Why are newspaper publishers so defensive? At the International News Media Association's (INMA's) South Asia convention last week, the quality of discussions was appallingly banal. The biggest congregation of publishers in a region that is seeing fastest growth in newspapers had just one thing to emphasise: we will survive. That, incidentally, has been the tone and tenor of any conference on the business of publishing that I have attended in India in the last five years. Almost the entire Indian newspaper industry speaks as if this is America and newspapers are going down the tube - financially and in terms of readership numbers.
This is so far from the truth that it needs rank outsiders to keep pointing out the truth. And they did so at the INMA conference.
It was an outstanding Rama Bijapurkar who said that "the rise in GDP doesn't mean that we will become the US." She emphasised - something that she has pointed out time and again - that our growth trajectory is different. Even though she was talking of the consumer market in general, the media is a good example of what she said. In the US, first newspapers took off, then radio, then television and so on. It gave all of them time to evolve. On the other hand, almost all news media in India - newspapers, television, radio or digital - are booming simultaneously. They were all freed up and attracted capital in the last 15 years or so. So India is on a very different growth trajectory.
In this boom, newspapers, which have been around longer than any other medium, have always had an edge. The thirst for knowledge and the aspirational value of the written word in India ensured that newspapers grew in double digits once capital was available. India's heterogeneity and spread mean that newspapers that can offer strong local connections in a region or state, say Malayala Manorama in Kerala or Dainik Bhaskar in the Hindi belt, are very profitable and stable. As Ms Bijapurkar says, we are such a large country that even a small niche is a big market.
In a country of 895 million literate people (according to Census 2011), only 354 million read newspapers. So there is still headroom for growth. At over 110 million copies sold every day, India is the second largest newspaper market in the world and one of the fastest-growing ones. The Rs 21,100-crore newspaper business is, in fact, one of the most profitable parts of the media industry; operating profits of large firms are more than 20 per cent. That makes India's newspaper market the most attractive one for investors. That is what Amit Dixit, senior managing director, Blackstone Advisors India, pointed out.
When he said that, there were a lot of nays - especially from younger people in the audience, who wanted to hear the word digital. There is no doubt that digital media is doing well, but it seriously lacks scale and profitability - the two things an investor looks for. At Rs 2,100 crore in advertising revenues and about 227 million people online on various devices, digital media will start becoming interesting only when pay revenues, currently controlled by telecom companies, take off. That is happening.
But the whole question is not about digital versus print or about television versus newspapers - something that publishers themselves don't seem to be getting. At the INMA event, it took Devendra Parulekar, a senior partner at EY, to point out the most important thing to publishers. He said that devices come and go; today it is a tablet, tomorrow it might be something else. But the heart of the business is content. However, for some reason the focus of every discussion these days is on smartphones, tablets or other devices that distribute the content. Some focus on content creation, and what digital media could do for that - whether at the back end or at the front end - to cut costs or improve efficiency might actually help the newspaper industry leverage digital media better, he reckoned.
He is right. Historically, every new technology has disrupted existing business models and created new ones. That is the nature of technology. In the US, for example, live musicians went on strike when the vinyl record came. In the 1970s, the music industry declared war against analogue tapes and home taping. In the 1980s, a law to grant a levy on blank CDs was put in place, which would compensate for any "unauthorised" copying. It resisted every technology that came and eventually made money from it. When digital media hit the industry in 1999, it went into a downward spiral that lasted for 13 years. In 2012, the global music industry bounced back with some growth, thanks to digital. Spotify, Pandora and iTunes, or Saavn and Gaana (in India), are some of the streaming and download services that are finally making the digital pennies count.
Unlike the American publishing industry, the Indian one is in a very comfortable position, at least for the next 10 years. Can it, then, start tackling the digital challenge that is sure to come soon? Can we see the birth of at least one crackling digital brand from a publishing house? That will be far more reassuring to investors than going on saying, "We will survive."
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