Reputation and Indian Newspapers

Yesterday, I wrote about how businesses invest in their reputations and how it was especially important in fields where the product is difficult to immediately evaluate. Newspapers have a particular problem with credibility. If they post sensational stories, they may immediately gain readers, but in the long run their credibility will be destroyed when these sensational stories are attacked. Likewise, if they fail to write about serious stories that are genuinely newsworthy because of a conflict of interest, their credibility will decline.

The IIPM vs. bloggers conflict that has erupted in the Indian blogosphere has put the print media in a curious conflict of interest situation. They want to print newsworthy stories but it turns out that IIPM is one of Indian newspapers’ biggest advertisers. So far, the so-called MSM has ignored this story. It could be that no one has researched the story far enough to see the newsworthy aspects of the story. It could be that investigative reporters are digging around at inside story of the IIPM and will publish their stories in the coming weeks (and I really suspect that there is a big story here to be uncovered). However, it might be that each newspaper is reluctant to upset its biggest advertiser.

This raises an interesting economic question: how much does it cost a newspaper to lose its biggest advertiser? To answer this question, they should ask Mr. Chaudhuri, dean of IIPM, to place his head into a basin of water, (any bowl will do, even a toilet bowl), and then quickly remove it from the water. If the image of his face remains in the bowl of water, the newspaper will sorely miss this ad revenue. If the water quickly rushes in to fill the void, then one would assume that likewise many other advertisers would rush in to fill the void caused by the absence of IIPM’s advertising.

This is an important point: there really is no conflict of interest here. No newspaper needs IIPM’s advertising. In the long run, there is no better way to guarantee advertising revenue than to produce a consistently credible newspaper that covers all of the news. Any credible newspaper knows this and purposefully keeps the advertising portion of their newspaper physically separate from the reporters so that there is no interaction between them and so there is no potential for a conflict of interest. In the long run, reputation sells papers, and selling papers brings in advertisers. And the only time the reporters should consider their advertisers is when they read them and wonder: “Who are these people and why are they spending so much on advertising – what is the story here?”

The links above for IIPM are to a new IIPM wikipedia entry. Read Ravikiran’s post about how you can help build this important wiki cite.

IIPM (technorati tag)