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Thursday, January 11, 2007

The Hindu Economics

There has been some confusion regarding the workings of a newspaper recently, so I thought I'd help clear things up.

However much I hate The Hindu, I know Mr. Ram is not stupid enough to think that he's doing his readers a favour by taking on advertising. Let's look at it this way. The Hindu discovers in a survey that a substantial number of its readers are not interested in the editorial (or otherwise) crap it produces, and even if they're willing to read it, they do so simply because of habit, while the cost of the newspaper is too insignificant to break the inertia. (Cheaper than mint is what Sudhish insinuates.)

Now if Ram were a true commie, he wouldn't mind the Tamil Nadu Government taking over the running of The Hindu so that it may carry on its "noble moral duty as part of the fourth estate".

If he were a protectionist, he would demand that the Tamil Nadu government buys up a definite number of copies of The Hindu everyday and distribute it in households for free. This in order to offset decreasing circulation, falling ad-revenue, and the paper's inability to "subsidise worthy news" for its readers; so that it may yet carry on its "noble moral duty as part of the fourth estate". Something like what is described here.

But Mr. Ram, we know is a proper Capitalist who researches, manufactures, and markets Communism. So he does the sensible thing, and discovers that the only way people will continue to buy his papers is if they actually make a profit (or break even, or at-least end up spending less than 50p net per copy) by getting good money from the recycling chap. So Ram decides to increase the number of pages in his paper. To offset costs, he takes on more advertising. This he can, by showing high-circulation rates (which is achieved as explained previously, and also as Sudhish explains so eloquently, by appealing to the "younger generation"). Every Austrian will appreciate the ingenuity free-markets breed in the businessman. Hell, I read Metro Plus everyday, and I'm glad The Hindu can afford to feature Calvin and Hobbes, rather than some crappy version of Kanni Theevu!

So let's go through this again. Newspapers make almost all their money by selling space to advertisers. So, newspapers are in the "space" business, not in the "news" business. The way they sell space to advertisers is by showing a large circulation. And the way they do that, is by making the paper as bulky as possible, and yet as inexpensive as possible; as interesting journalistically (did I make that word up?) as possible, yet as cheap journalistically as possible. All for the readers.

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9:25 pm

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Comments to The Hindu Economics

Well argued.

posted by Blogger Prasad Venkataramana 

8:00 pm, January 12, 2007
 

I wonder whether you bothered to do your math before writing this post. Subscribing to the Hindu for a month costs about 96 rupees a month. The recycler pays about 40 rupees for 3-4 months worth of paper. That still works out to more than 2.5 rupees a day, 5 times more than what you said was the maximum anybody would pay for the crap that Hindu carries. This certainly implies that people do not buy the Hindu because it works out cheap. They apparently like that crap.

Yes, newspapers do sell space for revenue. But the only way of getting people to read the advertisements is to make the newspaper worth reading.

posted by Anonymous Anonymous 

11:23 pm, January 12, 2007
 

This is not surprising. Ram wont take a position against Hindu's advertisers or parties which share his ideology. Ram can take on some one like Amma but not his advertises. If any article in Hindu offends advertisers, then Hindu Editor apologies personally to the advertisers. Also Hindu refuses to carry any articles against the parties it support. For example recently it chickened out by refusing to publish article about Kalanidhi Maran.

posted by Anonymous Saravanan 

10:01 am, January 13, 2007
 

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