In today’s Use Case podcast, we try to understand how the media industry has changed in the recent past, what sort of business models are working and how founders of new media startups should think about monetisation. Check out the timestamps for more.

Joining us to dive deep into these trends is Miten Sampat, the Chief Strategy Officer of Times Internet, the internet company owned by the Times Group. He and his team have led ~15 acquisitions and 10+ minority investments, making them one of the most active Corp VC / M&A arm in the India internet sector. He is a board member for multiple new media and internet companies such as MX Player, ET-Money, Dineout, Haptik, OML, Shuttl and Myra, among others.

🎧Listen in to the episode on your browser or find it on Apple/Google Podcast apps, Spotify, or Stitcher; ⚡️⚡️⚡️Please consider leaving us a review and rating us on Apple podcasts if you find this episode useful. ⚡️⚡️⚡️

Note: Link to Miten’s 2010 blog discussed on the show at around 27:00; some thoughts about the topic after the timestamp

Here are the timestamps:

• 0:00= Introducing Miten; Media as the most disrupted industry through all industrial revolutions

• 2:00= Two big types of transitions media has had to face in recent past

• 4:00= Shift from advertising to subscription model; Why now?⚡️

• 7:00= Competing with Facebook and Google for advertising- is it worth it? Can you do it?

• 8:44= Trust deficit leading shift to influencer/ personality driven content?🔮

• 9:37= Competing with vs utilising Facebook and Google platforms for advertising lead business models

• 13:30= How are advertisers responding to changes in platforms? Does advertising for India 2.0 give a return on advertising spend?⚡️

• 16:50= Is the Indian industry growing fast enough? Are they making money?

• 23:00= Are local Indian internet platforms beginning to be competitive enough?

• 27:00= Excess infrastructure leads to innovation and new opportunities⚡️

• 29:30= Miten’s strategy/advice if he were to start a new company in the media/internet space

• 31:00= MX PLAYER disrupting a mostly subscription driven streaming industry - Could it pivot into a video commerce company? Could it disrupt the Hotstar/Amazon/Netflix monopoly🔮

• 34:50= Content producers vs content aggregators - who wins? Is the content market consolidating?⚡️

• 37:30= Closing thoughts

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For more than a decade now, I’ve read about media being in trouble. As a reporter at two leading newspapers and then as part of early teams at digital media startups, I’ve had some time to think about it. Below, I’m reproducing a piece I’d written earlier on Twitter because it’s relevant here. 

So we all know the media is in trouble because revenues from print advertising are falling in most markets. And that money is going to digital media. That’s a good thing right? More for digital media companies?! Well, no.

For digital media startups banking on that shift, the big payday will never come. Because digital advertising will never deliver the goods to you. Because you’re competing for the same ad dollars that big tech companies are competing for.

Most of the money in digital advertising goes to Google, Facebook, and platforms like Instagram with an endless supply of ad inventory. For these platforms, the cost of content is nearly zero. They like to keep it that way and invest technology to capture eyeballs and not in ‘content’ itself.

You, as a journalism startup, have inferior technology, no matter how much you try, and you have the cost of content to bear. On both counts, Big Tech will always win. You could point to a few profitable digital news sites and say that it’s working for them.

In the short run, it may work for a company. And some companies may even be able to grow big enough to invest in better technology, hire a direct sales team and so on. But in the end, it is bound to fail.

For a moment, think of what the endgame will look like: Thanks to ad:tech, a marketer can always target your reader or readers of similar quality on Facebook or Twitter or TikTok or Spotify or an endless number of platforms. Why would they spend on your news site?

In the long run, the competition for digital advertising dollars will get even more brutal as the supply of inventory grows. For instance, two years ago, there was no TikTok in India. Now the Chinese behemoth with over 50 million users in India wants to make money from ads in India.

Until last year, Gaana was the only place a marketer could advertise at scale to streaming music users. Now there’s Spotify, Saavn and at least a dozen other streaming platforms fighting for the same money.

Heck, even Amazon and Flipkart are booking healthy advertising revenues.

As mega-platforms and apps powered by user-generated content bring an endless supply of ad inventory to the market, news media sites that manually put out stories don’t stand a chance. Your margins will constantly come under pressure because hey, how fast can your newsroom type?!

So then what’s your lever here as a news media company? Bring down the cost of content and increase ad inventory? But that’s not an option because as a news outlet, readers expect a minimum standard from you.

Best case, to make content cheaper, you hire cheaper and churn out content faster. You lose credibility and in turn, your ability to sell ads. You’re then left to pick up the scraps from the table on which the giants feast.

This is a downward spiral if there was ever one. Because it’s not just you who’s waiting to pick up the leftovers. Every day, there are more and more people just like you publishing online hoping to make a living out of it.

Perchance, if some money dribbles down to news media sites, it is cut up into a thousand parts since entry barriers are so low and everyone is publishing. The money isn’t meaningful enough for anyone to even think of investing in quality journalism.

So then, if it’s all doom and gloom, why don’t we all just go home? That’s not an option either. Because in these dark days, media has a role to play more than ever before. Can we make it work? To answer this, I like looking at how the media works. The traditional media model looks something like this.

Most of the money will come from advertising, some from subscriptions and a little from intellectual property. Currently, most media companies rely on advertising because it’s the lowest hanging fruit. They hardly have any subscription revenues and IP/ events are far and few. Advertising, as we showed earlier doesn’t make enough money.

The answer to our problem is in front of us really. If you look closer, you’ll realize: as you go higher up the pyramid, the value per user goes up. 

What it means is that you can make a dollar by showing an ad to 1000 people who land up on your site or you can make $100 by selling one annual subscription to one person. Or you can make $1000 by selling a ticket to an event or access to a database to one person.

So let’s update the figure a little to reflect this. Now if you, as a media startup, flip the model: you’ll get something like this:

Here, you don’t spam your reader with advertising. But you work hard to hook them to your product. Hooking a prospective user, or a loyalist is extremely vital here. This can be achieved by a combination of good product thinking and analytics to back it (Pro tip: Try this Audience Explorer Dashboard and Data Tools for News from Google). Consider the money you forgo in advertising revenues as your marketing costs.

Now you build products focussed on IP and events/ conferences for the same audience groups. Which means you have to be very careful to tie your editorial stack closely to these audience groups. Again, analytics is important here.

Here media companies have a natural advantage over platforms in building content related IP because of the access they have to thought leaders and data sources. It has higher margins, and scope for deeper work that rewards experienced journalists and quality stories.

If you build your strategy around building a stack of this nature, it will probably start looking like a sustainable company in the long run. To make this work, it’s important to segment your users clearly, have an editorial strategy around each segment (niche?) and eventually build IP based products for the segments.

If you crack one segment, perhaps you can port this model into other segments as well. Hope this helps.