Preity (Zinta) and Rani (Mukherjee) were nervous. “No matter what I told them or [how much] I tried to calm them, they looked like they were sitting for their final exams,” blogs superstar Shah Rukh Khan on Indya.com. Khan is talking about his actor contestants on Kaun Banega Crorepati, a TV show he hosts. There are no comments on this post. His other postings, however, have feedback from about 10-30 people. The blog is a ploy to connect people with the actor, the show and, therefore, the channel, Star Plus. Go to ndtv.com, indiatimes.com, timesjobs. com, moneycontrol.com, among dozens of websites from ‘old media’ companies. The evidence is overwhelming.

Old style, established mass media companies are finally connecting with audiences, virtually. They may be doing it for many reasons — because advertisers are demanding it or because the Net is eating revenues or because investors offer a better valuation for an Internet brand. No matter what, one thing is clear — the Internet is becoming a significant contributor to current revenues and a key part of growth plans. The result is a buzzing Rs 42,000-crore media and entertainment business. As the big boys get into the act, the incumbents — Rediff.com, Yahoo!, Google — are reacting. Earlier this year, Bangalore-based Yahoo! India tied up with Jagran Prakashan of Kanpur, which publishes the Hindi daily, Dainik Jagran. The duo will launch a co-branded Hindi portal (read a refurbished Jagran.com) by mid-2007. Wait for more of such announcements. As old and new media grapple with flighty audiences and demanding advertisers, they will find the going easier if they hold hands.

Most old media companies know that they are investing in the Internet a little ahead of time. But unlike 10 years ago when they briefly appeared and then withdrew with the crash in 2000, this time they claim to be in it for keeps. And all of them seem to have found ways around India’s Internet problems — bad access, no metrics, etc. For now, though, it seems as if the TV and film companies are better at the game than print companies. With the honourable exception of India’s largest media company. By the end of July 2007, the Mumbai-based Bennett, Coleman & Co. (BCCL) should get about 10-15 per cent of its estimated Rs 3,000-odd-crore in revenues from its portals — indiatimes, timesjobs and the others. That would make it, arguably, one of the biggest Internet companies in India.

Others are trying to catch up. In about two years, Mumbai-based news broadcaster Television Eighteen (TV18) has built, acquired or allied with partners to create a family of 10 websites such as poweryourtrade.com and yatra.com. Web 18 was recently spun off as a separate company with a new CEO, Surya Mantha. By end 2006-07, Mantha says that 10-20 per cent (around Rs 20 crore) of TV18’s revenues will come from its portals. “We want to be the largest consumer Internet company in India,” says Mantha, in a telephonic chat from Mumbai.

Its arch rival and India’s top news broadcaster, New Delhi Television has just set up NDTV Convergence. “We (ndtv.com) are at 200 million page views a month and among India’s top five websites. All we need to do is monetise it,” says CEO Sanjay Trehan. His revenue target is Rs 100 crore in three years. From The Hindu in Chennai to Zee and Mid-Day Multimedia in Mumbai to Living Media in Delhi, almost every company has set up either a Net division, a subsidiary or allied with an Internet firm.

Blame it on Rupert Murdoch. It was his ‘digital natives versus digital immigrants’ speech at the American Society of Newspaper Editors in April 2005 that created a sense of urgency. Murdoch pointed to the trend of young people going online for news and how that was making old media irrelevant. The thinking was: ‘if Murdoch, who makes all his money from newspapers, TV and films, thinks that the Net is the future, then we better look at it’. Internet M&As in the US, led mostly by big media, jumped by about 45 per cent in 2005 over the previous year. The summer of 2005 saw the New York-based News Corp., which Murdoch heads, spend $1.5 billion on three Internet companies in seven weeks. This included MySpace.com. In one year, News Corp. transformed from an old media company to a mover and shaker in the online space.

A few months after he had bought MySpace, Murdoch took it to Japan and China. Whispers of an India launch began when Fox Interactive Media (the digital arm of News Corp.) parked itself in the Mumbai office of subsidiary Star India sometime in mid-2006. By end January 2007, Star spruced up its portal, Indya.com. It is now trying hard to involve Star’s viewers online with cricket, travel and entertainment. It gets half its average traffic of about 80 million page views a month from people discussing anything from Sachin Tendulkar to Tulsi’s latest performance in Kyunkii Saas Bhi Kabhii Bahu Thi. The recent ICC Cricket World Cup saw the website hitting 500 million page views with 5 million video downloads. In a telephone interview from Mumbai, Ajay Vidyasagar, head of content and new media, Star India, says:“Our faith in new media is very, very high.”

There is a catch here, though. According to The State of the News Media, a report from journalism.org, readership, circulation, viewership and listenership across media in the US is dropping. The audiences and the revenues are clearly shifting online. In 2006, about $16.8 billion or 11 per cent of total US ad spend was on the Internet. Against a total ad spend growth of 4.6 per cent, advertising on the Net has grown by 35 per cent in 2006 over 2005. That trend has been more or less constant for a couple of years now. Revenues at newspaper and television firms are flat or going down. Wall Street has been pummelling the large listed media companies for some time now — the backdrop to Murdoch’s speech.

India, on the other hand, is one of the few global markets where media is booming. “Print dying is not a story in India,” says Dinesh Wadhawan, CEO, Times Internet. Newspaper circulation, readership and revenues are growing at double digits. Sure, the Net is significant. Going by the Telecom Regulatory Authority of India numbers on connections, the Internet reaches about 50 million people. That makes it one of the largest in the world. A bulk of the advertising for jobs, homes and other services has moved online.

That is where the good news ends. Just about one-fifth of the users are reached by broadband, so the quality of access is suspect. The Internet reaches about the same number of people as the largest read newspaper, or about 10 per cent of those who watched the most popular TV channel, going by the latest IRS numbers. It gets about Rs 800-odd crore in revenues from all forms of advertising. Compare that to the Rs 7,800-odd crore that publishers made from advertising or the Rs 6,600-crore broadcasters did. So, why bother now?

The reason is simple. Globally, the companies beginning to see the first slivers of profits on the Net began at least 7-10 years ago (see ‘The World’s Wide Web’ on page 36). The BBC, The Guardian, The New York Times and The Economist have been pecking away at the Internet continuously over this period. “The India Internet market is like how the US was 10 years ago,” says Piyush Shah, head (Internet) for the New Delhi-based HT Media. Indian media brands are, therefore, using the advantage of an underdeveloped market to build up.

There are two things that are probably egging them on. One, in spite of its smaller base, spends online are growing at roughly twice the rate of offline spends. “If jobs and matrimonials are migrating to the Web, we would rather that they migrate to our offerings,” says Benoy Roychowdhury, business head (media-marketing), HT Media. The second, more important one, is the loss of young viewers. Of Rediff’s 25 million active users (of a base of 47.5 million registered users), more than two-thirds are youngsters from SEC A, says Manish Agarwal, vice-president (marketing), Rediff.com. This is prime audience for several large advertising spenders such as FMCG or telecom companies. The trend is not big enough to cause alarm, but enough to make them view the Net seriously.

A third reason is advertisers. “The approach (towards the Internet) has changed. Clients are asking, can we have a blogging strategy?” says Pranay Anthwal, general manager (India), Starcom Entertainment, part of Mumbai-based Leo Burnett. New Delhi-based telecom operator Bharti Airtel, for instance, spends 1.5-2 per cent (Rs 7 crore-10 crore) of its budget on the Internet. Gopal Vittal, director (marketing and communications), Bharti Airtel, is very happy with the 10,000-odd leads this spend generates every quarter. “But if you ask me will it become part of dominant mass media, I would say, not for five years.” This is evident in the rate difference between what advertisers are willing to pay for the same reader or viewer on the Net as opposed to TV or print. In the US, for instance, a print reader is 14 times as expensive to reach as an online reader. “The gap will be reduced once broadband comes in,” says Stefan von Holtzbrinckis, president and chairman of Verlagsgruppe Georg von Holtzbrinck in Munich. It owns Macmillan among other publishing firms.

Von Holtzbrinckis is right. The take-off of broadband will be the turning point. Take Rajshri Productions of Mumbai. It has been producing and distributing films for over 60 years. Rajjat A. Barjatya, managing director, Rajshri Media, first launched Rajshri.com as “little more than a digital brochure”. On an April 2006 trip to Finland, he discovered there were 15,000 Indians there who knew all about every Indian film released and had seen them all on pirated DVDs. “I asked if they would see Vivaah if it was released on broadband and they said yes,” he says. That gave him his idea. In November 2006, Rajshri.com was relaunched as a broadband portal. About 6,000 people, mostly from the US and Europe, downloaded the movie at Rs 440 ($9.99). The bulk of Rajshri.com’s half million page views a day come from the free downloads of films, TV or other content. Currently, Barjatya sits on 6,500 hours of content. From early April, Rajshri began shooting a 90-webisode sitcom (3-5 minutes long) for the portal.

Everything, says Barjatya, is targeted towards overseas Indians alone. Ninety per cent of Rajshri.com’s traffic comes from outside and half of it from the US. Very few users in India, about 10 million, have broadband that allows full movie downloads.

Notice two things. One, while the Indian numbers are rising, NDTV.com, Indya.com, Rajshri and others are investing in services that may not have a market in India yet. This could be films for overseas Indians, dating services in India or airline tickets. “The Internet business is not just an extension of the newspaper,” says HT Media’s Shah. Wadhawan says that non-news content is key to cracking the Net. (It is a point that business-to-business portals have proved several times over.) This raises the question of how far mass media will stray from its core in order to make it. “There is always the danger of losing focus,” says Tom Turcan, general manager, Guardian Unlimited and head of Digital Media Development in a telephonic chat from London.

Two, unlike the first stabs they took at the Net, media majors now are ensuring that the online business is separate. This includes, in most cases, a separate corporate structure and team. Most have hired people from technology or telecom backgrounds, some from abroad, to head this business.

The big issues remain similar to the ones globally. These are metrics and lack of new media expertise. None of the companies we met gave us numbers. Even if a few did, it is not validated. Portals do not have their numbers validated by, say, ABC Digital (UK) or others. “We desperately need metrics. If you ask me which is bigger — Rediff or Yahoo! — I really don’t know,” says Starcom’s Anthwal. That is ironic for a medium that tom-toms its transparency and ability to pinpoint user behaviour.

At Rs 800 crore, it may not seem important. But Internet connections in India are growing at about 30 per cent annually. About two-thirds of all new connections are broadband. So, it is a matter of time before India plays catch up with Korea or the US. Then advertisers will willingly up spends while demanding robust numbers. The game will move beyond blogs.