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Trust trumps capital

No, The Ken does not have >26% FDI

But it does have >74% DSI

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Just over a week ago, the Indian union cabinet rejigged the limits for foreign investment in various sectors. One of them happened to be digital media, in which it decided to allow only a maximum of 26%.

The impact of the new policy was best summed up by this post from Nikhil Pahwa, a digital media entrepreneur who runs tech and policy news site Medianama.com. It “will end up restricting the ability of media businesses to serve their readers,” he said.

While we at The Ken watched intently from the sidelines (because the brief announcement has yet to be formally published as law), we were somewhat amused to see articles popping up in leading business newspapers discussing its impact on us.

From an unsigned wire piece carried by The Economic Times, “For example, Bengaluru-based subscription-driven digital publication The Ken has already raised more than 26 per cent FDI. […] According to industry analysts, if The Ken already has FDI in excess of 26 per cent, then it is a clear case of flouting the norms.”

And from The Business Standard, “‘If PEs and VCs are included, Bengaluru-based The Ken could face issues, since the company has more than 26 per cent foreign holding,’ said an industry executive in the know of things.”

I say we were amused because both of these stories were patently false. The Ken does not have foreign direct investment (FDI) greater than 26%. We’d have been perfectly happy to clarify this if any of the writers had bothered to check, but they didn’t.

What The Ken does have though, I’ll admit, is DSI that is greater than 74%.

<26% FDI, but >74% DSI

Direct Subscriber Investment, or DSI, is what has powered The Ken since October 2016 when we launched formally. It means our subscribers value our stories enough to subscribe to it, at a price that is higher than anyone else in India. In spite of the fact that we publish just one story a day.

Direct subscriber support means we’ve been revenue-generating from day 1. It means we don’t need to serve advertisements or solicit sponsors. It means we don’t need to aggressively surveil and profile our subscribers in order to target them better with ads. It means we don’t need to write buzzy, viral pieces to chase clicks and traffic. It means we can afford to pay competitive salaries to the journalists we hire, and then invest in their growth, well-being and satisfaction.

We just returned from a 3-day company-wide annual offsite to Phuket, Thailand.

What makes all of this possible is DSI – Direct Subscriber Investment, not FDI.

Yes, the angel and venture investments we’ve raised help. But by giving us a financial buffer that overcomes the gap between medium term subscription revenue (over 90% of our subscribers opt for our annual subscriptions) and longer-term ambitions. Not to survive.

Here’s what our monthly recurring revenue looks like. All DSI.

But doesn’t this give us an unfair advantage over our peers? Sadly, yes.

A level playing field

“This [26% FDI limit] will ensure Indian news sites have a level playing field with news aggregators and other digital news sites,” said Mammen Mathew, the president of the Indian Newspaper Society in an unsigned article published on the subject in The Economic Times.

In another, also unsigned, piece in The Economic Times, Pawan Agarwal, the chairman of another industry association for India’s large media companies, the Digital News Publishers’ Association (DNPA) said, “The government’s decision to cap FDI at 26% for digital news media will provide a level playing field for Indian news publishers and the news aggregators.”

To this The Ken submits that capital (whether foreign or domestic) is not the differentiator or accelerant that will determine which media companies emerge successful from today’s chaotic downward spiral.

It’s trust.

Trust is our playing field. And I’ll readily admit it’s one in which we enjoy an unfair advantage. Every single one of our subscribers is our unfair advantage.

Our other unfair advantages

Our investors. Who include some of India’s best known entrepreneurs and venture investors who support our DSI vision.

And our people. Who include journalism graduates, yes, but also MBAs, engineers, development economists and biochemistry majors. Across our editorial, engineering, marketing and product teams, they help us punch way above our weight.

We recently added widely-regarded technology journalist Jon Russell to our leadership team.

Jon is our first writer to be based outside India, but he won’t be the last.

And of course we’re hiring.

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