‘Now the Darwinian model of survival will come into play’

‘Now the Darwinian model of survival will come into play’
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First Published: Wed, Nov 07 2007. 12 18 AM IST
Updated: Wed, Nov 07 2007. 12 18 AM IST
Alex Vieux was named one of the most influential people in the technology business in Europe by Time magazine’s European edition. An MBA from Stanford University, he has worked as a journalist with the French daily Le Monde, been a consultant at Andersen Consulting, and taught at a university. Currently, he dons the hat of a publisher of leading technology magazine Red Herring. Originally launched in May 1993, the magazine had successfully established itself as the journal of record for dot-coms. But with the dot-com bust in 2001-02, the company went through a difficult phase and it even had to stop publication in 2003. Vieux stepped in at that time—buying the title and some other assets of the company. In the past couple of years, he has tried to change the business model of the magazine while trying to keep the business afloat. Vieux was in Mumbai this week to attend an event organized by Red Herring.
In an interview with Mint, he talked about the changing media landscape globally and its impact in India and the future challenges for Red Herring.
Edited excerpts:
‘Red Herring’ has been through some tough times. How do you sum up the journey so far?
The media industry has transformed itself and has been the victim and the beneficiary of the Internet. It has been the victim of the Internet because all the things that used to be in print are today on Internet. We have entered the digital age and digital media is transforming the way we live and consume information...the Internet allows immediate access to information, which is transforming traditional media business models.
Today, in the print business in the US, 80-90% of advertising has disappeared compared with the past. It isn’t that it has been taken over by online platforms. We are facing a nuclear winter between the moment where one model dies or changes and the new model emerges. Today, while the Net has yet to stabilize, it is still impacting the business of other media. It is happening across the globe. Now the Darwinian phenomenon of survival of the fittest will come into play. Those who are able to adapt better in the new order will survive. Being fit and consistent will be the criteria.
The onslaught of Internet doesn’t seem too pronounced in India, as of now. What is your understanding of the Indian market?
India and China are two unique countries. The global developments on the media front don’t seem to be impacting the industry here. Nobody anticipated that telecom companies’ Arpu (average revenue per user) will work the way they do in India. Similarly, nobody had anticipated the publishing industry in India will be able to work the way it does. India is one of the few countries where the print industry is still going strong and their low-cost model is still working well for them. It could be because of the nature of the local market, or maybe it is a demographic issue because there is a mass factor, which is quite important for the survival of any business.
‘Red Herring’ seems more focused on the Internet, than physical sales. What is the rationale?
There are three factors. One is the cost factor. Online costs are far less than printing. Logistical cost pressure is much more in the print model. The second factor is the demographic issue. There are people who are 20 years or younger who don’t read newspapers any more. The people who continue reading papers are in the age group of 50 years or above. And the third one is the pricing pressure. In print, you have to make sure that your product cost is low. Then, it is not just the cost structure, even in terms of timing you have to be more consistent.
Our focus on online only means we want to avoid death when we are forced to walk through the death corridor.
How does your business model work?
Our online content is almost free for users. It is largely supported by advertising. Subscription fee for online users is much less than the fee for the print edition. The subscription is $89 (Rs3,498) in print and $19 online. We want people to pay for what they use. If they use paper, it will cost them more. Around 90% of our revenues are from advertising, whereas in India, we have a huge subscriber base.
Red Herring events form an entirely different business. It is a highly profitable business and creates huge visibility. We have just broken even in 2007. I can’t disclose the sales but...they are extremely good.
How do you compare India with China? Do you think India could be the hub for your Asia-Pacific operations soon?
India has a huge advantage over China for three reasons. One, over the long term, the demographics of India will be quite favourable. China’s demographics show that by 2045, 60% of the population will be over 60 years. The second advantage India has over China is its diverse technology fabric, which also has a global tinge to it. Then, Indians are largely English speaking. The third aspect relates to the political environment. One thing India has and China doesn’t is democracy. India is a complicated country to do business in because while people tell you this will happen today, it doesn’t happen today. But every decision that is made, is made in a democratic way. The difference between India and China is 2 percentage points of GDP. China is at 10 and India at 8.5, but with a democratic regime. Between them, I vote hands down for the democratic regime. There is much more potential to make India our Asian hub rather than China. By 2008, India will be our major hub of operations.
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First Published: Wed, Nov 07 2007. 12 18 AM IST