not with investors, young managers and techies.
However enamoured we may be of it, the fact remains that till the Net becomes mass media — huge penetration, ability to create and market original content profitably — it cannot threaten other media seriously. Even after the Internet becomes ubiquitous, India will remain a mass media country just like the US or the UK. Only then, the “mass media” may just be the Internet, not TV or print.
