Media in Islamic finance

Hitting the right formula for a successful Islamic finance publication has been the elusive goal of a number of publishers for a number of years. Paul McNamara share some thoughts on why and suggests a possible answer.

It sometimes comes as a surprise to people who do not work in the media to discover that the industry works much like any other. It is all about making money.
Your favourite newspaper or magazine or website does what it does to make a profit There are essentially three models of publishing for profit.

• The first is where the subscriber pays. Typically this covers the newsletter market. Such products are often niche and expensive.
• The second is where the advertiser pays. Typically this would cover a wide range of B2B magazines. The advertiser wants to reach a specific niche (like doctors or lawyers) and will pay to do so.
• The third model is a hybrid of the two - where the subscriber pays and the advertiser pays too. This kind of model is at work in many daily newspapers.

It doesn't matter which media you pick, the economic drivers are always the same.


How does this affect the world of media in Islamic finance?

It goes some way to explaining why there is a relative paucity of good products out there covering the world of Islamic finance. There is a range of titles, from magazines to newsletters to e-newsletters to web based services, but while some are good, the rest are far from good and there isn't one really good strong title that can be taken as the benchmark across the globe. I mean no disrespect to the many Islamic finance journalists and editors who pour their hearts into every issue they produce, of whatever sort, since they are all we have got. But the lack of funding behind almost all of these efforts is plain to see.
None of the major financial publishers have taken a committed leap into the area.

Why would that be?

The reason is fairly plain to see. There isn't any money in it.
From a purely business point of view, you can hardly blame the media for failing to bring out a product that will lose them money. It is not why they are in business. As outlined before, they need to look at revenues from one source or another and unless they can be assured of making some money, even in the medium term, then they will hang back. And hang back.

Which leads us to the question:

Why is there no money in it?

Let's look at advertising spend to begin with.

There are lots of Islamic finance institutions out there. Practitioners. Banks. Investment banks. Lawyers. Consultants. Advisers. Educators. Regulators. The list goes on. There are at least 700 of these institutions and they are spread across the globe. We have a high concentration in Asia, particularly in Malaysia, Indonesia, Pakistan, Brunei, Singapore and even some in Thailand. There is an equally high concentration in the Middle East and North Africa. Then we have quite a number in the UK and the USA.

Some of these institutions are big and some are small. But almost all of them have one thing in common. They won't spend money on advertising in publications. Of course some will spend a bit here and there, but cumulatively it wouldn't amount to very much at all. My guess is that if you put together all of the expenditure in Islamic finance titles it would amount to something between $500,000 and $1 million. This does not include the amounts of money that they spend at retail level in newspapers of a general nature and elsewhere.

To put that in context, a single B2B title in the conventional finance field could book that kind of revenue and more in a single issue.

Here are some verbatim comments from multimillion dollar companies which Islamic finance publishers have forwarded to me in the past two months which typify the approach of these institutions:

• "Further to your invitation for us to participate in your new publication, we would like wish you luck on the launch of your new publication. Although we were very keen to participate, unfortunately we will not be able to take part in this year's edition."
• "We get offers like this all the time. We are only interested in UK. We have a limited budget and have spent it all."
• "We would be interested but unfortunately due to staff shortage during the coming weeks it may not be possible."
• "We regret to inform you that we will not be able to support your publication at this time. However, we would like to take this opportunity to wish you success in your new venture and look forward to receiving your first publication. Thank you for your interest in (company name)"

So if they don't spend money in publications devoted to the industry, where do they spend it? You only have to look at the conference calendar to see where the money goes. It goes on promoting the company at conferences and exhibitions which take place all over the globe.

Walk down the street in Dubai and you see Emirates Islamic Bank painted on the sides of buses and of course Dubai Islamic Bank is a leader in the field. So some of the banks are becoming more savvy about consumer marketing.

But many companies will still not spend in specialist media. Why is that? The answer is pretty plain. Why would they want to talk to a geographically disparate bunch of people whose only common link is working, in however peripheral a way, in the same industry. In other words, a Gulf bank does not want to talk to a consultancy in Kuala Lumpur.

So what does that leave us with?

It leaves us with the circulation income model. Pretty much the only model that works under this structure is the newsletter one. It is low cost, high price and low volume. In other words, you need to sell a small number of copies for a high price while using a small staff and without spending a fortune in advertising and marketing.

This has been tried on more than one occasion and it doesn't work in this industry either. The reason it doesn't work is that the same companies who don't want to advertise also don't want to pay for a subscription that is $500 or more. There seems to be an acceptance that, since they have never relied on information of this sort in the past, they will not need to do so in the future.

This is a terrible error. The reason that the world of conventional finance is so healthy and robust is because practitioners share information and read about each other's developments. The same is true in the legal profession, the medical profession and every other profession.

It is, to use a well worn cliché, a chicken and egg situation. Publishers publish this material because the reader needs the data and so will pay for it and so the publisher makes money. The driver is the need for data - not the need for profit.

The Islamic finance industry needs the same level of data interchange and they simply don't have it because they won't pay for it. This is one of the reasons why the industry is still small and growing slower than it should.

So what is the solution to the problem?

Someone has to carry the torch and show the way. Someone has to be the hero and spend the money.

Like who? Well like the Islamic Development Bank which spends so much money on infrastructure projects but much less on assisting the industry itself to develop.

Another option would be one (or more) of the big players in the industry from the banking or investment banking side of things. Many of these companies are announcing record profits this year. If the top 20 companies pooled $50,000 each we could see the birth of a true vehicle for the industry. It wouldn't be partisan. It wouldn't have an axe to grind. It would be an organ that speaks for the industry to the industry. It would cover trade finance, project finance, sukuk, murabaha, takaful, retail products. Everything.

What kind of statement would it make about one of the big players if they were to fund a publication themselves? Not for profit, but to show what good (Islamic) corporate citizens they are? And of course once you have one such publication, others would follow, driven by profit and the industry as a whole would benefit.

Then maybe we would see the beginnings of a healthy Islamic finance media where we could see the healthy interchange of ideas between academics, practitioners, regulators. The entire gamut.