Al Ries

Lessons from Nokia: Companies, unlike cockroaches, aren't great survivors

nokia-logoVivek Kaul

Cockroaches are great survivors. They can even survive a nuclear attack. As Dylan Grice, formerly with Soceite Generale and now the editor of the Edelweiss Journal wrote in a report titled Cockroaches for the long run! in November 2012 “Cockroaches may not be able to build nuclear bombs, but they can withstand the nuclear war. They survive.”
Grice also points out that the oldest cockroach fossil is nearly 350 million years old. “According to the record of the rocks, cockroaches first appeared just after the second of the earth’s five mass extinctions (defined as the loss of 75% of all species). In other words, that means they survived, the third, the fourth and fifth mass extinctions which followed,” writes Grice.
And there is no rocket science behind the ability of cockroaches to survive. They follow a very simple algorithm. As Grice writes “According to Richard Bookstaber, that algorithm is “singularly simple and seemingly suboptimal: it moves in the opposite direction of gusts of wind that must signal an approaching predator.” And that’s it.”
Such a simple straight forward strategy, along with their ability to go without air for 45 minutes, survive submerged underwater for half an hour, withstand 15 times more radiation than humans and eat almost anything, including the glue on the back of stamps, helps cockroaches survive.
Companies do not come with the same kind of flexibility. Neither are they good at avoiding trouble. And given that their turnover rate is pretty high. The average life span of a company listed on the S&P 500 index of leading American companies is around 15 years. This has come down dramatically from around 67 years in the 1920s.
Companies have a very high mortality rate. As an article in the Bloomberg Businessweek points out “The average life expectancy of a multinational corporation-Fortune 500 or its equivalent-is between 40 and 50 years. This figure is based on most surveys of corporate births and deaths.”
Companies are either acquired, merged, broken to pieces or simply shut down. Nokia, which till a few years back was the world’s leading mobile phone manufacturer, is now going through a phase of trying to stay relevant. It was announced yesterday that the mobile phone division of the Finnish company would be sold to Microsoft for $7.2 billion.
Nokia produced the first mobile phone in 1987, more than a quarter century back. It was the world’s largest vendor of mobile phones, until Samsung overtook it in 2012. Even now, Nokia makes nearly 15% of the world’s mobile phones. But it only has 3% share in the lucrative smart phone market, where the most of the mobile phone users seem to be moving towards.
So what went wrong with Nokia? It failed to see the rise of a new category of mobile phones i.e. the smart phone market. As marketing consultants Al and Laura Ries,write in War In the Boardroom, “The biggest mistake of logical management types is their failure to see the rise of a new category. They seem to believe that categories are firmly fixed and a new one seldom arises.”
Companies tend to remain obsessed in selling a product they are good at selling and thus fail to see the rise of a totally new category. Nokia fell victim to this as well.
The history of business is littered with many such examples. Sony invented the walkman but allowed Apple and others to walkway with the MP3 player market. RCA ,which was big radio manufacturer, had earlier allowed Sony to walkway with the pocket radio market. Southwest Airlines created an entirely new low cost airline market which gradually spread to all other parts of the world. Incumbents like Panam, Delta, Singapore Airlines and British Airways did not spot this opportunity. The 24 hour news market was spotted by CNN and not BBC as you would have expected to given the dominance they have had in the global news market.
So the question is why do incumbents which are doing particularly well fail to see the rise of a new category? The answer for this lies in what happened with Kodak, a company which was a global leader in film photography. As Mark Johnson writes in Seizing the White Space – Business Model Innovation for Growth and Renewal “In 1975, Kodak engineer, Steve Sasson invented the first camera, which captured low-resolution black-and-white images and transferred them to a TV. Perhaps fatally, he dubbed it “filmless photography” when he demonstrated the device for various leaders at the company.”
Sasson was told “that’s cute – but don’t tell anyone about it.” The reason for this reluctance was very simple. What Sasson had invented went against the existing business model of the company. Kodak at that point of time was the world’s largest producer of photo film. And any camera that did not use photo-film was obviously going to be detrimental to the interests of the company.
So Kodak ignored the segment. By the time it realised the importance of the segment other companies like Canon had already jumped in and become big players. Also by then brand Canon had come to be associated very strongly with the digital camera whereas Kodak continued to be associated with the old photo film.
The same thing happened to Sony as
well. The MP3 player was ultimately an extension of the Walkman and the Cdman market which the company had successfully captured. So what stopped them from capturing the MP3 player market as well? Over the years, other than being a full fledged electronics company, Sony had also morphed into a music company which had the rights to the songs of some of the biggest rock stars and pop stars. Hence, Sony supporting MP3 technology would mean that one of the biggest music companies in the world was supporting the free copying and distribution of music because that was what MP3 was all about.
And that of course wouldn’t work. This obsession with the current way of doing business stops companies from seeing the rise of a totally new category of doing business. Closer to home, Bharti Beetel is an excellent example. The company pioneered the sale of landline phones which had buttons. But it was so busy selling these phones that it failed to see the rise of the mobile phone market. And by the time the market took off brands like Nokia were firmly entrenched. This happened at the same time as Beetel’s sister concern, Bharti Airtel, became the largest mobile phone company in India.
Imagine the possibilities here. If Bharti Airtel during its heydays had sold a Bharti Beetel mobile phone along with every connection, a lot of money could have been made.
Another excellent example of this is Xerox. “Just think of Xerox’s Palo Alto Research Center, which famously owned the technologies that helped catapult Apple (the graphical user interface, the mouse), Adobe (post script graphical technology) and 3Com (Ethernet technology) to success,” writes Johnson. But the company had an excellent product in the photo copy machine which was selling like hot cakes, and there was no need for it to concentrate on other products which would be viable some day in the future.
Nokia became a victim of this phenomenon as well where it completely ignored the rise of a new category. The company was busy selling its mobile phones and failed to see the rise of the smart phone market. Even though smart phones have been around for a while now its only in the last couple of years that they have really taken off. Hence, as long as the basic phones of Nokia were selling well, it had no real interest in thinking about the smart phone market.
By the time it woke up to the smart phone game, the likes of Galaxy (from Samsung) and iPhone (from Apple) had already captured the smart phone market. The company has been trying to play catchup in the smart phone market through its Lumia brand but has very little market share. As a Reuters report points out “Although Nokia also said in July it had shipped 7.4 million Lumia smart phones in the quarter, up 32 percent from Q1, it was fewer than the 8.1 million units analysts had anticipated. Nokia now boasts only around 15 percent of the handset market share, with an even smaller 3 percent share in smart phones.”
Blackberry is another such company. It was busy selling phones which had an excellent email application. Meanwhile, it failed to see the rise of the smart phone market like Nokia. It is now trying catchup but other companies have already captured the market. In the days to come, the chances of Blackberry being acquired by another company, like Nokia has been, are very high.
What the Nokia story tells us is that companies unlike cockroaches are not great survivors. As the Bloomberg Businessweek article quoted earlier points out “Even the big, solid companies, the pillars of the society we live in, seem to hold out for not much longer than an aver-age of 40 years. And that 40-year figure, short though it seems, represents the life expectancy of companies of a considerable size…A recent study by Ellen de Rooij of the Stratix Group in Amsterdam indicates that the average life expectancy of all firms, regardless of size, measured in Japan and much of Europe, is only 12.5 years.”
Nokia started operating in 1871 and was named after the Nokianvirta river. It spent more than a 100 years manufacturing everything from boots to cables to tyres. In 1987, the company made the first mobile phone. In 2013, the mobile phone division was sold to Microsoft. That’s a period of 26 years. Almost double the life expectancy of 12.5 years which prevails for companies in Europe. As per that parameter, Nokia survived long enough.

The article originally appeared on www.firstpost.com on September 4, 2013 

 (Vivek Kaul is a writer. He tweets @kaul_vivek) 

How internet makes only a 'few' wealthy and destroys jobs

internet
Vivek Kaul
In 1996, Kodak was ranked as the fourth most valuable brand in the world by Interbrand. In January 2012, it filed for Chapter 11 bankruptcy. A major reason for its fall was the inability of the company to go ‘digital’ fast enough.
Ironically it was an engineer at Kodak who invented digital photography. As Mark Johnson writes in Seizing the White Space – Business Model Innovation for Growth and Renewal“In 1975, Kodak engineer, Steve Sasson invented the first camera, which captured low-resolution black-and-white images and transferred them to a TV. Perhaps fatally, he dubbed it “filmless photography” when he demonstrated the device for various leaders at the company.”
Sasson’s new product was shown to the top bosses at Kodak. He was told “that’s cute – but don’t tell anyone about it.” The reason for the reluctance of the top brass to what would become digital photography was very simple. Kodak at that point of time was the world’s largest producer of photo film. And any camera that did not use photo-film was obviously going to be detrimental to the interests of the company.
So ‘Kodak’ missed the digital revolution despite having invented the digital camera. As marketing guru Al Ries wrote in January 2012 column, just after Kodak went bankrupt “In 1986, Kodak announced the development of the world’s first megapixel digital sensor small enough for a handheld camera, one that had 1.4 million pixels. In 1994, Kodak introduced the first digital camera under $1,000. Between 1985 and 1994, Kodak invested some $5 billion into digital research & development. As a result of its massive investments, Kodak holds more than a thousand patents related to digital photography. Kodak recently received, in patent-suit settlements, $550 million from Samsung and more than $400 million from LG Electronics.”
Despite being a pioneer in digital photography, the focus at Kodak was always on trying to sell ‘more’ photo-films. And that finally led to bankruptcy in the end.
The new face of digital photography is Instagram, a company which was bought by Facebook in 2012 for a billion dollars. Computer scientist and philosopher Jaron Lanier makes a very interesting point comparing Kodak and Instagram in his new book Who Owns the Future? 
As he writes “Kodak employed more than 140,000 people and was worth $28 billion. They even invented the digital camera. But today Kodak is bankrupt. And the new face of digital photography has become Instagram. When it was sold to Facebook for a billion dollars in 2012, Instagram employed only thirteen people. Where did all those jobs disappear to? And what happened to all the wealth that those middle-class jobs created?”
So what makes Instagram so valuable, asks Lanier? “Instagram isn’t worth a billion dollars just because those thirteen employees are extraordinary. Instead, its value comes from the millions of users who contribute to their network without being paid for it. Networks need a great number of people to participate in them to generate significant value. But when they do, only a small number of people get paid. That has the net effect of centralizing wealth and limiting overall economic growth.”
And this is true not only for Instagram. Take the case of Google. It might be a great search engine but ultimately it’s the people (and not its employees) who are generating the content that Google helps throw up. What would Facebook be without the ‘time’ that people choose to spend on it? The same stands true for Twitter as well.
It is people like you and me who make these networks so valuable. As Lanier writes “An amazing number of people offer an amazing amount of value over networks. But the lion’s share of wealth now flows to those who aggregate and route those offerings, rather those who provide the ‘raw materials’…We want free online experiences so badly that we are happy to not be paid for information that comes from us now or never. That sensibility also implies that the more dominant information becomes in our economy, the less most of us will be worth.”
This concentration of wealth is one of the negative effects of the digital revolution. “The clamour for online attention only turns into money for a token minority of people, but there is another new, tiny class of people who always benefit. Those who keep the new ledgers, the giant computing devices that model you, spy on you, and predict your actions, turn your life activities into the greatest fortunes in history. Those are concrete fortunes made of money,” writes Lanier.
All that I have discussed till now stands true for music industry as well. It used to be a big industry until things started to go digital. “At one time, a factory stamped out musical discs and trucks delivered them to retail stores where salespeople sold them…There used to be a substantial middle class population supported by the recording industry, but no more. The principal beneficiaries of the digital music business are the operators of network services that mostly give away music in exchange for gathering data to improve those dossiers and software models of each person,” writes Lanier.
If all this wasn’t enough, the Moore’s law is still at work leading to negative consequences. As Lanier points out “The law states that chips get better at an accelerating rate…The technology seems to always get twice as good every two years or so…This means that after forty years of improvements, microprocessors have become millions of times better…As information technology becomes millions of times more powerful, any particular use of it becomes correspondingly cheaper…Moore’s law means that more things can be done practically for free, if only if weren’t for those people who want to be paid. People are the flies in the Moore’s law ointment. When machines get incredibly cheap to run, people seem correspondingly expensive.”
Lanier gives the example of printing presses and newspapers. “It used to be that printing presses were expensive, so paying newspaper reporters seemed like a natural expense to fill the pages. When the news became free, that anyone would want to be paid at all started to seem unreasonable. Moore’s Law can make salaries – and social safety nets – seem like unjustifiable luxuries,” writes Lanier.
The internet essentially destroys jobs, even though it ‘seems’ to make things more efficient.

The article originally appeared on www.firstpost.com on August 10,2013
(Vivek Kaul is a writer. He tweets @kaul_vivek) 
 

Extending Your Brand May Dilute its Identity

laura visual hammer
Vivek Kaul
 
Vijay Mallya, the liquor king, who wanted to run an airline, recently told the staff at Kingfisher Airlines that he had no money to clear their salary dues. Mallya, like many businessmen before him, also became a victim of the line extension trap. “The line-extension trap is using the same brand name on two different categories of products. Kingfisher beer and Kingfisher Airlines. We have studied hundreds of categories and thousands of companies and we find that line extension generally doesn’t work, although there are some exceptions,” says marketing guru Laura Ries, who has most recently authored Visual Hammer.
Along with her father, the legendary marketing guru Al Ries, she has also authored, several other bestsellers like The Origin of Brands, The Fall of Advertising & the Rise of PR and the War in the Boardroom.
But does such a rigid line against line extensions make sense in this day and age, when it is very expensive to build a brand. “We have never said that a company should not line extend a brand. What we have said is that line extension “weakens” a brand,” says Ries. And there are always exceptions to the rule she concedes. “Sometimes, a brand is so strong it can easily withstand some weakening. Early on, for example, the Microsoft brand was exceptionally strong so the company could use it on other software products and services.”
There is also the recent case of Tide, the leading detergent in America, opening a line of dry-cleaning establishments using the Tide brand name. And it might just work, feels Ries. As she explains “Because there are no strong brands or national chains in the category, this can possibly work, although we believe Procter & Gamble, the owners of Tide, would be better off with a new brand name.”
These exceptions notwithstanding there are way too many examples of companies which haven’t fallen for the line extension mistake and are doing very well in the process. Toyota is one such example. And one of the reasons for its success is the launch of three new brands in addition to Toyota. Scion, a brand for younger drivers. Prius, a hybrid brand. And Lexus, a luxury brand.
“Initially, Prius was a sub-brand of Toyota, but the company recently decided to create a totally separate brand. Prius has some 50 percent of the hybrid market in America and is a phenomenal success. The separate brand name will assure its success for decades to come,” says Ries.
What about Apple we ask her? How does she view the brand, everyone loves to love? Hasn’t it also made the line extension mistake by launching the Apple iPod, the Apple iPhone and the Apple iPad? “Apple is not a product brand. Apple is a company brand. Nobody says, I bought an Apple unless they have just visited a grocery store. They say I bought an iPod or an iPhone or an iPad, three brands that made Apple one of the most-profitable companies in the world,” explains Ries.
So in that sense Apple did not really make a line extension mistake. For every new product it created a new brand. And the success of this strategy reflects in the numbers. Apple’s competitors, Hewlett-Packard and Dell, line extended their brands into many of the same products. Both are in trouble. Last year, Apple made $41.7 billion in net profits. Dell made $2.4 billion. And Hewlett-Packard lost $12.7 billion.
But what about Samsung, which has been giving Apple a really tough time in almost all product categories that they compete in. “Currently, Samsung is an exception to the principle that line extension can weaken a brand. But that’s only in the short term. We predict that sometime in the future Samsung will suffer for its marketing mistake,” states Ries. “What keeps Samsung profitable is the principle that in every category there’s always room for a No.2 brand. Coca-Cola and Pepsi-Cola, for example,” she adds.
And Samsung is clearly not as profitable as Apple. Last year, Apple made almost twice as much in net profits as Samsung even though Apple’s revenues were smaller. Apple’s net profit margin was 26.7 percent compared to Samsung’s 11.5 percent.
The other two big companies in the mobile phone market have been Nokia and Blackberry. Nokia recently launched a smartphone under the new ‘Lumia’ brand name. On the face of it this is exactly what Ries would have recommended. The company launched a Lumia smartphone, and did not fall for the line extension trap. Given this, why is Nokia losing out in the smartphone business, we ask Ries.
“What’s a brand name? What’s a model name? What’s a sub-brand name?” she asks. “Many companies like Nokia think they can decide what is a brand name and what is a model or a sub-brand name. So Nokia considers “Lumia” to be its smartphone brand name. Not so. It’s consumers that make that decision. Consumers use iPhone as a brand name and not Apple. Consumers also use Nokia as the brand name and not Lumia. To consumers, Lumia is a model or sub-brand name.”
And there several reasons behind consumers not considering Lumia to be a brandname. “Look at a Lumia smartphone and you’ll see the word “Nokia” in big type. Look at an iPhone and you won’t see the word “Apple.” You’ll see the word “iPhone” in big type and just an Apple trademark,” says Ries.
And on top of that Lumia doesn’t even have a website of its own (www.lumia.com is a website of a British IT company). “Lumia” doesn’t sound like a brand name and it doesn’t even have a website. That makes it very difficult to create the impression that Lumia is a brand. This isn’t the first line-extension mistake Nokia has made. Nokia was its brand name for a line of inexpensive cellphones. And today, Nokia is also using the Nokia name for its expensive smartphone products,” says Ries.
The Blackberry story goes along similar line. On the face of it, the company doesn’t seem to have made a line extension mistake. But Ries clearly does not buy that. “What’s a BlackBerry? Is it a smartphone with a physical keyboard? Or a smartphone with a touchscreen? It’s both, of course, and that’s exactly why BlackBerry has fallen into the line extension trap. To compete with the touchscreen iPhone, the BlackBerry company (formerly called Research In Motion) needed to introduce a new brand of touchscreen smartphone. It’s very difficult to build a brand that it has lost its identity.”
And given the lost focus its very difficult for these companies to go back to the days when they were immensely successful. As Ries puts it “It depends upon whether either company (i.e. Nokia and Blackberry) can do two things: (1) Develop an innovative new idea for smartphones, and (2) Introduce that innovative new idea with a new brand name. It’s hard for us to tell whether it’s possible to come up with a new idea for a smartphone. It could be too late.”
And this could work in favour of Samsung, feels Ries. “Every category ultimately has a leader brand and a strong No.2 brand. Since all three smartphone brands (Samsung, Nokia and BlackBerry) are line extensions, one line extension has to win the battle to become the No.2 brand to the iPhone. Samsung made massive investments in product design and development plus massive marketing investments,” says Ries.
So it’s logical that Samsung would become a strong No.2 brand. Furthermore, they priced their smartphones as less expensive than iPhones, another strategy that increased its market share although not its profitability. This has worked particularly well in Asia, feels Ries.
This success of Apple over Samsung comes with a caveat. As Ries explains it “Long-term, every category has two major brands. But they are normally quite different. Long-term, we see Apple as the leader in the high-end smartphone category and Samsung the leader in the “basic” smartphone category. Apple would make a mistake in introducing less-expensive smartphones. That would undermine its position at the high end.” And that is mistake that Apple needs to avoid.
Another massively successful company that has fallen prey to the line extension trap has been Google. The company has introduced a number of products under the Google brand name, but none of them have been massive money spinners like the Google search engine.
As Ries puts it “Currently, I can’t think of any Google product that is very successful. Google +, the company’s social media competitor, is nowhere near as big or as profitable as Facebook. Google’s most successful introduction has been Android, which now is being use by 75 percent of all smartphones.” Google bought the Android company, one of the reasons it probably didn’t use the Google name on the software.
What all the examples given above tell us is that line extensions have had a sketchy track record. So why do companies fall for it, over and over again? Ries has an answer for it. “As one CEO told us, We have a great company and great products. Why can’t we use our great company name on our great products?,” she points out. “Most chief executives believe that the only thing that really matters is the quality of their products and services their prices. Deep down inside, they don’t believe that the name or the marketing makes much of a difference.”
Then there is the pressure to keep increasing earnings. Chief executives are under pressure to increase sales and profits and they see product expansion (including line extensions) as the best way to achieve these goals. “The more important strategic decision is the question of “focus.” It’s our opinion that the best way into the mind is with a narrow focus. That’s not, however, the majority opinion, at least among top management people. Most companies are moving in exactly the opposite direction. They are line extending their brands,” says Ries.
Given this, CEOs don’t believe a new brand is worth the cost and effort required. It’s true, too, that many management people equate new brands with expensive advertising programs, feels Ries.
But that again is a perception that they have. Most big brands in the last ten years were not built because they advertised left, right and centre. Ries questions the assertion that it’s expensive to create a new brand. “It’s only expensive if a company uses advertising to launch the new brand. In our book, The Fall of Advertising & the Rise of PR, we recommend launching new brands with no advertising at all. Just PR or public relations. Advertising doesn’t have the credibility you need to launch a new brand.”
This is because when a consumer sees an advertisement for a new brand, his or her first reaction is, this can’t be very important because I’ve never heard of the brand. And that’s why some of the biggest brands in recent years like Amazon, Twitter and Google, used almost no advertising. They did, however, benefit from extensive media coverage, feels Ries.
In order to succeed in the years to come, companies will have to create multiple brands. “The future belongs to multiple-brand companies. But with one reservation. A company needs to be successful with its first brand before launching a second brand. You can’t build a successful company with two losing brands,” concludes Ries.
 
The article originally appeared in Forbes India edition dated July 12, 2013
 
(Vivek Kaul is a writer. He tweets @kaul_vivek)
 
 
 
 
 

Arindam Chaudhuri and the impending death of newspapers

arindam
Vivek Kaul
Talking about contradictions, here is an interesting one.
The Times of India edition dated March 18,2013, had a huge advertisement featuring Arindam Chaudhuri, the pony tailed bossman at IIPM(Indian Institute of Planning and Management) and his father Malay Chaudhuri. The advertisement congratulated Chaudhuri senior for having turned seventy five and had the vision to launch IIPM forty years back.
This advertisement came four days after Arindam Chaudhuri wrote a column titled Are you still a moron advertising in newspapers? The column ended with the rather prophetic line “However, yes, your business may not be able to cater to the next generation unless you realise that you are a moron to be still advertising in newspapers!”
Why Chaudhuri chose to contradict himself is something only he can explain. But his column does offer reasons for why IIPM seems to gradually moving its advertising budget away from newspapers, the front page advertisement in The Times of India notwithstanding.
As Chaudhuri writes “It all started changing around 2009 to 2011! As everyone knows, we were one of the country’s biggest ad-spenders till 2012! But interestingly, our returns from newspaper advertising started dropping sharply from 2009-2010. The first year, the admission applications we received from students due to our newspaper advertisements dropped to 40% of the levels we had in 2008-09. The next year, the same was 25% compared to 2008-09 levels. And finally in 2011-12, our applications from advertisements were, hold your breath, just 5% compared to 2008-2009! So basically, in three years, our returns from newspaper advertising came down by a mind numbing 95%!”
While this might also be a result of the falling reputation of IIPM, given the negative coverage its constantly got in the media over the last few years, but Chaudhuri does make an important point here.
IIPM’s target audience would be people in their early 20s, living in cities and who come from reasonably rich families (given the high fees that IIPM charges). There is enough anecdotal evidence to suggest that people belonging to this demographic group consume news largely online by logging onto the internet through their computers and now their mobile phones. Or as Chaudhuri aptly puts it “if you wanted to target the youth, or actually anyone born after 1980 for certain! None of them is reading newspapers anymore! So how will this segment see your ads in the first place and how will they pick up your application form? Yes, that’s the hard fact!”
Various readership surveys have shown over the years that print readership in India has remained stagnant. In comparison people logging onto the internet is growing at a very fast pace, albeit on a lower base. It would be safe to say that a large number of advertisers are interested in this lower base which typically comprises of youth coming from reasonably well to do families living in cities. In short these are the people who have the money to spend (either their own or that belonging to their parents).
So the moral of the story is that Arindam Chaudhuri is making an important point though he has chosen to contradict it himself.
What Chaudhuri’s column does not answer is why is newspaper readership stagnating? When it comes to the city bred youth at some level its a matter of what we can call the Levis syndrome. The jeans brand Levis over the years came to be associated as something that their parents wore, in the mind of the American youth. The same stands true for newspapers as well. Reading newspapers is not cool at least among the youth.
The newspapers in India have tried to tackle this through what they feel is younger and funkier design. The looks are getting trendier and there is more sex and entertainment in the newspaper. But this hasn’t worked beyond a point. As Chaudhuri puts it “naked bodies and titillation are far more easily available and in greater variety on the internet.” And all said and done a newspaper has its limits on this front. The internet doesn’t.
An extension of filling the newspaper with sex and entertainment has been the conclusion that most readers are not looking for serious content in a newspaper. This is what we can call The Times of India syndrome. Since, this kind of positioning has worked for India’s most profitable newspaper, newspapers (across different languages) have been looking to do the same thing. But what works for The Times of India doesn’t necessarily work for others as well.
As marketing guru Al Ries told me in an interview “Everyone assumes the No. 1 brand must be doing the right thing because it’s the market leader. Therefore, we should do exactly the same thing, but better. That seldom works.” There are newspapers which have lost hundreds of crore trying to bring out a better Times of India than The Times of India.
They forget a very basic point. If I as a reader want to read The Times of India, I will read The Times of India, and not a clone. More newspapers (at least the top English and the top Hindi newspapers) have been trying to bring out different versions of The Times of India, though their managers, editors and promoters will never admit to the same. This has stagnated readership at one level as the standard of content has fallen dramatically. There is inherently better content available on the web in India, if you know where to look.
Another reason for worry for most newspapers is that their business model is not working. In the late 1980s a copy of the Delhi edition of The Indian Express (with air surcharge) used to cost around Rs 3.50 in Ranchi, where this writer grew up. Now nearly 25 years laterThe Indian Express costs Rs 4.50 in Delhi and Rs 4 in Mumbai. Most other English newspapers cost around Rs 3-5 i.e. if you buy them off a news stand. The price point of a newspaper hasn’t really taken inflation into account at all.
If you are annual subscriber the cost can be very very low. In Mumbai newspapers have been known to offer an yearly subscription for as low as Rs 99. This basically meant that the daily newspaper was priced at 27 paisa (Rs 99/365 days). No wonder people bought newspapers so that they could accumulate good raddi and then sell it.
The idea behind this business model was to lock in a subscriber for a year by giving away the newspaper almost for free, and then go to the advertiser and tell him, we have so many readers, why don’t you advertise with us.
This has meant that most newspapers are now totally dependent on advertisers to make money. This business model worked during the period between 2002 and 2008, when companies were falling over one another to advertise. It doesn’t work at all in a low growth scenario, where everyone is looking to cut costs. Also with the advertiser getting top billing any negative stories that hurt a prospective advertiser are a strict no no. This makes more newspapers concentrate on the feel good and have a pro business attitude. In short, most newspapers dish out more of the same. There is not enough differentiation for a wide variety of taste that people have.
The other thing this business model does is, it limits readership beyond a point. The newspaper cannot expand because its not viable unless extra advertising comes in. Newspapers are a rare business in which selling an extra number of units can increase losses instead of profits. This is because the reader doesn’t pay for the newspaper. If newspapers in India have to survive, they have to figure out some way of getting out of the subscription based business models that they have got themselves into and can’t seem to come out.
These were points that go against a newspaper, but what about the internet? Newspapers are a very limited medium of communication. You only read what the promoter(and not the editor) of the newspaper wants you to read. In case of the internet people can create their own content. Hence, there can (and is) a tremendous diversity of opinion which one can never get in a newspaper. Also space is not a problem on the internet. It is in a newspaper. Thus, internet can have more diversity of opinion and thus appeal to more people than a newspaper can.
Also as the world gets inherently more complicated, the limited space in a newspaper tends to make things overtly simplistic rather than just simple. On the internet  things can be explained and arguments and counter arguments can be made in detail. For anyone who is looking to understand the way the world works around him, the internet is an inherently better medium.
On the internet news can be consumed almost instantly. A reader need not wait for the next day’s newspaper to be updated on what is happening in the world around him. Even analysis on the internet is up and ready, before it comes out in a newspaper, the next day. Also, the internet is now accessible almost anywhere and one doesn’t have to go looking for it, like one has for a newspaper that one does not subscribe to.
Internet is a very low cost medium. A newspaper is a very high cost operation which involves buying land to set up a printing press and cutting trees to make newsprint on which the paper is printed.
So there are many good things going for news on the internet. The trouble though is that almost no one has till date figured out how to make money on the internet through news. Internet as a medium tends to be associated with “free”. Hence, digital subscriptions have not worked almost anywhere. Also people tend to ignore advertisements on the internet. A part of this equation is falling into space through Google Ads. Now only if websites could figure out the other half, newspapers would be dead sooner rather than later.
The article originally appeared on www.firstpost.com on March 19,2013
(Vivek Kaul is a writer. He tweets @kaul_vivek)

Cong trying to do a Romney in Gujarat by attacking Modi


Vivek Kaul
The Congress campaign in Gujarat is getting desperate. Sample this.
“When it comes to GDP growth, Gujarat is lagging behind states like Bihar, Odhisa and Chhattishgarh,” the Union Commerce and Industry Minister Anand Sharma said while addressing a public meeting in Gandhinagar. “Narendra Modi says Gujarat is most progressive, but if you have been to other states, Bihar, Odisha and Chattisgarh are much ahead,” he added.
When Indian politicians start using terms like Gross Domestic Product growth with voters you know that they don’t have much else to talk about.
Data from the planning commission shows that the state gross domestic product (GDP) at current prices (which does not adjust for inflation) of Bihar, Odisha and Chattisgarh grew at the rates of 20.4%, 16% and 15.3% in 2011-2012.
In comparison Gujarat grew at 15.8%. So the economic growth (which is what the state GDP measures) of Bihar and Odisha was faster than that of Gujarat. But Gujarat grew faster than Chattisgarh.
But as the old saying goes we should be comparing Apples with Apples and not Apples with Oranges. And to add to that as one of my teachers used to say “percentages should be used carefully lest we draw the wrong conclusions”.
Let me deviate a little and give an example to explain what I am basically trying to say.  Let us say you earn Rs 10,000 a month and your income jumps to Rs 20,000 a month, a gain of 100%. On the other hand let’s say you earn Rs 1 lakh a month and your income jumps to Rs 1.3 lakh a month, or a gain of 30%.
So even though the percentage gain in the first case is more, the absolute gain is more in the second case. Hence, when we are talking percentages it is important to keep the base number in mind. So Bihar did grow faster than Gujarat but it was because of what economists like to call the “base effect”.
Gujarat’s state GDP in 2010-2011 was Rs 5,13,173 crore. It went up by 15.8% to Rs 5,94,369 crore in 2011-2012. In comparison Bihar’s GDP for 2010-2011 was Rs 2,17,814 crore. And it grew by 20.4% to Rs 2,62,230 crore in 2011-2012.
The point being Bihar is growing on a lower base and that’s why the percentage growth is higher. The same argument holds for Odisha as well.
The other point that comes here is the population of the state. Bihar’s state GDP went up by Rs 44,416 crore to Rs 2,62,230 crore. This gain of Rs 44,416 crore was spread across a population of 10.38 crore people. This implies a gain of Rs 4,279 per individual who lived in Bihar.
Now let’s do the same calculation for the state of Gujarat. The GDP of the state went up by Rs 81,196 crore to Rs 5,94,369 crore. This gain of Rs 81,196 crore was spread across a population of Gujarat is 6.04 crore as per the 2011 census. Hence, this implies a gain Rs 13,447 per individual who lives in Gujarat.
This basically means that the growth in Gujarat at an individual level was three times that of Bihar in 2011-2012. Hence, Sharma’s argument that Bihar grew faster than Gujarat doesn’t really work.
And Sharma is not the only one attacking Modi. Ajay Maken, the youngest minister in the Union Cabinet alleged at a rally that the ruling BJP government was neck-deep in corruption in the name of development. Well that’s like the pot calling the kettle black. As has been proven time and over the last few years, India hasn’t seen a more corrupt government than the current UPA government ruling the country.
Mani Shankar Aiyer, a former minister in the UPA government, called Modi Ravana and asatya ka saudagar. He also called him a paani purush. Congress Rajya Sabha MP Hussain Dalwai, said “Modi is just a mouse before Sardar Vallabhbhai Patel”.
Bharat Solanki, Union Minister for Drinking Water and Sanitation, decided to beat all the abuses being hurled at Modi and termed him as “Nathuram Godse” and alleged that “under the BJP rule in Gandhi’s Gujarat not truth but lies carry more currency”.
Elections campaigns can get nasty. But the Congress doesn’t seem to have learned from its 2007 blunder when Sonia Gandhi called Modi a “maut ka saudagar”. While it might have sounded like a brilliant turn of phrase to the Congress speechwriter who wrote Sonia’s speech, it clearly backfired on the party.
The issue here is what does the Congress attack Narendra Modi with? Economic development as I showed above is healthy in Gujarat. It is one of the few states in the country which has a power surplus. The roads are ‘just’ fine and the cities are largely clean. Modi doesn’t really have any big corruption charges against him unlike the Congress government as well as the party.
So what do you do in a situation like this? You get personal and attack on Modi’s big blip, the 2002 riots in the state, and hope that it creates enough fear in the minds of the voter and he decides to vote for the Congress.
But does the issue really matter to the major portion of the voters in Gujarat? The answer is no. As Aakar Patel, a known Modi baiter, recently wrote in the Open magazine “Gujaratis like to think they are great national­ists. It doesn’t occur to them that India suffers every time they triumphantly keep memories of the massacre alive, by backing the man first unwilling or unable to stop it, now too incom­petent to prosecute its participants. They are voting Caesar(i.e. Modi) back to power.”
Hence, Congress’ negative campaign isn’t really going to work. In fact, it might work in  favour of Modi, who will continue to espouse the cause of Gujarati Asmita and portray himself as a lone gladiator taking on the Congress baddies.
Also negative campaigns do not really work. Take the case of the recent Presidential elections in the United States. Romney’s attacks on Obama got too personal towards the end of the campaign. Donald Trump, a Romney supporter, wanted to see the college records of Obama. The insinuation here was that Obama may got into college in America as a foreign exchange student from Indonesia.  Trump also wanted access to Obama’s passport. The insinuation here was that would allow him (i.e Trump) to prove something Muslim about Obama.
As marketing guru Al Ries told me in a recent interview on Firstpost “Mitt Romney spent most of his time attacking Barack Obama. That’s the wrong strategy. What a politician needs to do is to offer a positive concept first and then point out that his or her opponent lacks this concept.”
Some of the biggest state elections in India have seen winning parties run extremely positive campaigns. Akhilesh Yadav ran the umeed ki cycle campaign in Uttar Pradesh and Mamata Banerjee ran the poriborton campaign in West Bengal.  While they are busy making a mess of the states after coming to power, but then that is a different issue all together.
In comparison. the Congress party doesn’t really have any strategy in place when it comes to taking on Narendra Modi. And what it is doing clearly won’t work.
The article originally appeared on www.firstpost.com on November 12, 2012.
(Vivek Kaul is a writer.  He can be reached at [email protected])