Money matters

BY BHARAT BHUSHAN| IN Media Business | 17/03/2012
Media-sensitive politicians and their bureaucratic cronies have tremendous influence on the structure and complexion of news in today's papers, what with the government being the country's biggest advertiser.
Does commercial advertising really ensure the freedom of the press, asks BHARAT BHUSHAN
It has been often argued that commercial advertising ensures the freedom of the Press; that it releases the Press from the clutches of the State and allows it to truly be the Fourth Estate of democracy. But is that really the case?
Commercial advertising ensures the survival of the Press by rewarding successful newspapers with handsome profits and ensuring decent wages for journalists – at least in the metros. However, it also helps the market leaders in building huge entry barriers by keeping the subscription prices at such abysmally low levels that only those with very deep pockets and the ability to take losses for inordinately long periods of time can enter the market. Advertising revenue, instead of keeping the Press free, actually becomes a tool in the hands of the market leaders to restrict the market.
Advertising is the principal source of revenue for Indian media houses. Subscriptions, news-stand sales, and circulation-based sales provide a significant chunk of revenue only in the magazine space and not for newspapers. Niche magazines (Computer magazines, automobile magazines, photography magazines etc.) get a larger share, up to 60% revenue in some cases, from circulation. For the newspapers, the main source of revenue is advertising as subscription is almost free. But the dominant player takes most of the advertising in a particular market, the second one gets most of the rest and so on.
The government is the biggest advertiser in India. Government advertisements form 40 to 50 per cent of the total volume of ads in an established newspaper and about 30 per cent of the ad revenue. These include both advertisements released by the Directorate of Audio Visual Publicity (DAVP) as well as display and tenders issued by the Central as well as State government agencies.
Classified ads, which are more readership drivers rather than revenue drivers, form less than 10 per cent of the ad revenue of a newspaper. In the smaller newspapers classified ads are virtually non-existent.
The third category of advertisements is that of commercial display ads. They are either national or local. The revenue from national display ads forms, on an average, 50 to 55 per cent of the ad revenue of an established newspaper. Then there are local display ads which appear in the city or suburban pullouts of newspapers -- used largely by retailers, small property dealers, and local service providers – which are priced at a lower rate and therefore contribute proportionately less to the revenue.
These sources of revenue both shape the structure of the media as well as its content.
A major source of revenue, tender advertisements, for example, typically requires the publication to have a national footprint. A single-edition newspaper is less likely to get tender ads other than local, than a multi-edition newspaper. This has prompted some newspapers to start editions which are essentially facsimiles of the parent edition with minor changes and a low print run. Newspapers do not always become multi-edition to create new readers but to mark a token larger geographical presence in a market for attracting government ads.
The market for tenders and government ads is fairly corrupt and is known to be based on “relationships” between the public relations departments of the ad-giving agency and the ad sales representatives of the publication. A lot of government advertisement goes to newspapers where it does not belong. This is why one can see geographically irrelevant advertisements appearing in the newspapers in New Delhi. This also explains State government ads going to strange newspapers with low or virtually non-existent public circulation. There are newspapers which print only the so-called “voucher copies” which are sent to advertisers to show that their ads have indeed been printed.
All these shenanigans are possible because some of the ad revenue, in effect, ploughs back into the pockets of key individuals in the ad-issuing government departments. Not everyone is corrupt, but corruption is pretty rampant when it comes to getting government advertisements.
If the government is the biggest advertiser, one might ask how far can one go in criticising it. Ideally, it should have the effect of making all news anodyne and boring. It may seem a perverse argument, but one could say that the sheer size of the government in India, its inability to monitor the cost-effectiveness of its advertising budgets, and the all-prevalent corruption ensure that ads are not linked to being critical of the government. Everyone in the huge patronage network of corruption benefits  -- except of course the tax-payer whose money is frittered away in advertisements singing paeans of political leaders dead or alive and distributing ad largesse to all and sundry.
There are also media-sensitive politicians who are keen on ensuring that they get the bang for the government’s buck. Typically, they would be ministers who control the DAVP or a similar government publicity agency or the chief minister of a State who is particularly sensitive to negative publicity. They get terribly upset over negative publicity but do not intervene directly. Erring newspapers may be punished by the ad-giving agency of the government by denying them ads for two to three months. Such a signal is enough for the pressure to reach the newsroom to be careful while writing about such individuals. However, after a brief interlude, it’s back to business again because they know that they need the newspapers as much as the newspapers need them.
Other than this, from the agencies that distribute government display and tender advertisements, there is really no overt pressure on the editorial to toe a particular line in its reportage. However, that does not prevent willing editors and media owners to publish positive reports to please the powers that be.
One way that newspapers have found of pleasing bureaucrats is to have special pages to promote government news – about transfers and postings and interviews with senior bureaucrats and often even politicians, whom journalists would normally not give the time of the day. Only a thin veil separates such write-ups from regular news pages. They are pure public relations exercises, puff jobs on bureaucrats and heads of public sector corporations, playing to their vanity. The hope is that they would be generous with government advertising to them in return.  What editors normally would not do is done by the marketing departments but bundled along with credible news packages in the same publication.
Display advertising from the private sector impinges on editorial content much less than government advertising does. Most big newspapers would claim that they have a firewall between their ad sales and editorial departments. And that by and large is the case.
However, with the frontier of control in the newsrooms decisively having shifted in favour of the managers at least in some papers, occasional requests would come to the editorial for positive stories about certain big advertisers. There was a time when this could be resisted. Now editors see themselves in quasi-revenue-generating roles and have internalised a code of behaviour vis-à-vis big advertisers. Thus, for example, the biggest fake university in India not only continues to get positive mention in the Indian media but columns by its founder are published in several newspapers. Similarly, a chit-fund honcho, who has reinvented himself as a sports promoter and real estate developer, hardly ever gets any adverse publicity.
To please specialised segments of the display ad market, some publications have started pages to promote the leaders and decision-makers in that sector – e.g. in real estate, travel, food, and automobile sector. Here again, uncritical reports and puff pieces are written by journalists who seem to float between the editorial and the marketing departments. The hope once again is of a quid pro quo – that in return for free publicity in “specialized” pages paid advertisements would follow in the news pages.
The market is so competitive that the media houses have to do a lot of running to stay in the same place. Media companies, therefore, have been trying to build revenue stream from different sources with varying degrees of success.
Some of the new revenue streams which try to milk the brand credibility of the publication are:
1. Exhibitions and fairs: These are activities which are offered to the advertiser as a 360-degree bundling of their product experience and can include events such as property fairs for real estate companies; test driving events for new cars; activities in malls where consumers can experience the product by using it or witnessing a demonstration; etc. The consumer gets to experience the “brand promise”.
2. Surveys: These relate to annual surveys of best science, engineering, medical, and law colleges; best universities; best schools; best companies; etc. These are becoming big sources of revenue for media houses.
3. Content re-selling: The main customers are dotcoms. The content is usually not exclusively generated for the customer, but it is shared. Syndications, however, are yet to take off in a major way in India.
4. Content generation: Here, exclusive content is generated for customers. The selling point is the content-creation capability of the seller. Customers are both other media houses, principally print and online, as well as non-media customers such as banks, insurance firms, funds, etc. 
5. Custom publishing: Where the entire job of content creation, production, and marketing is outsourced to a media house. These could be an airline’s onboard travel magazines, magazines for specific car manufacturers, and so on.
6.  Paid news: Where content is simply carried against payment -- selling “packages” to political parties during elections in the heartland by prominent newspapers -- are examples of this. However, “paid news” is not limited to elections alone. We have seen the pernicious practice of newspapers getting into financial relationships – by getting corporate equity – to publish only favourable information about them and censor anything unfavourable. This is achieved through “private treaties" between media houses and corporate entities.
7.  Conferences, awards, and seminars: This is a rapidly growing area, where media houses use their ability to pull in participants and provide editorial expertise to run both their own and franchised conferences, seminars, and awards of interest to sponsors.
8.  Books and collector’s issues: These are a relatively small revenue source for media houses. They are not to be confused with publishing companies which also happen to be owned by media houses (Penguin, Harper Collins) which are really stand-alone businesses.
9.  Archives: This monetises old content. This has grown for the Times of India and The Hindu but the others have been less successful.
10.  New media: Another growth area. Customised content delivered to mobiles, iPad, etc. This is a small earner so far, but holds maximum potential, as the market grows in size and richness of content.
11. Brand extensions: This has been attempted with varying success and can range from publications (food, entertainment, or travel guides) to watches, CDs, diaries, and other gift items.
12. Agencies/representations: Market leaders dominate this segment. This involves representing foreign and small media houses for ads, managing their circulation, etc.
Those alternative revenue-generating activities, which do not have anything to do with the mass media or which do not reach out to large audiences, are referred to as “below the line” activities. Thus, bringing out special supplements on real estate, watches, or a particular industrial sector would be “above the line” while holding a promotional event in a mall would be “below the line”.
The “below the line activities” negatively impact content in two ways: first, these activities get covered as “news” in the publications which are associated with them; and second, as ad sales representatives develop a close relationship with these clients, they start transmitting their requests to the editorial departments. The latter, may be as innocuous as getting someone from these companies quoted in a relevant story, getting the client some stand-alone “positive” publicity or getting them a much larger voice than warranted in a story which affects their immediate business interests (say, for example, disproportionately quoting your favourite realtors in a report on changes in government policy on land acquisition).
The booming education market and the bourgeoning role of the private sector in it have meant that surveys of best places to study have acquired a premium in the market. These surveys are an important source of revenue. The market abounds with rumours that while a majority of their findings are credible, there is always some room for manipulation. Little known places of learning and upcoming universities are keen to get their names included in these lists. If they manage to get this done then they are also likely to repay their gratitude with advertisements and sponsorship of media events subsequently.
Although no concrete evidence is available, the inclusion of some second-rate universities in these lists is often surprising, and a careful observer can identify which university is the favourite of a certain media group. What this means is that media houses are willing to trade their credibility for revenue up to a point, except they do it as carefully as possible so as not to erode it completely.
The important point to note, however, is that these so-called alternative revenue streams can have and do have a negative impact on content and the practice of journalism.
Increasingly as the line between ads and news has got blurred, so has the distinction between editors and ad-sales managers. What used to be a shifting frontier of control between editors and the marketing and ad sales departments has become open and porous.
As for the readers, one cannot blame them for getting confused. They take the news plugs that necessarily come bundled with these alternative revenue-generation streams for objective reportage. There is hardly a clear way of knowing where PR plugs end and news begins. This will eventually erode the credibility of journalism as a profession as well as that of the publications and media houses which indulge in these practices.

Bharat Bhushan was the founding Editor of Mail Today. Earlier, he was the Executive Editor of the Hindustan Times, Editor of The Telegraph in Delhi, Editor of the Express News Service, Washington Correspondent of the Indian Express and an Assistant Editor with The Times of India

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