Will free dailies change the media landscape?

Will free dailies change the media landscape?

New Delhi: At his home in Chennai’s Mylapore neighbourhood, Jagadish Kumar Gandhimurthy, a 24-year-old software engineer working with HCL Technologies Ltd, reads The Hindu and The Economic Times. And that used to be it.

These days, since 10 December to be precise, he has been getting one more paper, a tabloid called Ergo, in the office. Since he doesn’t have to pay for it, he doesn’t mind reading it. Unlike the papers he reads in the morning, Ergo has news that is local and immediate: Yoga among the IT community, adventure sports in Chennai, and anonymous scrapping (or messaging) on social networking sites that bothers women.

Most importantly, as far as Gandhimurthy is concerned, Ergo is free. “It’s good... It’s peppy," he says.

Ergo may be free, but it is actually published by Kasturi and Sons Ltd, the Chennai-based family-controlled media giant that also publishes the 129-year-old newspaper The Hindu, among other publications.

Ergo, a 16-page, all-colour tabloid, is India’s first free daily from a large media house. Free newspapers try to recover all their costs—of publishing and distribution—from advertising. Globally, such free newspapers are now published in at least 52 countries.

See: How free newspapers are faring worldwide

According to Piet Bakker, an associate professor at the University of Amsterdam, 42 million copies of free newspapers are read every day by 70 million people across Europe, the US, Canada, South America, Australia, Asia and Africa.

Since August 2004, Bakker has been chronicling the rise of free dailies on his blog, Newspaper Innovation.

While Ergo is the newest offering, the model itself is not entirely new to India. A host of small local publishers have been bringing out weekly community newspapers, such as Neighbourhood Flash in New Delhi, Ontrack Suburbs in Mumbai and a host of them in Chennai, including Suburban Voice and Mylapore Times, for some time. But unlike Ergo, they have mostly tended to be from boutique publishers and very tightly focused in terms of their geographic reach.

In recent years though, major publishing houses, such as Jagran Prakashan Ltd, the publisher of India’s largest circulated daily, the Hindi Dainik Jagran, and Kasturi, have also begun such “community" papers. Jagran launched its weekly tabloid, City Plus, in September 2006 with an initial print run of 40,000. Today, the company claims a circulation of 370,000 through 18 editions in and around New Delhi. Kasturi’s Downtown and Neighbourhood Flash also claim a healthy circulation.

These weekly community papers, though, are significantly different from the emerging “freesheeters" such as Ergo, in terms of both their readers and the advertising they usually attract. Community papers—and their advertising—is essentially local.

“We give a platform to small retail advertisers who can’t afford to advertise in the big papers," says Vikas Chandra, the project head for City Plus. According to Siddharth Gupta, chief operating officer of Daily Page Pvt. Ltd, Neighbourhood Flash’s publisher, the paper mostly attracts “sub-local advertising". It mostly comes from “local schools, hospitals, salons, gyms, beauty products, apparel retailers".

Meanwhile, the advertiser profile of free dailies—or least the ads they hope to attract—isn’t very different from the “paid" dailies.

Metro International, the Swedish group that is the global market leader in free dailies—it publishes 84 editions in 19 languages across 23 countries—counts many traditional print marquee brands, such as Canon, Nokia, Puma and Samsung, among its advertisers.

Over in Chennai, a Kasturi and Sons executive says Ergo plans to tap the same set of advertisers that mainstream paid dailies vie for. “There is interest from advertisers as we are doing a controlled distribution in a clearly targeted IT corridor," says N. Murali, Kasturi’s joint managing director. “We are hoping to get banks, automobiles, telecom and gadget companies to advertise with us," he adds.

In a controlled distribution model, the publisher decides which neighbourhoods or office buildings will get the paper delivered, thus hoping to create a critical mass of certain kinds of households or readers that advertisers would pay to reach, and the ability to charge more than, say, the community-based free papers.

Indeed, the rate card charge per sq. cm colour ad in all editions of Neighbourhood Flash is Rs300. The corresponding figure for City Plus, in and around New Delhi, is Rs150 per sq. cm while Ergo says it charges Rs200 per sq. cm. In comparison, the Capital edition of The Times of India (ToI), circulated in New Delhi and its neighbouring areas, charges Rs1,632 for the same space. According to the latest data from Indian Readership Survey, ToI enjoys a readership of 2.13 million in New Delhi. Readership surveys do not cover free newspapers such as Neighbourhood Flash.

Murali says free papers don’t have to be mass papers to generate ad revenue, adding: “Advertisers will test the response they get anyway."

Indeed, some advertisers are saying it doesn’t matter to them if a paper is free or paid.

“Advertisers are only interested in eyeballs," says Sam Balsara, chairman of the Madison Group. “With the readership of regular dailies stagnating, if not declining, new ways of reaching readers have to be found (so) the launch of free dailies was inevitable. As for advertising, if consumers read the paper, ad bucks will follow. Whether it is paid or free is immaterial."

The free newspaper market in India is still too small to have reliable data on how much advertising it is starting to attract. But India’s overall print media continues to grow rapidly in terms of its ability to attract advertising.

According to AdEx India, a division of Mumbai-based research agency TAM Media Research Pvt. Ltd, print advertising grew 21% during January-September 2007 over the same period in 2005. TAM measures ad growth in terms of column inches.

Many industry players have made rosy predictions on advertising growth in the near future. It is not surprising then that Kasturi plans to take Ergo to other markets in due course. “We chose to launch Ergo in Chennai because it is our home market," says Murali. Indeed, The Hindu is the largest circulated newspaper in Chennai. “As a test market, it is easier for us to handle. Depending on its success (in Chennai), we might think about other cities with high concentration of IT professionals, such as Bangalore and Hyderabad."

Murali denied the timing of Ergo’s launch had anything to do with the reported plans for a Chennai edition of ToI. “ToI’s coming has been in the air for the past couple of years. Now it’s more concrete, it is clear that they are coming in 2008, but Ergo’s launch doesn’t have anything to do with it," he says.

In addition to trying to get more ad dollars with such flanking moves, some Indian publishers see an emerging opportunity in the growing trend, at least in large cities, of more people using more comfortable public transport, such as metro trains and buses that run in dedicated corridors.

This means free papers not only have a regular—and captive—audience, but such transport systems also become relatively easy ways to distribute their paper, often from kiosks set up at the entrance, with one outsourced employee making sure copies are not pilfered en masse by competition or, especially in India, for recycling.

“Public transport is by far the most efficient way to distribute (free papers)," says Bakker.

Indeed, cities such as London have seen new free papers emerge just to serve the tube, as the London metro is informally called. Even Metro International has flourished by initially focusing on urban train commuters in European cities.

In India, mass rapid transit systems are in various stages of conception and execution in Ahmedabad, Bangalore, Mumbai, Hyderabad and Kochi, while the Delhi Metro continues to expand its reach and its riders. Chennai already has one that runs along the IT corridor in the southern part of the city.

“We are studying the needs of the metro commuters," says Sanjay Gupta, CEO of Jagran Prakashan. “We have been talking to the Delhi Metro" to explore distribution.

But some large media houses say they don’t see much of a future in free dailies, at least for now. “It’s another way of marketing your product. We don’t have any plans as of now," says Ravi Dhariwal, CEO of Bennett, Coleman and Co. Ltd (BCCL), the publisher of ToI. Tariq Ansari, the managing director of Mid-Day Multimedia Ltd, the publisher of the tabloid Mid-Day, also said his company has no plans for free papers.

A spokesperson for Metro International declined to comment on whether the company is scouting for a partner in India to launch a paper here.

And some media experts say the success of free newspapers outside India is unlikely to be replicated here.

“There is only a vague chance that such dailies will work in India," says Zee Entertainment Enterprises Ltd CEO Pradeep Guha, who spent 29 years in the print industry, rising to become president of BCCL. He is also a director at Diligent Media Corp. Ltd, the publisher of DNA.

“The difference between the West and India is that there is no raddi (recycling) value (of newspapers) in the West. If you give out something for free, the challenge is to make sure it ends up with the reader and not in the raddi," says Guha, echoing what has been conventional wisdom in recent years, especially from paid newspaper publishers, on why free papers will not take off in India.

Adds Dhariwal: “In India, the raddi value poses a challenge to such a model."

But Kasturi’s Murali says it isn’t a major issue for Ergo as he sends out teams that monitor Ergo’s distribution and conduct random checks on the outsourced distribution agent responsible for deliveries.

And Jagran’s Gupta dismisses the significance of the raddi hurdle, saying that in many ways, it is not really unique to free papers.

Says Gupta: “Paid or free, 5-10% of all papers end up in raddi."