Newspaper Publishing: Opportunities Ahead

Wednesday, 17 October 2007

The newspaper publishing industry, which accounts for a significant chunk of the global publishing market (est. > $250 billion) is reeling under pressure from various quarters. Every spoke of the traditional model of running a newspaper - news-gathering, writing, editing, composition, advertising, print and delivery is undergoing a phenomenal change - thanks to the convergent impact of technology and globalization. Till early nineties, leading newspapers invested primarily in the print medium. This dependence on print and sluggishness in adapting to the communication revolution has affected the newspaper publishing industry. At the same time new publishing opportunities have emerged in the digital media. Maintaining bottom lines and profitability for the newspaper business has become a focus area for most newspaper publishers. With fall in print advertising; cost cutting and innovation in both content and mode of delivery have become key to sustain within the competitive environment. Offshoring is a natural corollary to the idea of cost cutting, coupled with additional resource needs to cater to the online market. The offshoreable editorial services in newspapers include composition, design, layout, news collation, content sub-editing, copy-editing among other services. However, currently most of the work done from India is in the ad design and composition space. Opportunity The US Newspaper publishing industry has been consolidating and there are about around 1,500 daily newspapers in the US today. In the UK, there are over 1,300 daily and weekly newspapers. Newspaper industry in the US and UK together are estimated to account for over $75 billion in revenues. The US and UK alone provide an offshore opportunity of approximately $3.75 billion in newspaper publishing. While a huge opportunity exists, the key challenge in providing offshored services to real-time media is consistently quick turnaround - day-to-day, hour-to-hour or even minute-to-minute. The employee skill sets in newspaper publishing are transferable to other media segments like magazine publishing and premedia services. However, the onus of creating awareness and comfort with the idea of offshoring lies with the vendor. Interview: Robert Berkeley - CEO, Express KCS Express KCS is one of the leading players in providing outsourced services to the newspaper and magazine publishing segment. Express also supports most media-dependent businesses, including design and ad agencies, printers, and retailers. ValueNotes spoke to Robert Berkeley, CEO - Express KCS about the newspaper publishing business, his company's plans and initial challenges. Excerpts of the interview: VN: What prompted you to get into newspaper production services? What percent of your business comes from newspaper production? Newspapers are a significant part of our business. Today, newspaper business is undergoing transformation in the US. I come from the same business (newspapers) and understand how it works. We offer on-going day-to-day production services. We even work with advertisers, for a campaign. Express KCS designs the artwork. There is an awful lot of information coming in and we process the information for the buyer. VN: What are typically the most offshoreable services in newspaper publishing? Design and layout, high-end imaging, knowledge and creative services. We do offer a wide range of services. What does a newspaper publisher look for when they are cutting costs? Typically, they would want to reduce their ad production and editorial production costs. VN: Is cost the major driver for outsourcing newspaper production services? Well, cost is a key driver, but that alone cannot justify outsourcing if the quality produced is not comparable to existing standards. So apart from cost other drivers are quality and flexibility. Clients now realize that outsourcing is easy and much more efficient for their business. VN: What is your key geographical focus - UK or US? What percent of business comes from these two countries? How is the nature of work outsourced different? Both geographies; the UK and US are our focus areas. The two markets have different profiles. We find more magazine and reprographic work coming from the UK and more retail work coming from the US. Australia is also emerging as an important market. We get some prepress work from Australia. VN: What do you think is an exciting growth area in newspaper production services? The emerging segment is "graphic production" from the India point of view. VN: How do you typically service a newspaper client? Our employees log into the newspapers' ad production servers via VPN to create the ads, which are produced as per the deadline requirements. For one of our earlier clients, we have a dedicated studio with employees who are equipped with the same software as the ones used by the newspaper. After ad creation and checking, the completed ad is put back on the server. All this takes a great deal of preparation and we have very tight processes that guide our engagement and transition. VN: What is the current employee strength/ How much employee growth do you envisage? We are currently 150 employees. About future growth - I cannot share our business plan, being a private company. VN: What are the key challenges faced - on the marketing front and operations front? The major challenge is the credibility of services provided from India. Secondly, it's getting clients in the US and UK to be happy about Indian service providers' offerings. On the operations front, we do not have a significant problem of either employee acquisition or turnover. The above brief write-up and the interview have been extracted from the September bimonthly update of the ValueNotes' report, "Offshoring in the Publishing Vertical - An Update ". The report provides in-depth information and analysis of the Indian vendor space along with vendor profiles of all major and upcoming players in the STM/Academic, Educational and Legal Publishing segments.

 

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