The changing enterprise of the news business in India Deepanshu Mohan is Assistant Professor of Economics and Executive Director, Centre for New Economics Studies at Jindal School of International Affairs, OP Jindal Global University. He is a Visiting Professor to the Department of Economics, Carleton University The recent series of reports, counter-reports sprouting from the Cobrapost sting operation continues to reflect a waning credibility in our democracy’s fourth pillar - the mainstream media and news-producing agencies. With exception of a few fearless journalists, English and vernacular news-platforms, mainstream journalism continues to witness a deeply troubling transition, from being the vanguard of democratic values to being a principal threat to them. To get a perspective on this troubling transition, it is vital to carefully study the changing dynamics of the news business in India, as part of a global phenomenon. A number of variables can be considered responsible for the rapid dissolution of professional attitudes in journalistic practices and its ethics: rating-sensitive television news; circulation wars among competing newspapers; high transaction and signaling costs in adapting to a digitally powered media space etc, are a few worth mentioning here. Combination of all these factors increasingly force media executives and journalists to go for ‘infotainment’ based news options for purposes of revenue extraction, which quite often require them to remain unconditionally docile to existing chambers of power and interest-groups that are seen inter-twined with their business interests. A core problem that remains at the heart of this remains directly concerned with a misaligned revenue-incentive structure operational under a neo-liberal consensus of private run-news agencies, emerging from countries like the United States to others (including India), where private investment in the media market share remains greater than the public sector owned media spaces. The private sector media market’s motive to commercialize news through maximum advertising and sales generated revenue not only redefines the business and purpose of journalistic reporting but endangers its relationship with democracy too. Some of these aspects are discussed below. The digital disruption Over the last decade, the emergence of a digital economy with the internet’s rising user-interface (seen in Figure 1) substantially disrupted revenue-incentive models within most private sector led news businesses across the world. India and China emerge as countries with two of the largest internet users in the world. However, in terms of percentage of population using internet (as a source for news), countries like Finland, Germany, France and the US remain the highest, while countries like India, China, Brazil (given their demographic user base) are emerging frontiers in the digital media market space. Transnational media conglomerates see the future of news business in these emerging frontiers. Pricewaterhouse Coopers (PWC) recently did an extensive study to scale the extent of impact caused by the global digital disruption on newspapers and magazines across the world. An excessive reliance in commercializing the digital space have continued to push most news agencies to substitute their revenue models towards more volatile sources, like advertising (Figure 4), imposing significant quality constraints on the process of news production and its distribution across platforms. A rise in multiplicity of news agencies through a technological disruption may be welcome in increasing the number of news-providers across platforms. The concern here however, remains centered on the means of financing which, for most private news agencies remain largely focused on advertisement generated revenue model. As seen from the chart below (plotting the compounded annual growth rate-CAGR of digital and print news platform against the percentage of total advertising and consumer revenue from digital media), the more digitized a country’s newspaper industry, the faster its overall revenue are projected to decline. Other clear trends responsible for this include aspects such as the rise in advertisement based-shared services and outsourcing news platforms with players like Google, Facebook getting in the business domain. The only exceptions to this phenomena are countries like Germany, Finland with comparable levels of internet penetration but with strongly supported public service media organizations (operating across several platforms), that enjoy greater public funding and remain less dependent on (online) advertising as their main revenue source. Lack of a diversified revenue-incentive portfolio in a rapidly digitizing news readership space generates wide divergences across media markets ie. both, developed and developing economies. These divergences exacerbated since the years of the global financial recession of 2007-08. Figure 3 and 4 help us to get a more precise picture of the newspaper publishing business and its relation with advertisement expenditures in a post 2007-08 crisis context. Figure 3 presents the OECD’s estimates of revenue change in newspaper publishing in various countries (including advertisements, sales, and other sources of income). The change in revenue numbers were dramatic in countries with greater private investment led media market share like the United States (-30%) and the United Kingdom (-21%), but much more modest in many other developed democracies (with greater public funding supported media market) like Germany (-10%), Finland (-7%) and, most notably, France (-4%). India, remained the exception where the newspaper publishing revenue continued to rise (9%). While in many countries (excluding India), the financial crisis- in some cases further exacerbated by domestic recessions, housing slumps, and other related downturns- led to stagnation in total advertisement expenditures, and in a few cases to actual decreases (seen in Figure 4). While there was a significant fall in advertising expenditures across main spenders post 2008-09 period, India’s advertising expenditure, on a year-to-year level, has seen an average increase of more than 16-18%, which reflects the dependence of news business platforms on advertisements as their main revenue extraction. This scenario remains the same, across other private news platforms in India (including other private tele-news and digital news spaces). The reliance on ‘paid news’ in India With a volatile source of revenue growth in advertisement-sensitive private media market, mainstream news-agencies resorted to ‘paid news’ options for infotainment purposes. Instances of this were earlier reported by P Sainath during the provincial elections of Maharashtra in October 2009 when the then Chief Minister, Mr Ashokrao Chavan bought editorial space in three leading Marathi-language newspapers to promote his election prospects. At that time, the Press Council of India observed - “The phenomenon of ‘paid news’ goes beyond the corruption of individual journalists and media companies. It has become pervasive, structured and highly organized and in the process, is undermining democracy in India” (quoted from here). Similar references can be drawn from across other ‘paid news’ news areas, including entertainment, witnessing a Bollywoodized form of journalism (as termed by Daya Kishan Thussu), and sports, where celebrity-cricket-centered news culture tends to generate more clicks and readership interest diluting other news events. Solution(s) in foresight: diversifying revenue-incentives There is a need to acknowledge how multiplicity of media outlets help citizens to access a wider range of information and news analysis. The presence of multiple news agencies across news platforms curtail government’s power to control and manage information in a direct, centralized manned. Networks such as NDTV 24x7, and digital platforms such as The Wire, The Quint, Alt-News etc. have taken up spirited measures on causes in public interest- including freedom of information, environmental protection, gender inequality - forcing government to amend and initiate policy discourses. However, any incentives drawn from multiplicity of self-managed and financed news agencies can only continue to exist if such agencies operate under a diversified revenue model of financing within a competitive market-price structure, as against being dependent on singular revenue sources ie. advertisement or other mono/duopolistic corporate channels, giving enough opportunities for tacit collusion to take place between political or corporate groups with news agencies. Diversifying revenue-incentive structures for news agencies requires cultivation of creative financial institutions and channels that offer long-term capital to news-agencies including news-startups. Here, promoting Venture Capital (VC) modes of financing that thrive in other business areas of e-commerce, biotech, pharmaceuticals etc. helps in this case. The role of the venture capitalist is not just providing investment funds. By selecting to invest long-term in a news business, the VC can reduce risks of adverse selection faced by passive investors who do not know where to put their money, and more importantly, give agencies a reliable source of revenue over a longer period of time. News startups, like any other startups may not generate profits for years, it is therefore not advisable for them to get into debt which will only push for paid news means of revenue maximization (to quickly make repayments). Without the right structure of incentives and revenue structure for news businesses, the social trust embedded in the 
aesthetics, ethics and values of journalistic integrity - most essential to safeguarding democratic values - remains likely to be irretrievable.
Without the right structure of incentives and revenue structure for news businesses, the social trust embedded in the aesthetics, ethics and values of journalistic integrity - most essential to safeguarding democratic values - remains likely to be irretrievable