A recent Wall Street Journal report said that American online content publishers are readying for a showdown with big tech firms like Microsoft and Google that use their content in their AI tools such as ChatGPT, Bing and Bard. Their news media body contended the investments they make in creating valuable content is scraped off the internet and fed to AI training models to generate revenue. Hence, they are seeking compensation as AI tools could take traffic and advertising money away from their websites.
While the US media body has been quick to perceive the fresh threat to their business, AI could open another battle front for digital news publishers in India as well. Unfortunately, digital news media in the country – whether it is websites of newspapers and television news channels that formed the Digital News Publishers Association (DNPA) or independent, digital-only news organizations that created Digipub as their representative body – are already under pressure. They are struggling to scale both advertising and subscription revenue even as they seek legislation to get fair revenue share from Google.
There is no dearth of dough in digital advertising though. Look at the numbers. Ad spends on digital media will touch Rs 39,315 crore in 2023 and Rs 51,110 crore in 2024 at a CAGR of 30 percent, according to the Digital Advertising Report 2023 by Dentsu India and e4m.
By the end of this year, digital media will overtake TV ad spends cornering 40 percent ad share. This will increase further to 45 percent by 2024. But even with advertising money rapidly shifting from print and TV to digital, online news publishers in India are a discontented lot faced with the challenge of building sustainable businesses.
The report said that while the outlook for ad growth on digital is “rosy, the unevenness of revenue spread is only likely to grow. Handful of large players continue to corner lion’s share of advertising,” it said, referring to firms like Google and Meta which walk off with majority of digital ad revenue.
It is easy to see why Google, YouTube, Facebook and Instagram are gobbling up media spends. “They know the pulse of the new media consumers, that is, GenZ,” says Sanjay Trehan, strategic advisor to digital and ad tech companies and former business head at HT Digital Streams. “They gorge on short form video content. These platforms are also fuelling the creator economy with brands chasing them for collaborations based on their captive audiences,” he says. Social media influencers’ business is already worth Rs 2,000 crore.
Anant Goenka, executive director at the Indian Express, admits to online news publishing facing an advertising challenge. “The fact is there are too many people chasing a small pie. Digital news market is cluttered. Currently, put together, the top 25 online news publishers are not generating more than Rs 2000 crore in advertising revenue,” he says.
Clearly, there’s money in digital advertising but news gets a minuscule share. Other than big tech and social media firms, ad money is drawn by gaming, streaming, large e-commerce platforms and connected TVs.
Besides, 70 percent of the digital advertising money goes into performance marketing and remaining 30 percent comes to brand building, Goenka explains. In a way, the digital advertiser is really a channel sales agent ready to invest Rs 100 to sell products worth Rs 120. Besides, of the Rs 100, the publisher receives only a fraction as the rest goes to the middlemen – networks, agencies, platforms and data vendors, he says. “On a pure CPM (cost per mille also called cost per thousand) basis, a combination of linear media (print, TV, outdoor) offers brand building at a very competitive price to digital,” he adds.
Goenka thinks the digital news party is over as he is seeing both news user and even overall internet user growth rates stagnate. “That the party is getting over, will be advantageous to established players who are serious about their digital business, are fiscally responsible and invest in the right strategic areas,” he says.
With the emergence of such companies, advertisers will be able to make an easy assessment of what is quality content and premium audiences, rather than getting distracted with commoditized inventory. “Given our brand of investigative and explanatory journalism, we have a very differentiated offering in the ecosystem, and are very confident of the future,” he says.
The Indian Express has also introduced a paywall for its news website. “News users are becoming more discerning and early numbers of our digital subscriptions are proof of that,” Goenka adds.
However, Suparna Singh, former NDTV group president and CEO who ran a highly profitable independent digital business at the company, and Raghav Bahl, editor-in-chief of the general news and entertainment portal The Quint, vote for the advertising-led business model.
“At NDTV, we felt the subscription model was not for us, our kind of content and our users. Across the world there is subscription fatigue among publishers,” Singh says, adding that Time is the latest international magazine to remove paywalls. “You unlock content because you want to have the best, broadest, biggest, and most diverse audience. And when you do that, you can command more advertising dollars, which you cannot do if you’re going for subscription model because then you’re making your audience narrower,” she says.
The Quint is a large bandwidth content site covering news, sports, entertainment, gender, youth, fitness, opinion and much else. “We offer advertisers the kind of content that is ‘advertisable’. Not all brands like to be associated with news since it is often negative. On the other hand, we get sponsors for our fitness and women-oriented content,” Bahl says. The company Quint Digital Media also runs a YouTube channel which gets 30 million unique viewers a month. “A lot of our advertising revenue comes from YouTube videos and not from the site,” he says.
To augment revenue, most digital news sites are relying on branded content. They are also looking to sign sponsors for their newsletters and podcasts. Trehan says New York Times reinvented itself as a digital first brand not just by launching a website or an app. “They started with daily podcasts, interactive graphics and today they are doing storytelling in animation,” he says.
Not everyone can replicate NYT’s success, says Bahl, adding that online business is not easy and money is not gushing in for digital news. But for a viable strategy one needs to choose between the advertising or subscription-led model. “A hybrid model at this stage of evolution in India doesn’t hold as the consumer is not willing to pay for generally available content, unless it is something unique,” he says, referring to news platform like The Ken and The Morning Context that are small and subscription-led. There are other business models in news too that serve constituencies with specific ideologies. These work on subscriptions through donations.
Whatever be their business models, digital news players are firm on getting paid for their content which is used by companies like Google. Bahl says online news business will not become profitable in any significant sense, unless one starts getting a fair share of revenue share from the big tech firms.
Australia has shown the way through legislation where the government and the competition regulator addressed the power imbalance between social media giants and news publishers and mandated that the two negotiate deals. In case they cannot agree, an arbitrator will rule.
In India, the DNPA as well as the Indian Newspaper Society (INS) had also filed a complaint with the Competition Commission of India (CCI) against Google saying it denied fair advertising revenue to their members. The matter is subjudice.
But in the meantime, most large publishers – news TV and newspaper owners – running digital sites, have already signed individual deals with Google. “The money negotiated isn’t great. Ideally, news publishers should have waited for CCI to rule or government to legislate. But owing to tremendous revenue pressure, they were in a hurry,” rued a top executive of a large media house with interests in print, TV and digital, declining to be named.
But what about the fresh threat from AI tools? Indian Express’s Anant Goenka feels that reputable companies like Microsoft and Google will not blatantly plagiarise content. “This time policy makers and regulators are much more in tune with what’s happening around the world and in India. They are aware of the problem of content getting unfairly picked up by platforms. I am sure there will be talk of protecting the interest of the content creator.”