Evolving a sustainable and thriving media business model was the topic taken up by Professor Rishikesha T Krishnan, Chairperson, Corporate Strategy & Political Area, IIM Bangalore.
Touching on the challenges in the recent years, he observed that the challenge of competition is not new to print media, which had to face the entrance of radio, TV, cable and internet, which has had a far greater impact. “Blow up the trade-off between richness and reach” is what he recommended; richness as far as customised information is concerned and reach as far as a large groups of customers go.
One of the challenges how would the internet impact business strategy? How would market dynamics affect profitability? Management guru, Michael Porter when asked how Internet will affect the industry, said that there will be pluses and minuses; his prediction was it affect industry but they would adapt affective strategy, and “most businesses will be able to integrate Internet into their strategy”.
Taking the impact of the internet on print media, he observed that in 2012 online ad spends are growing at 21 per cent in the US; and what was the strategic response of print media? It was through consolidation, cost cutting, partnerships with newspapers, portals, price increases, segmentation and developing online strategy. Other important changes are: i-Pad and apps.
The challenge of how to monetize content, there was work in progress and some like New York Times had to stop publishing, he pointed out. The key decision variables that companies had to grapple with were: how to embrace the internet, source of content and change strategies. Here he discussed case studies to demonstrate this. Schibsted, a daily in Norway developed a strategy to reach the reader through the front page; Huffington Post which is a user-generated content model; New York Times Paywall which made users pay for content, but finally they decided ‘digital’ is the only way viable and stopped printing.
On what route Indian media should take, he expressed the fact that in India there is a strong tradition and the print ad revenue is 47 per cent of total ad revenues. The challenges are: low cover price, growth of ‘paid’ news, major investment to establish presence in non-home markets, growth of regional newspapers, entry of traditional players, ad revenue dominated by certain sectors like education, services, Hindi and vernacular growing strongly. There are developments which are opportunities too, like one third of readers are women. As far as internet went, the low internet penetration cannot go on forever, he felt. Possible solutions for Indian newspapers could be – drawing on supplier power, enhancing revenue and look at internet options for print. But then the question will always pop up – will Indians ever pay for content? “My prediction is that the shift to internet when it happens, will be more disruptive, because to collect money from the Indian subscriber will be very different. To control volatility, we have to look on newsprint side what we can do, if you are looking for profitability it may be a function how much expansion you want to do; if you are going to spend money to go to markets of marker leaders, it’s going to be costly and will definitely have an impact on your bottomline,” he concluded.
Rishikesha T Krishnan was expressing his views at the 6th International News Media Association (INMA) South Asia conference, held in New Delhi on August 7 and 8, 2012.