On Friday (August 1), I was part of a panel at an event organized by Afaqs - “The Future of News.” My panel’s topic was “Who will subsidise Digital Content?” Here is a gist of what was spoken:
It’s not about subsidising but about monetisation: Thinking subsidies necessarily implies that the primary source of revenue is somewhere else. How can we look at the digital world independently and see how content can be monetised? On the Internet, the only revenue stream is advertising. My belief is that the mobile is where the big action and opportunities lie. On mobile, one can create multiple monetisation streams - from not just advertisers, but also subscribers, merchants and enterprises. For this, creating a direct-to-consumer relationship is essential. In other words, content owners need to think of themselves as “VAS (Value-Added Services) Operators” [complementing the Voice Operators] in the mobile space.
Digital will be about M3 and N3: Content in the digital space needs to focus on Mobile, Mass and My (M3) and Now, New and Near (N3). The Mobile will be where we will get our news first - before any other medium. The sheer numbers make it the biggest Mass medium in India. We will also want “My” news and other content to be personalised - things we are interested in. We want to know about things Now - as they happen. We want to also be kept updated on the New stuff - the Naya Naya. We also want to know what’s happening Near us — in our neighbourhood. Putting all this together will create the foundation for the opportunities in the Digital space. The mobile can thus provide not just instant updates but also offer a window into reach media services (images, audio and video).
First, Create a Right of Way: The first step towards moentisation involves creating services that touch people multiple times a day. On the Internet, Search has done this very effectively and thus created the foundation for companies like Google to take that attention and convert it into cash. On the mobile, I think it will be about SMS and Subscriptions. Use free, permission-based push services on SMS to create the right of way to consumers thus building a subscriber base and creating ‘Media on Mobile’, and then leverage that attention to create multiple monetisation streams.
Become a VAS Operator: An operator has a direct-to-consumer relationship. In the mobile world, Voice operators have done phenomenally well in using voice as the anchor service to create additional revenue streams. But their focus is still not on VAS. What India needs (and can lead the world in) are VAS Operators. Besides the direct-to-consumer relationship [starting perhaps with SMS subscription services], VAS Operators have three additional characteristics: multiple services, multiple revenue streams, and alternate payment channels. The VAS Operator opportunity in India in the next three years is to reach 50 million subscribers, generating a monthly ARPU (average revenue per user) of Rs 50-100.
Mobile can be an excellent Youth Marketing Medium: Mobiles are increasingly the centre of our lives for communications and interactions for most of us. For Young India, it is even more so. In a world of fragmenting mainstream media attention, the mobile can become the magnet for reaching out to youth - because it is personal, always available and always on. Digital content companies need to think of strategies to use all the mobile bearer channels (SMS, Voice and WAP) to reach out to the Youth.
MyToday provides a good case study: My company, Netcore Solutions, launched MyToday’s free SMS subscription services in October 2006. Since then, 3.6 million people have subscribed to an average of 3 channels each. MyToday sends out about 12 million SMS daily - about 4% of India’s SMS traffic. While SMS advertising is the first and most significant revenue stream, the Right of Way to the subscriber base is enabling us to create innovative new revenue streams in the form of Pull services (request-reply on SMS), Email2SMS, WAP traffic to our portal (mytoday.mobi), Lead Generation and as we set up alternate payment channels, Paid Channels and Transactions. News is one of our most popular services - reaching nearly 1.5 million, twice daily.
Summary: The Digital world of the Internet and Mobile offer rich opportunities because of their inherently interactive nature. What news media and digital content companies need to do is to start thinking of them as platforms in their own right, rather than simply as extensions of print or TV (which starts implying subsidisation). By building a right of way to subscribers, they can create many more monetisation streams than just advertising. The game has just begun!
Bio: Rajesh Jain is an entrepreneur from Mumbai, India. He is the Founder and Managing 
Director of Netcore Solutions Pvt Ltd (messaging and security solutions, and mobile data services), and has made a number of investments in various companies as part of his own fund (Emergic Venture Capital). He had earlier set up IndiaWorld, India’s first Internet portal which was launched in 1995, and was acquired by Sify in November 1999 for USD 115 million (then, Rs 499 crore). He blogs at Emergic.org
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