India’s cashed-up news aggregators like DailyHunt hit a revenue roadblock
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Three years after venture capital-fueled cash led to new app releases, celebrity endorsements and rapid customer acquisition, news aggregation apps in India are going through a period of reckoning.
The promise of digital advertising at scale hasn’t delivered, user consumption patterns have shifted to video, and new apps such as TikTok, Helo and ShareChat are increasing the competition for attention and advertising.
DailyHunt and InShorts are among the biggest players in the Indian news aggregator space. DailyHunt currently has more than 100 million downloads on Google Play Store while Inshorts has over 10 million.
DailyHunt serves content in 14 Indian languages, and InShorts in English and Hindi. According to Sajith Pai, director of Blume Ventures, which invests in early stage technology startups, the business still needs to validate its revenue model. “Monetisation has been slow in coming by. If they don’t begin monetising in the next two-three years, they will be in trouble,” Pai says.
Like publishers, news aggregators have pivoted multiple times in the past three years, from English to regional Indian languages to video.
India’s cashed-up news aggregators like DailyHunt have hit a revenue roadblock. "If they don’t begin monetising in the next two-three years, they will be in trouble.”
Publishers aren’t happy
An antagonistic relationship with news publishers isn’t helping news aggregators. When aggregators began scaling users, most big publishers were promised a minimum guarantee fees for sharing and hosting content on aggregator apps.
According to Sandeep Amar, the founder and CEO of Inaaj, a tech services company for news organizations based in New Delhi, publishers were initially paid between INR500,000-INR600,000 per month (between $6,000-$7,000) for hosting content on DailyHunt.
With the reversal of roles has also come the change in terms of payment. “Publishers are taking their content off such platforms,” Amar says.
Malayala Manorama was one of the first big publishers to exit DailyHunt in 2017 because of changes in payment terms. “We don’t publish on aggregators anymore. Earlier, the scenario was different. Aggregators started changing the terms of payment,” says Boby Paul, general manager marketing of Malayala Manorama, the biggest Indian language publisher.
“Today, revenue share agreements aren’t working,” says Chitti Pantulu, the editor of NewsPlus, another news aggregation app based in India. “[Many] aggregators show user numbers to increase valuation and raise investment to further increase user numbers. The advertising market isn’t growing at the same pace. It’s a vicious circle.”
Pantulu says publishers, most of whom are making little digital revenue, are giving content away in the hope that they can make money through ad sales or some other form of revenue share agreements. Unlike DailyHunt and Inshorts, which host content on their apps, NewsPlus redirects traffic to publisher websites the way Google News does.
The news aggregator business still needs to validate its revenue model. Image: Shutterstock
Businesses in trouble
Most news aggregators that came to India in 2015-16 such as UC Browser, NewsDog, and News Republic have stopped reporting user and page view numbers. The news aggregation space has been a bloodbath in India, according to Pai. In the last two years, many of these firms have laid off engineering and sales teams as they struggle to pivot and find profitability.
“User acquisition costs are really high. While the number of users and advertisers is growing, it isn’t growing fast enough,” he says. The slow growth in advertising coupled with an increase in the number of apps vying for the limited advertising pie hasn’t helped the category.
“Goal posts shifted in the last few years as ad rates kept going down. Now, every ad rupee is split between different app [categories] including news aggregators, music streaming services, video streaming services, social networks and e-commerce apps,” says a former media entrepreneur who didn’t want to be named.
The other challenge is that growth is skewed — user numbers are growing in vernacular languages but advertisers aren’t biting. “Even after the video push, advertisers haven’t moved beyond English and Hindi,” says Paul.
Investment plateaus
“Investors have realised that there is no money in digital media,” says a former employee of a leading Indian news aggregator. “Most investors haven’t invested again and are trying to consolidate their investments.”
While that may be the case, DailyHunt recently raised $25m in series-F funding and is looking to raise more. Amar explains, “DailyHunt can raise money because they are the only ones left and are too big to fail.”
“This category is all about the next round of funding. None (of them) have a sustainable business model,” says Vivek Durai, who tracks private investments in India.
According to Amar, metrics change before every round of investments. “Like the e-commerce industry kept changing metrics to show growth from Gross Merchandise Value (GMV) to gross margin to the size of the marketplace, news aggregators show numbers that investors ask for and that keeps changing.”
So what’s next?
“The new story in the news aggregator space is vernacular content and experimenting with video / web series, social, e-commerce, financial services, etc. because ads revenues are not coming. The big guys in the space are realising that scale is useless,” says Durai.
With no sustainable business model in sight, DailyHunt and InShorts are experimenting with selling financial services to users, according to multiple current and former employees. “They probably hope there is a business model to be found,” Paul says wryly.