“Less than free” cover price keeps newspaper industry booming in India


Another INMA World Congress is over, and despite the inspiring examples of creativity and guts shining through, a sense of gloom continues to pervade the print newspaper industry.

By contrast, the newspaper business in India seems almost embarrassingly in the pink of health. Over the past decade, aggregate circulations have grown at over 5% per annum and advertising revenues at upwards of 15% (despite the recent slowdown, from which the industry has bounced back with a spirited growth of more than 18%).

What explains this buoyancy? Is it merely a reflection of the generally more upbeat Indian economy?

Of course “yes,” but only in part. The print industry isn't merely riding an overall economic boom. It is, in fact, growing faster than most other industries and faster than other media, including the far younger television industry. Over the decade, print has actually increased its overall revenue share within media!

Does print continue to thrive in India only because online hasn't as yet developed enough to seriously eat into its lunch? For a large part of the industry (especially Indian language newspapers) this is true. Yet for English newspapers, despite over 70% of readers having ready access to the Internet, the patronage of print continues relatively unabated.

So could there be something fundamentally different in the way newspapers have developed over the years in India, which makes them inherently more resilient?

In a talk at the Kellogg School of Management at Northwestern University a while ago, I identified three factors that I feel explain the robust health of newspapers in India.

  1. An extremely low cover price that ranges from a mere Rs 1.50 to Rs 5 (US$0.03 to US$0.10) per copy.

  2. A system of direct distribution that enables some 50 million copies to be home-delivered on time, morning after morning.

  3. A clear and palpable focus towards young readers, even at the risk of occasionally annoying the old.

Over the next few weeks I'll try and expand on each of these factors. But in this post, let's start with price.

Indian newspapers today cost pretty much the same as they did 15 years ago — despite inflation of over 400% in the same time period. At under US$0.05 (5 cents), the product is cheaper than in perhaps any other large newspaper market in the world. In many cases, newspapers cost less than the salvage price for old paper, making them effectively less expensive than free.

How did this happen? The trend was perhaps led by the company I work for (The Times of India), where we came to a realisation as early as in the mid-1990s that against the escalating onslaught from free newsmedia like television (Internet was yet to happen!), it was important to make the cover price of newspapers a virtual non-issue for readers. We had inherent faith that if we were able to build a large enough readership, advertising would pay for it. We were willing to jettison the stream of circulation revenue for the sake of maximising advertising revenue. And this bet has clearly paid off handsomely.

From time to time — such as after the global downturn of late 2008 — several newspapers get tempted to raise cover prices as an immediate way out of their difficulties. Given the reader loyalty which print tends to enjoy in the short-run, this could well be argued as sound pragmatism.

Thankfully we and the other larger Indian newspaper groups have resisted these short-term temptations and have stuck to the principle of keeping newspapers as close to “free” as possible.

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