A future in black and white for India

India is defying a global trend and its 2,700 newspapers are enjoying rising sales and advertising revenues. But the industry is facing criticism over the issue of paid news

The Indian Readership Survey released figures this month showing the top five national dailies all added readers in the third quarter of last year. Dan Istitene / Getty Images

As circulations dwindle and advertisers migrate to the web, obituaries for newspapers are being written across the globe. But not in India.

The country's 2,700 newspapers, boasting the world's second-largest readership base of 325 million, are enjoying an explosive growth.

With rising literacy rates, the fourth estate has never had it so good - and advertising revenues are rising.

In the past five years, the industry has grown at a compounded rate of 13 per cent and is worth 174 billion rupees (Dh14.22bn), according to the consultancy firm Ernst & Young. It is expected to grow to an estimated 246bn rupees by 2013.

"India is one of those rare countries where newspapers have a future in the 21st century," says Robin Jeffrey, an Australian academic and the author of India's Newspaper Revolution. "They are frugal, profitable, and reach out to the masses in remarkable ways," he says.

Newspapers in India cost an average of 2.50 rupees, less than a cup of tea. News-stands in cities and towns across the country are typically crowded with an assortment of glossy papers in English and a slew of regional languages. Most of them are crammed with scandals, cricket scores and gossip involving Bollywood celebrities.

The Indian Readership Survey released figures this month showing the top five national dailies all added readers in the third quarter of last year. The survey, conducted by Hansa Research in collaboration with India's Media Research Users Council, revealed that the Hindi broadsheet Dainik Jagran is the most widely read newspaper with 16.07 million readers a day.

The Times of India expanded its daily circulation to 7.42 million from 7.08 million in the third quarter of last year compared with the same period in 2009. With those sales, The Times of India retained the title of the world's biggest-selling English newspaper.

Another leading English-language daily, the Hindustan Times, increased its readership in the same period from 3.453 million to 3.517 million.

Overall, the number of titles has grown 40 per cent since 2005, with new dailies and weeklies in 29 regional languages being added to the crowded print market.

But the rising competition is stirring a price war among publishers over advertising rates. Ernst & Young says advertising revenue share of English-language newspapers, which lag in circulation but command the highest rates because of their prestige, fell from 39 per cent to 32 per cent between 1999 and 2009.

Increasing newsprint prices, which typically accounts for about 60 per cent of the cost of a newspaper, is another concern. One tonne of newsprint typically costs between 20,000 and 37,000 rupees. The average cost "has hovered at the higher end of this range, at around 33,000 rupees", says Ernst & Young, referring to the fourth quarter of last year.

While the web is usurping newspaper circulations in much of the developed world, a low rate of penetration in India has insulated the industry. There are 81 million internet users in India, according to comScore, a provider of online audience measurement services.

But that number is expected to soar to 237 million by 2015 with the introduction of third-generation (3G) mobile technology, the Boston Consulting Group forecasts.

"Consumers in high income and young age groups, primary target markets for advertisers, are adopting digital media to fulfil their information needs, especially with the advent of 3G and broadband," Ernst & Young says.

"In the long term, it will hit us harder than newspapers," says the editor of a popular bimonthly business magazine who asked not to be identified. "Our cover price is high [compared to newspapers] and we cater to a niche readership that is very internet savvy. Our future depends on how best we learn to monetise our digital platforms."

In the more immediate term, another troubling concern threatens the credibility of India's print media: the phenomenon of paid news.

The Press Council of India has discovered in recent years that newspapers and magazines have been selling editorial space for a plump fee, peddling adverts as genuine news items without informing readers of the arrangement.

Pranjoy Guha Thakurta, a commentator based in New Delhi, says the culture of paid news is a "cancer afflicting the media as a whole", and not just the print industry.

Mr Thakurtawas on a committee set up by the press council last year to investigate the trend. He says hundreds of millions of rupees have been spent to buy "news" in large national dailies and television channels.

In September, the Securities and Exchange Board of India, the stock market regulator, raised new concerns with the press council about "private treatise", arrangements where the advertising fee from large corporations are paid not in cash but in equity. This trend could be misused to manipulate share prices, the board believes.

"Biased and motivated dissemination of information, guided by commercial considerations, can potentially mislead investors in the securities market," the board adds. It has urged newspapers and television to disclose any stakes they might have in companies they report about.

So far, media companies have ignored the advice.

"Today the phenomenon of paid news goes beyond the corruption of individual journalists and media companies and has become pervasive, structured and highly organised," the press council says. "In the process, it is undermining democracy in India."

But the entire media industry cannot be painted with the same brush, Mr Thakurta points out. "The fact that this malaise is being widely reported proves that there are many upright media houses," he says. "That should explain why newspapers here continue to sell like hot cakes."