In May 2016, Shivendra Gaur started Rocket Post Live. It offers local news from Pilibhit in Uttar Pradesh through WhatsApp. Of the 14,000 people who use the service, more than 11,000 pay Rs 100 each a year.
Down south in Bengaluru, The Ken, launched last year, offers one original business story of 2,000-5,000 words every morning. It charges Rs 2,750 a year (excluding GST) and has 20,000 subscribers for its newsletter. Of these, paying subscribers are in “the low single digit thousands,” said co-founder Rohin Dharmakumar at Digipub, a digital publishing event last month.
Fastfilmz, another Bengaluru-based video app launched in 2016, offers south Indian films across small-towns in the four Southern states for Rs 30-40 a month. Of the million people who have downloaded its app, about 100,000 pay to watch films on Fastfilmz. It has one of the largest (known) number of paying subscribers online in India.
Rocket Post Live, The Ken and Fastfilmz are, along with AltBalaji, VCCircle or even this newspaper, among the dozen-odd brands that are experimenting with pay revenues in India’s notoriously ad-dependent online media market. The scale is small, the niches tightly defined — a remote district in eastern Uttar Pradesh, business features or south Indian films — but their existence offers hope for India’s Rs 7,690-crore digital media business. There are some attempts at e-commerce from NDTV or ABP but, largely, advertising drives the industry that sells news and entertainment to 422 million Indians online. And just like in the rest of the world, a bulk of the digital ad spends end up with Google and Facebook, leaving publishers who invest crores in content counting pennies. “Going pay has always been an existential crisis for publications in India,” says Nikhil Pahwa, founder and editor, MediaNama. They are finally tackling it, for a variety of reasons.
Rocket Post Live was started as a weekly newspaper for Pilibhit by Gaur, who has worked with Dainik Bhaskar earlier. However, by April 2016, it was struggling financially because of the cost of printing and distribution. Gaur then took the WhatsApp route. “We want to spend on news and journalism, not on distribution,” says Gaur.
“We are unapologetically subscription driven. In business news, it had reached a point where there was too much noise, the ad-funded business model wasn’t really working,” says Dharmakumar.
Are there shades of China here? The Chinese digital market has seen a huge shift over the last five years as consumers consciously swing from pirated to legal content. As a result, pay revenues are shooting up, going to over 22 per cent for online video. Is that how the pendulum will swing in India?
Possibly, says Karam Malhotra, co-founder, Fastfilmz. “In 2016, the price for video apps was Rs 199/299 a month. Everybody says there is piracy — but in small-town India people don’t use torrent (streaming sites that offer pirated content) because they don’t have laptops or the bandwidth. They depend on SD cards and memory sticks. We realised that Rs 30-40 is the price that will work in small towns, because that was the money people pay for pirated content,” says Malhotra.
The challenges of online pay
“The big problem is collections. The average rural guy doesn’t have a bank account, or credit card. The market operates only in cash,” says he. Both Fastfilmz and Rocket Post operate in small towns and coupons work best there. They sell coupons (like prepaid cards) to any regular shopkeeper. When he sells one Rocket Post Live coupon for Rs 100, he keeps Rs 30 (split among various parts of the trade) and passes the rest to the brand. The coupon is usually a scratch card with a number that allows the user to access Rocket Post Live or activate Fastfilmz (which lapses after a two-week trial period). Fastfilmz uses several channels — like bulk sales to factories, bundling with a broadband provider like ACT or telecom operators.
Collecting small amounts is the problem that several start-ups such as Orcsnet are trying to solve for publishers. Launching this month, Orcsnet offers an ‘online royalty collection’ service. If a reader likes an article, he can click on a button to pay Rs 5. Of this money, Rs 4.50 goes to the publisher, fifty paise to Orcsnet and there is an additional 12 paise charge by the payment gateway, say Paytm. Once a reader has totted up Rs 10 or more across articles and publications, he can pay via card, net banking et al. Orcsnet currently has four major regional publications such as the Tamil news site, Ippodhu, using its button.
Globally, except for a handful of publications — say The New York Times or Financial Times — few have cracked the pay market. Can a push for pay help hold back the inevitable fall in margins and revenues that online brings? Only if pay brings in a profitable 60-70 per cent of the industry’s revenues. If you add up the cover price of newspapers, money paid to cable or DTH and for film tickets, Indians pay close to Rs 63,100 crore for their media. That is roughly half the total media and entertainment industry’s revenues. But not all of it comes back within the business. In online, the payment is usually direct and there is little scope for leakages. So there is hope.
This then puts on its head the oft-repeated argument that Indians, especially the younger ones, don’t want to pay for content. “Millennials are all right paying for news. They don’t have an institutional memory of not paying, of disposing of stacks of newspapers as rubbish. They pay for Netflix or Gaana, so they are okay with paying for news,” points out Dharmakumar.