BY RAJAN NARAYAN

If you want honest genuine news and views, you will have to pay the price for it. Newspapers and magazines are the only products sold for below the cost of production, forcing them to prostitute themselves to advertisers and unscrupulous politicians.

THE COST of production of potatoes, or the price which the farmer gets for a kilogram of potatoes, is Rs. 3. By the time it reaches the wholesaler, the price of potatoes goes up to Rs. 14 with the middle man’s margin contributing Rs.11 to the wholesale price. By the time the kilo of potatoes reaches you at the Panaji, Margao or Mapusa market, the price shoots up to Rs.25 with the retailer adding his own margin of Rs. 11 per kg. In the case of cucumber, the price at which the farmer sells a kilo to the middle man is Rs. 4. The middleman adds Rs. 16 as his margin. So much so, by the time it reaches the wholesaler gets it, the price is Rs.20. In the market, a kilo of cucumbers costs you Rs.40 because the retailer adds his margin of Rs.20. In the case of ginger, an essential ingredient in cooking even though it may be used in very small quantities, the difference between the price the farmer receives for a kilo and the retail price is as much as Rs.95. While the farmer gets between Rs. 2 to Rs.3 per kilo of ginger, the price you pay for it at the market is Rs.100.

POOR MARGINS

THIS is true of virtually every product you buy from the market, whether it is tea of coffee or rice or toor dal or Fair & Lovely vanishing cream or your refrigerator or your television set or your washing machine. The only product that most of the middle class at least buy on a regular basis which comes to you far below even the cost of production is the daily newspaper. The cost of production of the Goan Observer, for instance, (taking into account the cost of paper and printing and salaries and overheads like rent, telephones and electricity bills) is Rs. 29.60 per copy. Unlike in the case of vegetables, cereals and other consumer goods, including consumer durables, the producer of the newspaper does not even get the cover price of the newspaper whether it is Rs.8 in the case of the Goan Observer or whether it is Rs.3 in the case of The Navhind Times.

NET INCOME

BECAUSE the producer referred to as the publisher of a newspaper or a magazine has to part with a minimum margin of 30% to the wholesaler of which 20 to 25% goes to the retailer. If you take the distribution costs of a daily or a weekly, the net income from one copy of the Goan Observer to the media organiaation printing and publishing the paper, which is Goan Observer Pvt Ltd, is 25% of the cover price of Rs.8. Which effectively means that while the total cost of publishing and printing the Goan Observer is Rs. 29.60 per copy. What the company which prints and publishes the Goan Observer gets is just Rs.2 per copy. This is true of all legitimate media houses.

This is true to an even greater degree in the case of the Times of India, which entered Goa a year-and-a-half about two years ago. The cost of production of a single issue of the Times of India (including the four-page colour supplement called the Goa Times) considering the huge salaries and overheads is probably over Rs. 100 per copy. Yet the Times of India, when it was introduced in Goa, offered the newspaper to subscribers at as little as 80 paise per copy. In fact, the Times of India threw in a rexine bag costing probably Rs. 10 to 15 at wholesale prices as an additional incentive to offering the Times of India, which costs over Rs.100 per copy to bring out, at 80 paise.

PREDATORY PRICING

THE Times of India engaged in what has become a common practice in the industry. Predatory pricing. The word predatory comes from larger animals like lions and tigers preying on smaller animals like deer and rabbits. National newspapers with deep pockets have been trying to destroy local newspapers by predatory pricing. Which means offering the national paper at a price much lower than the price of local papers. In the confidence that offered a much cheaper alternative the price sensitive Goan consumer would switch from local papers like The Navhind Times, the Herald and the Gomantak Times to the Times of India. More recently, the Lokmat group owned by national NCP Chief and Union Agricultural Minister Sharad Pawar’s brother has been attempting precisely the same tactic to kill local existing vernacular newspapers by pricing the Goa edition of the Lokmat at Re.1 against the price of Rs.3, which is the cover price of Gomantak, Tarun Bharat and the only Konkani newspaper, Sunaprant.

In any other industry, predatory pricing to destroy the competition and acquire a monopoly would attract strict action from the central government under the Monopolies and Restrictive Trade Practices Act. If, for instance, Hindustan Lever dropped the price of Dalda or Fair & Lovely to one tenth of the price at which it is currently sold for a brief period of time to kill and destroy a new competitor, who does not have the deep pockets that Hindustan Lever has, it would be hauled up by the Ministry of Corporate Affairs and would have to pay a severe penalty for engaging in blatantly unfair trade practices. But it does not happen because, for obvious reasons, newspapers do not seem to be covered by the Monopolies and Restrictive Trade Practices Act.

FINANCIAL CLOUT

OBVIOUSLY because the larger the circulation or the financial muscle of a large national newspaper group, the greater the political patronage it enjoys. It is of course another matter that, as in Goa, the Times of India has not been able to significantly erode the circulation of the local papers. Though of course local papers have had to pay a price because they have not been able to increase their cover price despite the steep increase in the cost of paper, which accounts for 80% of the cost of a newspaper for fear of losing sales to the predatorily priced Times of India.

SALARIES

THE local newspapers also saw their costs shoot up because of having to match the salaries offered by the Times of India to retain the best of its editorial staff. A price which not all of them could afford. It must be placed on record that the salaries that are payable to newspaper employees is not decided by the patrao who owns the newspaper but by the Wage Board for newspaper employees set up by the union government. The scales payable under the Wage Board depend on the turn over of the newspaper group. Since the turnover of newspaper groups in Goa are far less than that of the Times of India the applicable wage board scales were much lower.

However, with the Times of India resorting to offering predatory salaries to destroy the talent pool in local newspapers, the cost to local media organisations also soared. It must, however, be acknowledged that there were newspaper organisations in Goa which were paying much less than what their journalist and non journalist employees deserved because of the lack of choice and collusion between newspaper organisations to deny journalists and non journalist employees reasonable remuneration for the work they put in.

If a newsweekly like the Goan Observer costs Rs. 29.60, or in the case of The Navhind Times or the Herald or the Times of India, the cost of production is four or five times more, how is the media organisation able to offer it to the reader at one-fourth or one-tenth the cost of production? They are able to do so because, traditionally, media organisations have relied on advertising rather than revenue from the sale of newspapers to sustain themselves. But every media organisation and, up to a point even an independent media group like the Goan Observer, has had to pay a price for its dependence on advertising.

MARKET DRIVER

WITH costs of paper and printing and salaries, not to mention overheads continuing to increase every year, media organisations have become increasingly dependent on advertisers. The corollary to this is that it is the advertiser and not you the reader of a magazine or a newspaper who decides what will appear in the newspaper. The corollary to the increasing dependence of media organisations for sustaining themselves, if not to satiate their greed for more and more money, means that you read what advertisers and PR agencies want you to read and not you may want to read. Or what politicians want you to read during elections in advertisements masquerading as analysis.

The problems of the print media have been compounded by the multiple choices that the advertiser now has. As recently as two decades ago, there were far fewer contenders for the advertising budget of the corporates which sustained the print media. Indeed, two decades ago the only choices that corporates had for advertising were the print media, Doordarshan and All India Radio. In sharp contrast, now there are dozens if not hundreds of television channels plus new advertising avenues such as the internet, mobile messages and even opportunities for brand positioning in movies and television serials. From a buyers market, the advertising business has become a sellers market. Which means that the corporate sector and other advertisers have a very wide and expanding range of mediums to convey their message or market their products.

The arrival and the proliferation of television channels has led to the diversion of 50 to 80 percent of the advertising price to the visual media. Unlike in the UK or the US, where there has been a fall in the circulation of existing media and virtual stagnancy in the growth of new publications, in India and even in Goa there has been a phenomenal growth if not in the circulation of existing publications, certainly in the number of advertising mediums available to the advertiser. The situation is compounded by the fact that Goa, with a population of around 15 lakhs and possibly 30 lakhs if one takes the tourists visiting the state, is not of great significance to advertisers.

MIND SPACE

SO much so, if national advertisers feel the need to tap the Goa market, they normally limit themselves to just one publication. Here again local newspapers and magazines are at a disadvantage as newspaper groups like the Times of India are offering advertising space in their Goan editions at a token incremental charge when big corporate groups advertise in the metro editions of the group. Advertising revenue has also been impacted by dramatic changes in the manner in which space is bought. In the good old days, the advertising agency decided which publications or media to advertise in and the 15% commission they received from the publications or other media were their primary source of income. Now, however, there are specialised space selling organisations which are independent entities and buy and sell space in the print media and time on the electronic and the audio visual media in bulk setting their own rates at which they will buy space or time slots.

The consequence of this is that media organisations have to give huge discounts on their formal advertising rates if they wish to get any business from the space selling monopolies which have sprung up all over the world and in India. This has increased the dependence and domination of the media by the advertisers, further undermining the autonomy and integrity of media, which has to dance to the tunes of the pied piper. So much so, independent media organisations or even large media groups cannot expect to even partly subsidise the newspaper reader for the product that he or she gets at a fraction of the price of production.

ADVERTORIALS

ONCE upon a long long time it was sacrosanct that no more than one quarter or less of the front page of a newspaper or magazine would comprise advertising. Now, of course, it is routine to see the entire front page taken up by an advertiser. Advertisements have even appeared over the mastheads of newspapers, which is utter sacrilege. If page three, which is devoted to the bold and the beautiful and the rich and the powerful, has started dominating even page one of newspapers, it is not necessarily because the readers don’t consider the water shortage in Vasco or the damage caused by the cyclone to the beach belt or the outbreak of dengue and chicken flu more important than the antics of the bold and the beautiful and the rich and the powerful.

It is because the news items and photographs masquerading as news items are bought and paid for. To the Times of India goes the dubious distinction of institutionalising the disgraceful practice through what it refers to as a private treaty agreement whereby those who offer Times of India shares of their company or a huge retainer are guaranteed favourable editorial coverage. Even more importantly, they are guaranteed that there will be no unfavourable coverage. This is true not only of the Times of India, but virtually every newspaper in the country. There is even a section called ‘New from Associates’.

ELECTION TIME BOOM

POLITICIANS being even greater corruptors than businessmen, it was inevitable that electoral coverage by newspapers would also become a purchasable commodity. During the last Legislative Assembly elections in Goa, we witnessed any number of cases of obviously planted propaganda in favour of a candidate and sometimes even of rival candidates on the front page or on the same page inside appearing as news items by some ghost special correspondent. This was a win-win situation for both politicians, political parties and newspaper managements. The payment for the space devoted to these advertisements posing as news was in cash and, therefore, did not reflect in the permissible expenditure that can be incurred by candidates. For newspapers, it meant black money and indeed the sale of editorial space has converted the media in several parts of the country, including Goa, into a money laundering industry. It has been estimated that, during the recent Legislative Assembly elections in Maharashtra, over Rs. 400 crore was spent by individual politicians and political parties for favourable editorial coverage, charged for at premium advertising rates. Many newspapers and television stations, in fact, are owned by politicians.

MEDIA INTEGRITY

SO has the media become totally immoral? Have they lost all sense of morality? While this is true of a growing number of media organisations, there are still even national newspapers like The Hindu and, to a large extent, the Indian Express which have maintained their journalistic integrity. But how long they will be able to resist the temptation of selling editorial space as advertising is anyone’s guess. This is because the present revenue model of media organisations under which the reader pays a little more than the radhi value of a newspaper is unsustainable.

In the human resources area, there is a saying that if you pay peanuts you will only get monkeys. This is true of the media industry also. If you want good content than, you the reader, should be willing to pay for it. To be an honest media organisation is becoming extremely difficult. We, at the Goan Observer, barely manage to survive by cross subsidising the Goan Observer with our desktop activities. Because it is even more difficult for us to get advertising than other media organisations because of our obsession with telling the truth without fear or favour.

This is not an excuse for increasing the cost of the Goan Observer which, at least for the moment, we have no intention of doing. What we would like to stress is that no industry, least of all the media industry, can continue to give you a product for less than one-fourth or one-tenth of the cost of production unless the reader is willing to pay more. In no other areas does the consumer expect the manufacturer to subsidise the cost of the product by as much as 500%. If the media is getting trivialised and is focusing more on the bold and the beautiful and the rich and the powerful, it is because they are the ones with the purchasing power and it is the advertisers who are increasingly calling the shots with regard to the contents of a newspaper or a magazine or a television programme. Every brand of clothing or shoes or even underwear worn by the characters in your favourite soap opera is paid for by the advertiser in what is diabolically called picture-in-picture advertising.

So don’t blame the media house alone. Search within your self to examine to what extent you have contributed to the degradation and trivialisation of the media. If you expect independent media, you will have to be prepared to pay a price for it. And those who want to know the truth, even among advertisers, will have to go by quality and not just quantity. Quantity or huge circulation numbers that can be achieved by selling newspapers and magazines virtually free to readers. The audit bureau of circulation does not require a media organisation to sell the publication at the cover price. It can sell it at any amount above the radhi price. So you get inflated circulation figures, which is the basis of advertising and newspapers and magazines full of radhi instead of meaningful or even truthful content.