The contract printing option for reducing production costs

Indian dailies hit the wall on innovation and digital transformation

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It is mostly a myth that Indian daily newspapers are growing. They have hit the same wall that publications in developed markets hit 20 years ago. Given the recent trend in flat and decreasing circulations of Indian dailies, even the juggling of the readership surveys to reflect digital reach cannot sufficiently add significantly to revenues.

It is simplistic to say that newspapers can shift to digital media. Publishers have been struggling to do this for more than a decade with little or marginal success. Although digital revenues are growing at more than 38% year on year, these are mainly going to Google and Facebook. In some of the recent second-quarter results of the listed Indian dailies, it is apparent that revenues are decreasing at a very fast pace. The decline in ad revenues cannot be blamed entirely on either the failing economy or the reduction in automobile sales.

Although readership is declining, newspapers remain an accessible mode of news distribution. A smartphone is not the answer for a long and detailed story to be read comfortably, especially by an essential and influential part of the demographic. The overall decline in circulation, pagination, and ad revenues leaves the newspaper owners at the crossroads with no solution at hand.

While a majority of the Indian dailies are thinking about and planning to put up paywalls, their reluctance in implementing these betrays their lack of confidence. Print ad revenues are still somewhat more comfortable to generate than paid digital subscriptions. A few dailies think their content is differentiated enough to attract a loyal readership and that readers will shift to free access dailies rather than pay for a single digital subscription. There are exceptions amongst the business dailies, such as Business StandardThe Economic Times, and The Hindu Business Line, but their paywalls cannot yet guarantee their overall economic survival.

As printed editions shrink both in pagination and circulation, one survival trend is to get out of the printing business by outsourcing production to a contract printer. Practiced for several decades by many newspapers for smaller circulation editions, the trend has now shifted to larger circulation editions as well.

Cities such as Bengaluru offer five choices of contract printing plants for daily newspapers. Large contract printers such as Rajhans in Bengaluru, who produce both dailies on standard newsprint and supplements and magazines on heatset presses, have set up newspaper printing plants in several cities for major national dailies. Other major cities such as Mumbai and the Delhi/NCR are as well equipped to produce multiple dailies in a choice of plants and networks.

While a contract printer may sometimes be a little more expensive compared to captive printing, the newspaper saves a lot on the headaches of managing a large workforce with huge salaries, and the organization can operate with a very lean capital structure. The most significant advantage is that the digital switch in the future becomes easier with less legacy baggage associated with the print infrastructure. The organization is free from the operational and human resource costs associated with the government’s wage board, environment, health and safety issues, labor problems, and the maintenance of huge factories with impending obsolete equipment and infrastructure.

Large newspapers like The Times of India, The Hindustan Times, The Indian Express, Business Standard, The Hindu, Thanti, Eenadu, Anand Bazaar Patrika, and many others already use contract printers to print their small and medium remote editions. They concentrate on printing the major editions in the biggest centers in their own plants.

There are a variety of outsourcing models. The most popular is to create a separate legal entity within the organization and shift the production operations to the new entity. Various functions like marketing, circulation, security, finance, HR, and sometimes the editorial are operated through the outsourced company. However, it must be noted that companies that have tried this approach have realized that there are few, if any, legal benefits and have shifted to other models.

Newspapers encourage third parties by giving them long-term contracts to develop the entire infrastructure with plant and machinery, people, and resources. Variations include the provision of capital as an advance, providing machinery, or providing key resources to operate the plant so that the quality and consistency are maintained. Often, only the manpower is outsourced and paid on a cost-plus basis. The outsourcing vendor sends a bill periodically based on the number of editions and the number of copies printed.

At the same time, newspaper groups like the Indian Express, Dainik Bhaskar, Hindustan Times, and several others provide contract printing to other dailies to utilize their spare capacities. These operations generate substantial revenues and rationalize their capital and production costs to a great extent.

As a general trend, newspapers are getting away from their commitment to printing their publications and converting their organizations into news processing and content management setups. With this strategy, papers would be free from the burden of capital-intensive structures and can sever these costs without any significant legal entanglements in the future.

It is important to note that the readers or consumers of news choose the medium, and the media industry is no longer a seller’s market. Readers and consumers now have a wide choice of media channels, and the combination of market forces and innovations will determine the way forward for the newspaper industry and, indeed, its survival.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Indian Printer and Publisher’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

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2 COMMENTS

  1. This article is rightly timed in the present Indian newspaper context. The days are not far off wherein major newspaper houses with large circulation centers will be forced to switch on to this model. As rightly pointed out by Mr.Raja, running a newspaper print plant involves huge costs apart from wages; with strict environment and safetly rules in place it is becoming increasingly difficult to manage.

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