Google and Facebook have become the main beneficiaries of the booming internet advertising market in India. Media companies at home seem to be losing ground, as well as revenue. According to latest reports, the combined ad revenues of Google and Facebook at ₹23,213 crore is higher than the combined ad revenues of the top ten listed traditional media companies at ₹8,396 crore. This comes as no surprise but as a huge warning bell for traditional media companies who depend quite significantly on advertising revenue for their sustenance and survival.
It is Google and Facebook’s algorithms which determine which content or article would be shown prominently. With massive user data at hand, these companies know the preference of their users and are able to customise messages and advertisement in a very focussed way. Traditional media sites just cannot match this efficiency in advertisement delivery. The growing duopoly on cornering advertisements may cost media dearly in the long run, particularly, the news media in India.
Consumer behaviour and corporate spends have changed sharply during the pandemic with more emphasis on digital. Consumers also access the information via the internet, many having lost the habit of reading physical copies of newspapers and magazines.
Digital and print ad revenue for newspapers has been falling sharply in India. In 2020, major media houses announced job closures and print shutdowns. Print media was hit the hardest with severe drop in revenues during the lockdown. This led to many shut-downs and lay-offs in the industry.
News media hit the hardest
According to PwC’s Entertainment & Media Outlook 2021-2025, India is the fastest-growing internet advertising market in the world at a CAGR of 18.8 per cent during 2020-2025. As the world is recouping from the Covid-induced decline in advertising spends in 2020, this year the recovery has been sharp. Print media is seeing green shoots again in the recent recovery in the July-September period over its previous quarter, according to AdEx India, a division of TAM Media Research.
However, some irreversible losses have happened. All major outlets like Times of India, Hindustan Times, The Hindu, ABP News, NDTV announced job losses or salary cuts. The Times of India group stopped the publication of its popular but loss-making tabloid Mumbai Mirror and also shut editions in Kerala. Sakal Media shut some papers. Business Standard discontinued its Patna and Raipur Hindi editions. Print edition of Mail Today was suspended. It has been a tough year for many journalists.
While journalism has never been a high paying profession and most journalists come into the profession because of passion and commitment, they still have families to feed. The Indian Newspaper Society (INS) had exhorted the government to give them a stimulus package for the newspaper industry as it lost around ₹12,500 crore in eight months of the Covid Crisis.
Sales teams are under tremendous pressure to sell ad space. The advertisor seems to be having he upper hand. The result is that often ads now increasingly appear in the garb of news. Advertorials are common in many popular publications – newspapers and magazines – where the unsuspecting reader is sometimes not even able to tell the difference between a report or a paid piece. A senior politician purportedly said recently that journalists should fall in line to get government advertising.
News is not free
The Indian print media industry has relied heavily on advertising revenue and Covid-induced rapid decline means that digital streams have to be ramped-up. As advertisor preferences move to digital and so does the consumer, newspapers will have to find a firm footing.
In the United States, a lot of the print and online news media has moved to the subscription model. Just like streaming services, news creators asked their consumers to support them through subscriptions. It seems to be the last resort for survival. And many top US newspapers now depend more on readers than on advertisers. At The New York Times, subscriber revenue far outstrips advertising revenue. It reached seven million paying subscribers during the pandemic. Financial Times, Washington Post, Wall Street Journal and New York Times have more subscribers online than for their print editions. The FT had a million paying readers even in 2019.
But in India, it will be a challenge to make readers pay after they have grown used to letting the advertiser pay for the news they consume. Newspaper websites here have only just begun to build a subscriber base in the last few years. Big newspapers like the Times of India, The Hindu, Dainik Bhaskar, Mint have gone behind a paywall. But is the Indian reader willing to pay to read good journalism online? That still remains a moot question.
It is also a lot harder for smaller publications to build and maintain a subscription model. Some critics already find holes in this model as it benefits only large publishers, the acquisition costs are high, market is becoming smaller and the subscriber can be fickle and may demand news and views that suit their own appetite which again could compromise press freedom.
Make platforms share profits
There could be hybrid models for revenue which includes both advertising and subscriptions. Plus, news media in India can also benefit from grants, donation and endowments which can free them from pressures of the advertiser or the reader.
And finally, Facebook and Google can also pay for the news that they display on their sites. The Australian government has already passed a law that provides for negotiations for media outlets and the tech giants for payment deals regarding the usage of local content on news feeds and search. Despite initial reluctance and strong threats to leave the county, both companies have agreed to follow the code laid down by the government. The two tech giants are also facing similar battles in many other parts of the world for use of news content.
Perhaps the Indian government can take a cue from this recent development and ask digital platforms to pay for news content as there is no level playing field for news publishers. Media outlets need Google and Facebook to pay for the content they use and also help in creating quality content as well as combat fake news which also proliferates because of the ease of use of social platforms made ubiquitous by these two companies.
Creating credible, reliable news comes at a cost and is the bedrock of a thriving democracy. The news business would have to remain viable and the health of its workers should be taken into consideration for India to retain a free and fair press.
(Vineeta Dwivedi is a former journalist and teaches Communications at Bhavan’s SPJIMR. Views are personal)