Legacy media is fighting for survival. Will a government lease of life help?

It may, thus, be argued that ad spends play an important role in a functioning democracy. It is for this reason that the government’s decision to raise advertising rates for print media by 26% is inadequate, both in its prognosis and the remedy offered. The government said it was offering essential revenue support to the print media to help sustain operations and quality journalism amid cost escalations and unrelenting competition from digital platforms.

Indeed, the conventional media industry is battling for survival as artificial intelligence (AI), Large Language Models and deep machine learning are reshaping content creation and upending the distribution model that had already been disrupted by the likes of Google and Meta. Today, automated systems are writing news, editing videos and generating hyper-realistic imagery at a fraction of what it costs to run a traditional newsroom. This forces legacy media to compete with infinite, low-cost content that floods social feeds and search engines as news and views, stealing attention and more importantly, ad revenue.

Picture this: According to industry estimates, the size of the Indian advertising industry is around ₹1.55 trillion, including the direct spends of unorganized sector and small and medium enterprises on search engines and social platforms. In 2024, digital media cornered more than half of this, while the rest was distributed among TV, print, outdoors, radio and other sundry platforms. To be precise, ad spends on digital platforms stood at ₹75,000-85,000 crore, while television accounted for ₹36,000-40,000 crore and print got ₹16,000-20,000 crore. Digital’s share in this pie is expected to have grown even bigger this year, while the rest are likely to have shrunk further.

The distribution within the digital bucket is even more skewed, as 75%-80% of digital advertising is cornered by Google, Meta and Amazon. The rest is split among various content producers, with journalism platforms receiving the smallest share.

The principles of free market require policymakers to keep out of the stakeholder dynamics. This, however, becomes contentious when such dynamics is manipulated by the dominant players to the detriment of their weaker and smaller counterparts. There are several legal cases in different countries against the likes of Google and Meta alleging the use of unethical, monopolistic and anti-competitive practices in building their products and distribution footprint.

As they continue to corner the bulk of ad spends and their revenues swell, these companies are better placed to invest in improving their products and making their offerings future-ready, leaving traditional media to play catch-up or fall by the wayside.

This virtuous, or vicious, cycle has gathered so much momentum that it’s unlikely to stall or reverse on its own. Besides, this challenge goes beyond business and economy. It impacts governance and the democratic values of which free and fair journalism—an ideal even in the best of circumstances—is an integral part.

The need for journalism that passes through editorial rigour against the one that simply relies on emotionally-charged content to go viral has never been greater. And the legacy media cannot be expected to continue investing in robust journalism while the distribution companies monetize their hard work.

For a long time, developing countries such as India relied on investments from these big tech companies to build and expand their consumer internet ecosystem. That goal has been achieved to a good extent, and these companies have been compensated more than handsomely for their contribution. In India, Google and Meta earned over ₹31,000 crore and ₹23,000 crore, respectively, in ad revenues in FY24. The ad revenues of relatively large news media companies, in comparison, hover between ₹1,200 crore and ₹1,800 crore.

It's time to correct this imbalance. The need of the hour is not quick-fixes such as the increase in ad rates, but a bold policy intervention and a comprehensive regulatory framework similar to what has been implemented or is being explored in countries such as Australia, Canada and some of the European nations.

The Australian Competition and Consumer Commission, for instance, is building a framework that relies on preventive legislation as well as direct enforcement. It has also introduced News Media and Digital Platforms Mandatory Bargaining Code that allows news publishers to negotiate their fair share in revenue from distributing their content. Canada and some European countries, too, have come up with specific regulations to check the abuse of dominance of big tech. Canada’s Direct Competition Bureau is investigating how AI, LLM and vertical integration by these companies can create monopolistic risks and barriers for their smaller rivals.

India, too, needs to evolve a framework suited to its specific needs.

The writer is former National Corporate Editor of Mint