Coronavirus outbreak isn't responsible for newspaper industry woes; over-reliance on ads and poor pricing strategy to blame

In these times of the coronavirus pandemic, one of the unhealthiest industries around is the newspaper (print) industry. Most of its troubles are of its own making, but going by its matchless chutzpah, you would not think it was so

Vedam Jaishankar April 14, 2020 14:29:55 IST
Coronavirus outbreak isn't responsible for newspaper industry woes; over-reliance on ads and poor pricing strategy to blame

In these times of the coronavirus pandemic, one of the unhealthiest industries around is the newspaper (print) industry. Most of its troubles are of its own making, but going by its matchless chutzpah, you would not think it was so.

Over the years, the print industry has painted itself into a corner, but instead of taking the knocks on the chin and moving on, it has brazenly sent a threat in the form of an SOS to the government.

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Industry members are demanding a reduction in customs duty on imported newsprint, a two-year tax holiday, a massive increase in government advertisement rates and spend etc. The alternative, which resembles holding a gun to their own head, is shutting down, which, they warn, would affect the 'domestic newsprint manufacturing industry and the ripple effect that would affect large number of employees, their families, allied industries, printing presses, distribution mechanism, newspaper vendors and delivery boys'.

And why would all of this happen?

Organisations that have been in business for decades — some for more than 100 years — and over that time, have accumulated awesome power, prestige and money, now suggest they are unable to look after their staff because of a two-month coronavirus-induced slowdown.

To repeat: The accumulated wealth of over a 100 years pales into insignificance if they have to look after their staff for two months.

It is this inconceivable scenario that makes one wonder whether COVID-19 was a golden opportunity for some organisations to trim expenses, reduce flab and goad the government into providing sops that would shore up their bottom line.

Coronavirus outbreak isnt responsible for newspaper industry woes overreliance on ads and poor pricing strategy to blame

Representational image. Reuters

Sure, Prime Minister Narendra Modi might have stated that no employee in any industry should be sacked in these challenging times, but newspaper owners have their own way of circumventing issues.

In earlier eras when wage boards determined salaries, it was they who threw a spanner into the works when they pointed out that 'ability to pay' had not been factored in the wage board awards. Later, they ended up paying far more than the wage board's recommendations, but only to those permanent employees who agreed to become contract employees. Over a period of time, this became the norm. Currently, many of those staring at termination are high-cost individuals whose contracts have ended or are coming to an end.

Usually these contracts are renewed, but these are not usual times. Rather it is a rare opportunity to bring some to heel or get rid of others. Of course, once journalists became contract employees, they lose all rights and thus have to simply grin and bear whatever is dished out to them.

The marginalisation of the rights of the employee notwithstanding, the revenue model of Indian newspapers is deeply flawed, lopsided and almost exclusively dependent on advertising. It is the primary reason why they could be in deep trouble when the advertising tap is reduced to a trickle or dries up.

Indeed, it does not require any great deal of insight to fathom that undue dependence on either subscription or advertising is fraught with risk and leaves the organisation open to pressures and manipulation. But, our newspapers were eternally on the lookout for short-cuts. Thus, when the economy was thrown open in the 1990s, a couple of them saw it as a great opportunity to grab windfall revenues from a plethora of consumer goods and durables flooding the market.

But they needed to rapidly ramp up their subscription base and become more attractive to advertisers. They thus dropped cover price of the newspaper to as low as Re 1. This cheap subscription model, complete with gifts and other incentives gave them an instant boost in circulation. But it also locked the newspaper down to an eternally low cover price.

To put this low pricing into perspective, a comparison in pricing of English language newspapers in India's neighbourhood is an eye-opener. Dawn's (Pakistan) cover price is Rs 25 while The Island (Sri Lanka) is priced at Rs 30 per copy. Sri Lanka's Sunday Observer sells for a whopping Rs 60. On the other hand, India's market leader, The Times of India, is priced at Rs 4.50.

There is little doubt that this sort of predatory pricing has led to the print media being boxed into a corner. Had it increased its costs gradually, like toothpaste, cigarettes, beer or soft drinks (selling newspapers was often equated with selling toothpaste in the 1990s and 2000s), these papers would not have been in the state they currently find themselves. Any attempt at course correction and suddenly taking the price to a more equitable Rs 25 or 30 will almost certainly wipe out their subscription base.

In short, the over-dependence on advertising is deeply encoded and flawed.

This still does not explain why some newspapers are shedding staff, especially those whose cost to company is high. After all, these newspapers must have accumulated solid reserves and surpluses and could easily look after their long-serving staff; unless the aim of the entire exercise was to arm-twist governments into providing sops.

Sadly, in the days to come this perceived crisis in the industry will have political parties rushing to play Santa Claus to media owners and journalists alike. The ruling party will be dragged into a muddle not of its making. But who cares? The Opposition and newspaper owners have a dream scenario at hand: Heads I win, tails you lose.

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