Mediasaurus meets media startups: who survives?

THE REALITY OF SRI LANKA’S MEDIA MARKET IS THAT IT IS OVERCROWDED AND NOW RIPE FOR DISRUPTION

Does Sri Lanka’s mainstream or legacy media sector defy all known rules of a market economy? If not, how can we explain many of our media companies running at a loss, year after year, and still staying on in business?

I posed these questions while speaking at a recent symposium on digital disruption at the University of Ruhuna. In the audience were a few dozen students and faculty from the university, as well as members of the Southern Province business community – all keen to find out how the digital economy brings up new opportunities for entrepreneurs.

Asked to explore ways in which digital technologies are disrupting the media industry, I noted how a good number of legacy media companies – or “old guard” of publishing and broadcasting – are struggling to evolve, many failing to go digital in ways that serve their audiences and sustain revenue streams.

Despite being in the red for years, however, they haven’t gone bankrupt.

How come? A few legacy media companies are internally cross-subsidised by other, profitable ventures of the same parent company. But not every money-losing media house has that helpline. In some print and broadcast companies, even managers don’t know who is really paying their bills and salaries.

ADVERTISING PIE

Of course, some investors of newspapers, radio or television do so not to make much (or any) money but for political or ideological influence. Possibilities of money laundering through media companies have also been speculated but never proven.

According to the Media Ownership Monitor website (MOM: http://sri-lanka.mom-rsf. org) maintained by the think tank Verite Research, almost all of Sri Lanka’s private media companies are family-owned, and the country’s media market is concentrated in a few hands.

MOM analysed 46 media outlets in print, radio, TV and online with the most significant audience shares (as determined by market research surveys). They found that 23 individuals own 44 of the most popular media outlets in the country. The state is a media owner across all platforms, as well as referee and rule-maker for the whole sector (which raises conflicts of interest).

The other reality of Sri Lanka’s media market is that it is overcrowded: too many outlets are competing for pieces of the finite advertising pie. Advertising and sponsorships drive most of the industry, with subscriptions bringing in only meagre revenues and digital paywalls practically non-existent.

What could happen when more digital media startups emerge, slowly but surely? They will likely eat into the advertising share of legacy media companies, pushing the latter kind further into the red. Some legacy players — on life support for too long — could finally collapse.

Data collated by Nielsen Media Watch show that Sri Lanka’s total advertising spend (ad-spend) in legacy media during 2018 was around Rs120.5 billion. Of this, almost Rs91 billion or 75% was spent on television advertising: most of it went to the country’s 18 free-to-air, terrestrial channels.

Another Rs22.5 billion (around 18%) was spent on radio where over 50 FM channels competed for it. Newspapers received only Rs7 billion or 6% of the total. [Caution: These figures are based on ‘rack rates’: in reality, media companies offer significant discounts to high volume advertisers.]

The same source analysing the same rack rates said Sri Lanka’s total ad-spend in 2014 was Rs77 billion (TV accounting for 71%, radio 21% and print 7%). This means ad-spend has continued to grow during the past five years due to factors like inflation, aggressive marketing and advertising practices, and the proliferation of media outlets. Advertising in print (newspapers and magazines) has stagnated over the years and
is in a slow decline in percentage terms. This suggests focus is shifting from print to digital media, says one industry leader in media buying.

However, there is no reliable figure on total annual ad-spend in digital media. Not surprising, given that digital outlets are proliferating (with hundreds of news and gossip websites, not to mention websites of legacy media outlets).

Global social media platforms like Facebook are also stepping up competition for advertising rupees/dollars in our market, leveraging their fine-tuned ability for micro-targeting. This is a strategy that taps web users’ data —such as what they like, who they are connected to, what their demographics are, what they have recently purchased — for displaying advertisements customized for each user.

…TOO MANY OUTLETS ARE COMPETING FOR PIECES OF THE FINITE ADVERTISING PIE

AUDIENCES MATURING

Meanwhile, Lankan audiences are maturing – they have become more discerning and demanding. The trend is most pronounced in the youthful demographic between 15 and 29 years.

Market research and advertising industry sources confirm that our younger audiences engage content on multi-screens, i.e. smartphones or tablets besides TV screens. As elsewhere in the world, attention spans keep shrinking, which in turn challenges content producers to pack more into each second and to deliver shorter, media-rich content. Television audiences have also been fragmented between broadcast and online. More and more entertainment and news content originating from TV channels are being consumed not on air, but online. With several local TV channels now uploading all or most of their programming to YouTube within hours of the first broadcast, some shows gain more traction on the video-sharing web platform. This trend was seen with the popular teledrama series Koombiyo, which was broadcast on ITN Sri Lanka from August 2017 to March 2018. It gathered more momentum on YouTube than it did in television audience ratings.

With the same content being consumed on different media platforms, advertisers have a greater choice – but also face more difficulty in tracking their reach. Multinational companies operating in Sri Lanka realize changes in audience behavior and are adapting fast, but many local advertisers are keeping up, says an industry source. The latter are bewildered and uncertain about how to react to digital trends. Like our legacy media, many advertisers are also trapped in their analogue era mindset.

MEDIA STARTUPS

How can media startups succeed in this scenario where consumers expect fast-paced, short and punchy content across multiple platforms, delivered for cheap or free?

This was another question I raised at the Ruhuna event, one for which I don’t have a full answer.

One word of advice I offered: avoid how our legacy media outlets have clumsily extended themselves online. With very few exceptions, their attempts remain mediocre, leaving the field wide open for digital-first and digital-only content publishers to innovate.App developers have shown the way. While certain apps have been able to attract a large-enough customer base who make micropayments monthly, legacy media websites have failed in the subscription model. Revenues have to come mostly or entirely from monetizing the eyeballs – not easy, given the conservative advertisers.

Media startups are thus challenged to augment advertising revenue by exploring non-traditional funding, for example, through crowdfunding, event organizing and grants from charitable sources.

Sri Lanka does not have many media startups precisely because the market is limited and crowded. One exceptional success is Roar Media (https://roar.media), which recently turned five. Roar was started in early 2014 by Mustafa Kassim, then 25, as a website covering current affairs, business, lifestyle and culture. Originally in English, its Sinhala and Tamil websites – offering unique content, not translations – soon built up a large and loyal audience. In August 2016, Roar became the first Lankan media startup to expand overseas when it started a Bangla language edition in Bangladesh.

Roar’s Hindi edition was not as successful as its Bangla one, yet undaunted, the company is reportedly looking at Southeast Asian media markets. Its content mix now includes news analyses and multimedia items. Roar gives all this away for free, making money instead from a chosen few advertisers, sponsors and investors.

Each media startup has to find its own niche and recipe for success. As legacy media dinosaurs gasp for survival, let dozens of digital startups bloom!