‘There’s no sustainable business model for media worldwide’

DOMINIC YOUNG, 52, has spent most his professional life with publishing companies (News International, News Corp). Two years ago he founded and launched Axate, a casual payment tool that is helping publishers in the UK switch to paid subscriptions. Since the Indian publishing industry is getting serious about subscription revenues, Vanita Kohli-khandekar spoke to Young in London via Zoom. Edited excerpts:

What is Axate all about?

Axate is a way to pay for online media. Once you’ve registered and uploaded some money to your Axate “wallet”, you can use it to pay per article you access. The wallet works across different brands. Then depending on whatever price the publisher has set, from a few pence to pounds, is deducted from your wallet if you click to read a story. Again depending on the brand after a few articles, the rest of the day or week will be free. Your balance will reflect how much is left. Axate follows you (across member publications) so you only ever have to sign up once.

What is the thinking behind it?

There is no sustainable business model for the media worldwide. Covid has proven the vulnerability of ad revenues. The problem with subscription is that it requires readers to make a commitment. And they don’t want to make multiple commitments or to pay for similar articles. Therefore, subscription works for specialists like The New York Times with high-quality, standout content. It is hard to be a reader’s number two title in a subscription-based market and harder to be number three or four. Axate offers middle ground. Most people don’t object to paying but don’t want to do it for things where the price or process is wrong. The plan has to reward you for coming back, encourage you to form a habit. But if the process is too involved or expensive then you lose the user.

So it is a payment system …

It is a casual payment tool; it creates an increasing opportunity for the media as more customers and platforms get in. Its real effects will come into play once there is a large enough network; because you can link to related articles across the media without damaging your own opportunity, making a better experience for readers. There is the question of whether people will pay. Our experience is that they will if the produce justifies the price and commitment being asked.

Are you working with Indian publishers?

We have started talking to publishers in India — to free publishers who want to move to subscription and others who want more from subscription. What happened to publishers in the UK and the

US is happening to Indian publishers, later but faster. Readers move online and ad revenues don’t reliably follow them.

What has the experience been like?

Currently we have 30 British publications (using Axate). It all depends on the newspaper. If it is a free newspaper and you putting a price tag on it for the first time, then the challenge is to explain to readers what you’re doing and why it’s a good deal for them. Core readers are usually supportive and that support grows over time. Also depends on the focus of the newspaper. We work with a lot of local papers and find stories about local crime and local sporting teams get a response (people are willing to pay for these). But you need to do it cautiously. On a site with subscription there is often an uptick in subscription sign-up as well because users not ready to subscribe begin by accessing via Axate on a “pay as you go” basis.

Of the 30 publications you have, how many are free? How does Axate sit with an existing subscription service?

A majority of the publications were previously free. They needed a readerrevenue model but knew subscription wouldn’t work for them. Many are very local or specialised publications. For example, we have Popbitch (a pop music gossip site), Cornwall Reports, a specialist boxing sports site, another one focused on cricket, some local papers and magazines published by larger groups. Four-five publications use it, along with subscription. It allows readers to get to know the publication before they decide if they want to subscribe. If a subscriber cancels, you can do new things to keep them reading. For example, you could give him an Axate wallet with, say, £5 to keep reading. Some sites want to target Axate for readers unlikely to shift to subscription — diaspora readers around the world, for example.

What are the big learnings?

The inertia of the media, even though the current model is not working, is sometimes surprising. Decades of internet challenges have taken their toll on confidence and energy levels. The relevance or the acceptance of the solution is not questioned but they want to see others try it.

Your impressions of where the publishing world is currently.

Newspapers allowed the internet to determine how their relationship with customers would play out online. We don’t need to pay homage to the accepted ideology of the internet. We can define it. The network effects are scary (that is evident from the internet) but the media has a huge network of its own. We should not try to reclaim the ad market or take on Google and Facebook. Instead build a product that delights users. If a network forms — of lots of publishers and consumers using the tool — everyone succeeds by pleasing the consumer.

NEWSPAPERS ALLOWED INTERNET TO DETERMINE THEIR RELATIONSHIP WITH CUSTOMERS. WE DON’T NEED TO PAY HOMAGE TO THE ACCEPTED IDEOLOGY OF THE INTERNET. WE CAN DEFINE IT

India’s date with 5G was proclaimed with fanfare in June 2019 when Communications Minister Ravi Shankar Prasad said that spectrum for trial runs would be allocated to operators in 100 days. Twenty months later, forget spectrum auctions or the actual rollout of commercial services. Operators are still waiting for the go-ahead for 5G trials.

What critics call the government’s casual attitude came in for criticism yesterday when a report by a Parliamentary Panel headed by Congress MP Shashi Tharoor slammed its ‘laidback’ approach and trial delays. The committee pulled up the Department of Communications (DOT) for insufficient preparation for launching 5G. It said India, after missing the 2G, 3G, and 4G buses, looked set to miss the 5G bus too. The reprimand came in response to the DOT saying India would only see some partial 5G deployment by the end of this year or early 2022.

India has lost out on 5G leadership. Over 140 operators in 63 countries already run commercial 5G services, according to the Global mobile Suppliers’ Association. China has rolled out 5G in over 50 cities and has over 200 million customers. This year, it will be adding 600,000 5G towers and launching industrial applications.

Contrast this with June 2019 when only 26 operators in 16 countries offered some kind of 5G service. The delay has prompted Nokia and others to say there may be no need for 5G trials at all as the technology is now proven and live in many countries. “It would have made sense earlier when 5G was being introduced globally but now it’s an established technology. India is using the same bands — 3,500 MHZ — as countries like the US and Europe,” said Amit Marwah, head of marketing and corporate affairs at Nokia India.

The view was partially endorsed by S P Kochhar, director general of the Cellular Operators Association of India, who said while some felt there was now no need for trials, others disagreed. In fact, 5G technology is moving on. Telcos are upgrading from 5G non-standalone (in which you can use the existing 4G core) which can offer higher speeds to power mobile broadband last mile connectivity in homes.

Instead, they are moving to standalone 5G networks that will enable machine-tomachine services, automation services, and remote robotic services which will be a future revenue source for telcos. Several factors have held India back. One is DOT policy somersaults and lack of clarity on whether to or not to ban Chinese gear makers. It was only in December 2019 that the DOT asked telcos to give applications with their OEMS for trials. Despite US pressure, there was no ban on Chinese gear makers and the operators tied up either with Huawei or ZTE in certain cities for trials and made presentations in January 2020. But by June-july, with rising border tensions with China, the operators decided to play safe. They handed in an additional application with a non-chinese operator in cities where they already had an application with the Chinese.

Meanwhile, Reliance Jio, keen to test its indigenous 5G technology, asked for special trial spectrum in Delhi and Mumbai. This was met with silence. Jio had no option but to go to Verizon in the US in October to test its technology on a live network before selling it globally. Then came a surprise for the industry in September when Minister of State for Electronics and Information Technology Sanjay Dhotre said the government had no plan to exclude China from 5G infrastructure deals. At the end of last month, Prasad reiterated that trial spectrum will be given soon and the 4G core should be made in India.

A second factor in the delay has been competing claims for the 3300-3600 spectrum. The Trai had earmarked 300 MHZ of spectrum, which is clearly enough for the three main operators (100 MHZ is the minimum requirement for 5G). But the problem was other claimants such as the departments of space and defence demanding 125 MHZ together. If they do not vacate this band, there will not be enough spectrum to power 5G for the three telcos. A panel headed by cabinet secretary Rajiv Gauba is still struggling to find a solution.

Without the issue being resolved, there can be no 5G auction. And unless auctions get going by July, it is unlikely for the rollout to happen by year-end. Thirdly, the telcos haven’t helped matters either, having been at loggerheads on the right timeframe to take the 5G plunge. For instance, Airtel’s Sunil Mittal said 5G was still two to three years away. Yet just a few days ago, Airtel demonstrated 5G services in a limited area in Hyderabad, saying its network was ready. Jio is ready to roll out by the end of this year if spectrum is given. Vodafone Idea, with all its financial problems, is unlikely to go in for 5G, say analysts.

However, Kochhar has a different take on the whole issue. “Telcos can offer 5G by using existing spectrum also. But the key is, are they enough use cases to launch 5G services as a business as most of it will be for industrial use?” he said. Some think he has a point as even globally, many use cases such as autonomous cars, machineto-machine operations, and remote surgery are still under development. For some analysts, it makes sense for India to delay 5G. For one, 4G services, which many are still investing in, are here to stay for another 3-5 years.

A senior executive with an Indian telco agreed with this view. “5G can surely be used to expand broadband in homes by using wireless in the last mile instead of fibre which takes a lot of time. That has been the first main use case in most countries, so why should India be any different?” he asked.