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The Internet The Almighty Buck The Media

Developing World Is a Profit Sink For Web Companies 203

Posted by kdawson
from the international-paradox dept.
The NYTimes is running a piece on the dilemma faced by Web entrepreneurs, particularly in social media companies: the developing world is spiking traffic but not contributing much to revenues. The basic disconnect when Web 2.0 business models meet Africa, Latin America, and the Middle East is that countries there are not good prospects for the advertisers who pay the bills. "Call it the International Paradox. Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results. ... Last year, Veoh, a video-sharing site operated from San Diego, decided to block its service from users in Africa, Asia, Latin America, and Eastern Europe, citing the dim prospects of making money and the high cost of delivering video there. 'I believe in free, open communications,' Dmitry Shapiro, the company's chief executive, said. 'But these people are so hungry for this content. They sit and they watch and watch and watch. The problem is they are eating up bandwidth, and it's very difficult to derive revenue from it.' ... Perhaps no company is more in the grip of the international paradox than YouTube, which [an analyst] recently estimated could lose $470 million in 2009, in part because of the high cost of delivering billions of videos each month."
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Developing World Is a Profit Sink For Web Companies

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  • by cashman73 (855518) on Tuesday April 28, 2009 @07:21AM (#27744043) Journal
    Well, that explains part of the reason why online videos are really only available legally (e.g. hulu, veoh, etc) in the U.S. But I still think that they could easily make money on advertising by offering the same videos that are in the U.S. to countries like Canada, the U.K., most of Europe, Japan, etc,...
    • by jsoderba (105512) on Tuesday April 28, 2009 @07:28AM (#27744087)

      The reason that Hulu is only available in the US is that international TV licensing is a nightmarish legal morass from which no man emerges fully sane.

    • by fuzzyfuzzyfungus (1223518) on Tuesday April 28, 2009 @07:34AM (#27744147) Journal
      I think that there are two distinct phenomena at work here.

      "US only" or "Canada Only" and "EU or some subset only" are almost certainly products of wrangling over distribution rights and/or various wrinkles in different countries' compulsory licensing schemes. While those are likely to slowly come down in the long term, they don't have much to do with how profitable various regions are.

      The second factor, discussed in TFA, would lead more to "US/Canada/EU/etc. only" or "no third world" and is pretty much exclusively economic in motivation. Clearing the rights isn't an issue with the mass of amateur youtube uploads and the like; but costs of delivery are (at best) constant across the world(at worst, they are likely to be rather higher in poorer areas) and expected revenue certainly isn't constant.

      I'll be interested to see if Youtube and the various other *tubes and knockoffs start to offer schemes whereby outfits who want their stuff available outside of the usual geographic areas (ie. propaganda groups for various banned NGOs, governments in exile, and the like) can pay to have them made available. I suspect that that might be attractive; but it might also become useless pretty quickly. If a video service, say, is extremely popular among good upstanding citizens of the regime, who use it to exchange funny cat videos and blooper reels, banning it will be unpopular. If a video service is virtually inaccessible, save for a bunch of videos sponsored by banned/unpopular groups, great firewalling it is a political no-brainer.
      • Clearing the rights isn't an issue with the mass of amateur youtube uploads and the like; but costs of delivery are (at best) constant across the world(at worst, they are likely to be rather higher in poorer areas) and expected revenue certainly isn't constant.

        NOTE: This post may appear to be a trifle bitter in tone. That's because it is.

        Let me speak from my personal experience of living these last 5+ years in a developing country: It's the developed world's own goddamn fault that we don't pay for things o

  • Time = Money, Right? (Score:5, Interesting)

    by eldavojohn (898314) * <eldavojohn AT gmail DOT com> on Tuesday April 28, 2009 @07:23AM (#27744057) Journal
    Yes, this is a very difficult thing to overcome with providing content--especially high bandwidth content like video.

    But maybe the third world should be looked at more like consumers with a lot of time and little money? I know it's horribly ridiculous for me to think that I work more than a poor Chinese man working 15 hours a day because I don't. But if you want to think of it as a viable market, these people have time to offer a business. So the obstacle becomes not how we can get them to click on our Amazon.com link and buy overpriced shoes like we do with fatass Americans (calm down, I am one)? But instead how can we ask them to perform some very menial task on the computer with a reward of our services?

    So maybe your company would like image or video corpora tagged with words in a different language and background of a different culture? Those are becoming more of an asset. Or perhaps you want to boost a wiki in a particular language? Or perhaps you could offer premiums on translations and bother to attempt teach them a second language through cheap software? Ontology building services? Or treating each small region as a zone by population and blocking IPs until someone or some team completes rent-a-coder like challenges? Then you could host their name(s) on sites where people now have access as a kind of local hero style recognition? I mean, there are a number of things you could do with simple peer review that would keep a steady income of services which equate to time from these people. Some are more realistic than others. Who knows, you could inadvertently better their lives by doing some of the above?
    • Unfortunately, none of your proposals provide a way for money (however small an amount it may be) to flow from the users to the advertisers/corporations/web site operators.
      Which is the main problem outlined.
      • by zarkill (1100367)
        If you put the users to work, you "get" the value of the work they're performing in exchange for your content. It might not be "money", but you might be getting enough value from their menial tasks that it could be worth your while.
        • by YrWrstNtmr (564987) on Tuesday April 28, 2009 @08:12AM (#27744523)
          True. But, for instance, translation to their local language, for thier population, still gains you nothing back in financial terms.
          Yes, you've gotten the value of work from them, but in real terms...nothing has flowed back to your pocket. The service they have performed is mostly useless to those who CAN and do pay.

          Like advertising to dedicated music 'pirates'. They're not going to (or can't) buy from you anyway, so any resources devoted to them is money down the drain.

          At some point, it has to be Money = money.
        • by ScentCone (795499)
          Half a billion dollars in micro translation, click fraud, link farming, and captch busting services?
    • by TheNarrator (200498) on Tuesday April 28, 2009 @07:44AM (#27744235)

      How about a new model based on transparency!

      You could have a infographic on the top of the website called the "bandwidth cost bar". Every day it starts at the top and slowly works its way down based on the amount of bandwidth the provider is able to pay for based on the revenue to the site for that day. If one clicks on it there will be a detailed breakdown of who they are paying for bandwidth, how much they are using and how much it costs and a top level summary of revenue and expenses.

      The bar slowly gets used up until its completely used up for the day and then there are no more videos and all pages redirect to the same page explaining that all the bandwidth for the day has been used up and customers did not buy enough stuff so they had to shut down for the day.

    • It might be interesting to build a simple interface for mapping Mechanical Turk jobs to video access.

      Video service has a Mechanical Turk account. Video site has list of Mechanical Turk jobs that you can do on the account's behalf. Once your execution of the job is approved by the job poster, you get viewing credit proportional to the value of the job.

      It would be rather crude, and a lot of Mechanical Turk stuff is rather language dependent; but writing some glue to stitch together a couple of existing
      • Re: (Score:2, Insightful)

        by bami (1376931)

        If there is an incentive, people will abuse it.

        File sharing websites already do this, sort of. You want it for free?
        watch our advertisements for 15-120 seconds.
        You want more for free?
        Come back later.

        You want to skip advertisements?
        Buy a premium account.

        Then there are the people with loads of time on their hands, and start abusing the free service.
        First based on exploits (javascript hacking, captcha breaking etc).
        So they step up the requirements, making it more of a chore for other people.

        Most of the t

    • Re: (Score:3, Insightful)

      by inviolet (797804)

      But maybe the third world should be looked at more like consumers with a lot of time and little money?

      They have little money because their time does not produce anything particularly valuable. And a culture must produce before it can consume. Therefore, in the grand scheme of things, there are no poor consumers.

      • by hedwards (940851)

        Yes indeed, because it's not like us in America have been living based largely upon borrowed money.

      • by TheLink (130905)
        And some have _relatively_ little money because they make _cheap_ stuff for the rich westerners.

        When you are a factory worker in a Chinese factory making RC cars that are sold for USD4 per piece, you can't earn big bucks in US terms.

        You might earn more in local terms. While 4 US dollars might not be much in the USA, it could buy 5 or 6 meals in China.

        Meals might be subsidized/provided by the factory too.

        Hard life perhaps, but seems a lot of people in China would rather do that than work in a farm (unless it
        • by cayenne8 (626475)
          "Yes many (Chinese) would prefer to be earning "big bucks" working for Starbucks in the USA, but I doubt the USA wants to let them in to do that."

          That's just because we don't share a border with them.

    • But instead how can we ask them to perform some very menial task on the computer with a reward of our services?

      So maybe your company would like image or video corpora tagged with words in a different language and background of a different culture? Those are becoming more of an asset. Or perhaps you want to boost a wiki in a particular language? Or perhaps you could offer premiums on translations and bother to attempt teach them a second language through cheap software?

      The embodiment of optimism.

      You are so amazingly right. Make them do something valuable with their time and use Internet to distribute wealth more fair.

      Unfortunately, examples of "very menial tasks" are:
      - Gold farming
      - Captcha answering

      The problem is to find a task that benefits humanity, can be broken up and solved by people with little education. At a higher wage than the shady competitors.

      If you can manage that, though, you should be raking in millions pretty soon.

    • How about ads for where to sell ^h^h^h^h donate a kidney? (running for the woods now...)
  • by Ed Avis (5917) <ed@membled.com> on Tuesday April 28, 2009 @07:29AM (#27744093) Homepage

    The obvious answer is to distribute videos and other bandwidth-heavy content through a peer-to-peer mechanism such as Bittorrent. Then the users themselves take care of providing your extra server capacity. I guess it just needs a Bittorrent client written in Flash (ugh), or else built into the browser, with the site's main server acting as the first seed for each file.

    • by Jah-Wren Ryel (80510) on Tuesday April 28, 2009 @07:53AM (#27744317)

      The obvious answer is to distribute videos and other bandwidth-heavy content through a peer-to-peer mechanism such as Bittorrent. Then the users themselves take care of providing your extra server capacity. I guess it just needs a Bittorrent client written in Flash (ugh), or else built into the browser, with the site's main server acting as the first seed for each file.

      That's unlikely to work, at least in anything like bittorrent's current form, because these users don't own their own computers and network connections. Based on my experiences in a couple of 3rd world countries, I'm pretty sure that 99.9% of these users are at internet cafes - they spend the local equivalent of a couple of quarters for a couple hours and then the next user gets on. Few torrents of any significant size are going to complete in that short of a space of time.

      • Re: (Score:3, Interesting)

        I live in a 3rd world country, and I'll tell you that internet cafes here mostly do not have the bandwidth for such. Most people do it from work. Most of us here are still on dial up or equivalent. Even at most companies/universities, you have to get in at off-peak ours to be able to watch youtube.

        Even so, it is not uncommon for people in the towns to own (obsolete) computers (P3 era and up).

        That being said, I'm not sure how typical the basket case of Africa is [wikipedia.org].

        • by Ed Avis (5917)

          I'll tell you that internet cafes here mostly do not have the bandwidth for such.

          In that case, surely, they do not have the bandwidth to view the videos anyway, Bittorrent or not. It's true that some upstream bandwidth is necessary whereas viewing a downloaded video just needs downstream bandwidth. But the upstream only needs to be within that country or local area - it would often be between two different PCs in the same internet cafe, which would be a net saving of bandwidth since a video watched by two

          • I suspect my country is an extreme case, but you are right, viewing videos online in realtime here is rare. But I suspect a better solution would be to allow the local ISPs to set up a local mirror of the more popular portions of various sites. They would compete with each other to be able to do this - it means more customers if you offer a value added service like that. Local bandwidth here is virtually free(if you have DSL), but there is no local content worth viewing.

            Uploading only makes sense when your

        • Re: (Score:2, Interesting)

          by xtracto (837672)

          I live in a 3rd world country, and I'll tell you that internet cafes here mostly do not have the bandwidth for such. Most people do it from work. Most of us here are still on dial up or equivalent. Even at most companies/universities, you have to get in at off-peak ours to be able to watch youtube.

          Even so, it is not uncommon for people in the towns to own (obsolete) computers (P3 era and up).

          I won't comment about the technology issues of delivering high bandwidth services on third world countires. Like it or not, such issues are slowly but steadily being overcome.

          However, one of the main points in the summary (yeah, I did not read the article, so sue me[or flame me]) is the *profitability* issue that comes with advertising.

          The problem is that as a high school mexican student, usually the ads you see when navigating through porn sites, facebook, hi5 or whatever page is "de moda", you usually see

          • Re: (Score:3, Informative)

            You're right. In my life I've followed ad links less than ten times, and only once did it lead to a purchase(Intergrated Circuits).. There simply isn't all that money to be made from advertising in underdeveloped countries unless you can localise the adverts.
      • by dejanc (1528235) on Tuesday April 28, 2009 @09:20AM (#27745277)

        Based on my experiences in a couple of 3rd world countries, I'm pretty sure that 99.9% of these users are at internet cafes - they spend the local equivalent of a couple of quarters for a couple hours and then the next user gets on.

        "3rd world country" is a very wide definition, but I live in one of those country where we pull a lot of content but don't click on ads.

        Here in Serbia, many people have good enough broadband connection, either at work or home, to watch a lot of videos.

        However, we have no incentive whatsoever to click most of the ads. Paypal doesn't work here, and I wouldn't trust our post to ship any goods anyway. Also, most of the stuff to buy online (like premium memberships) are way too expensive for most of us.

        I think countries like this are the problem, not the real 3rd world where hardly anyone has the bandwidth to watch videos and download music.

      • Re: (Score:3, Informative)

        by Acer500 (846698)

        That's unlikely to work, at least in anything like bittorrent's current form, because these users don't own their own computers and network connections.

        It is true that there are a lot more net cafés over here (here = Uruguay, South America) than in the US on average, but at least over here, 1/3rd of the population owns a computer (that includes children and elderly), though a lot of those are OLPCs.

        "Broadband" (if it can be called that) would collapse, though, we're already quite strained as it is.

        Whatever happened to the multicast idea?

        BTW I saw a mention of SopCast somewhere in this thread, I second the idea...

      • by Ed Avis (5917)

        Few torrents of any significant size are going to complete in that short of a space of time.

        What do you mean? Obviously, these files are small enough to download in a reasonable amount of time otherwise the users would not be able to watch them, no matter how they are downloaded. It is true that for web video, you don't want to wait for the whole file to download before it starts playing, whereas the current Bittorrent protocol downloads blocks in a fairly random order. (I think the randomization might b

    • by ivoras (455934)
      The single major problem with p2p-like video streaming is bandwidth reliability. The canonical problem is: a peer you've been downloading the stream quits watching in the middle of it - your stream of course stops then and there until another peer can be found (now multiply this with possibly hundreds of peers supplying you with patches of the whole content). It seems that the only way around it is to force clients that have started streaming to finish them and to force them to seed. Of course, then the tot
    • Or you could just use Pirate B... oh, right.
    • That might work for all I know, but I see a potential problem. Relying on user bandwidth assumes the users have much in the way of bandwidth and can afford to use their own bandwidth for these issues. Of course, if the users in these third world countries had the money for great/cheap Internet infrastructure and bandwidth to spare, then they'd probably have the money to buy crap from ads, in which case none of this is a problem anyway.

  • by squoozer (730327) on Tuesday April 28, 2009 @07:29AM (#27744099)

    I don't see the dilemma here, we are talking about companies that are in the business of trying to make money. If it is prohibitively expensive / unprofitable for them to supply video to Africa they should stop doing it. Of course there might be a good business reason to do something that incurs a loss for a while but I don't think anyone would bank on Africa suddenly becoming a profitable area of the world for anyone but diamond miners.

    I don't want to argue for rampant capitalism but we need to get a grip and realize that services cost money to provide and unless the consumers are willing to pay (in one way or another) they will probably have to go without.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      I believe that the problem is less to do with the fact that it may be charity to supply access to content for these companies and all too often the case of business personnel saying our advertising works in the US why are the Africans not buying it. To put it in perspective, I am an American my culture roughly equates to some European cultures and Australian culture. If I see an advertisement from one of these cultures I generally get it. There may be pieces missing but for the most part I get the gist of t

      • Re: (Score:3, Interesting)

        by squoozer (730327)

        I think there is certainly some mileage in what you are saying but I think you missed one vital point regarding consumers in poorer nations at least: they don't have spare cash. For the most part almost all their money goes on buying essential goods, they don't have spare cash to buy the next gadget. From the advertisers point of view there is little point in directing adverts at them even if they were localized.

        Of course this is a rather broad brush argument because there are rich people even in the poores

    • Re: (Score:2, Insightful)

      by jfrankmbl (1542851)
      The dilemma is that their main goal may not be to make money. Maybe they want to provide information or a creative outlet or a little bit of humor to people. If the cost of doing so is not offset by incoming revenue, it is impossible for them to maintain, no matter how good their intentions. So, yes, you are right they should stop doing it because Africa probably isn't going to turn a profit with their current business model anytime soon. However, if that causes them to stray from their vision, they are
    • Re: (Score:3, Insightful)

      by PingPongBoy (303994)

      There is a huge potential market but the people who put this fantastic technology together can't take advantage of the situation??? If the customer comes to the door but can't get in, don't whine about losing money.

      If they drive away customers, someone else will take up the business. It's just a matter of selling them something they want.

  • by moon3 (1530265) on Tuesday April 28, 2009 @07:31AM (#27744119)
    You don't need to be a web2.0 savant to figure out that rampart bandwidth expenses combined with meek advertisement (YouTube) could lead to loses.

    But hey, some consider this turf and establishment price. Google sure can afford it.
    • Re: (Score:3, Funny)

      by Anonymous Coward

      Are we still on web2.0?

      The web is just about the only thing that has a longer release cycle than debian.

    • Re: (Score:2, Informative)

      by dtoffe (799874)
      From a developing country here (southern south america) and I fully agree with you, the problem is in the business model. See, I have now some money to spend, in local currency, that translates to around 3000 US dollars. I was trying to pay a 90 U$D service, and the only available payment method is with International Credit Card. But, the basic cost of having such CC is ridiculously high compared to the amount of money I could spend in a year buying internet items and services. So, what about easier paym
      • by rhsanborn (773855)
        There would almost certainly have to be an intermediary service a la Paypal (I mean in the general aggregation sense, I have no idea of their capabilities for other currencies, etc). It would be incredibly expensive for all but the largest providers to maintain broad coverage of currencies/payment methods. Instead, it needs to be the business of a company to maintain this, and take a little off the top. That does mean that it's going to be more expensive to the end user, one way or another.
  • No paradox (Score:5, Insightful)

    by Tx (96709) on Tuesday April 28, 2009 @07:32AM (#27744129) Journal

    It's not as if this is anything specific to the developing world. The model for the dotcom 1.0 boom was "get the users now, figure out how to make a profit from them later". Now it just so happens that with Web 2.0 the new users are in developing countries, but the problem is the same - do you try and serve all these users in the hope that some day they might become profitable, or do you say that if you can't see a way to realize profit from them near term, then cut them loose. We all know how dotbomb 1.0 turned out, so the answer is pretty clear. The likes of google can cross-subsidize the poor, but less well-funded businesses should face up to the economic realities and not continue to pour money into users that will likely never be profitable for them - by the time these users might become profitable, they'll probably have moved on to other services anyway.

  • by sysupbda (1502727) on Tuesday April 28, 2009 @07:34AM (#27744143)

    Yes, I know.. it costs money.

    But I just started thinking Internet is getting amazing again. The fact that I can stream a political discussion from the U.S. or access free e-books from Europe here in Hong Kong is AMAZING.

    How can we resolve the money issue without breaking this? I feel people around the world have never had a chance like today to bridge misunderstandings. Up until 2 years ago the only understanding of Western world one could have far away was:

    - Hollywood (or other typically fictional) movies

    - Expensive imported books (sometimes requiring a language skill level not easily attained abroad)

    • by MosesJones (55544) on Tuesday April 28, 2009 @08:11AM (#27744511) Homepage

      How can we resolve the money issue without breaking this? I feel people around the world have never had a chance like today to bridge misunderstandings. Up until 2 years ago the only understanding of Western world one could have far away was:

      - Hollywood (or other typically fictional) movies

      - Expensive imported books (sometimes requiring a language skill level not easily attained abroad)

      You really have this arse about face. The issue is not the inability of people in the developing world to understand Western culture, they get it all the time. With CNN and the BBC broadcasting globally its easy to get "Western" news and the BBC in particular has very strong cultural link communications with the world service. Then you get the propaganda stations like Voice of America

      In addition governments spend loads on organisations to spread the cultural message (e.g. the British Council) to these countries.

      These countries are voracious consumers of western media and fashions and have been for 50 years, this is why they are massive users of this content.

      The real issue is that in the Western World, especially the US, there is bugger all going the other way and bugger all knowledge of non-Western cultures (or even countries).

    • by bitt3n (941736) on Tuesday April 28, 2009 @10:23AM (#27746121)

      Yes, I know.. it costs money.

      But I just started thinking Internet is getting amazing again. The fact that I can stream a political discussion from the U.S. or access free e-books from Europe here in Hong Kong is AMAZING.

      How can we resolve the money issue without breaking this?

      Yes! For many years I was a stalwart member of the Islamic Jihad. Then one day, I saw that Youtube video where the cat grabs the string tied to the the ceiling fan and then spins around until he can hold on no longer, and he flies off against the wall. It gave me an entirely new perspective on Western culture and the common struggles faced by our two civilizations.

      • Re: (Score:2, Insightful)

        by sysupbda (1502727)

        I know that terrorism is the only major concern of the western world together with the Swine flu and Obama's puppies + the funniest tricks cat do.

        What I meant is it is hard to stumble upon the things like western debates like those presented on http://www.youtube.com/user/HauensteinCenter [youtube.com] while walking around Hong Kong. You would have to fly to the U.S. and attend debates if youtube was cutting you out.

        Also the West is taking more and more advantage of Internet to share their much better funded research lik

  • P2P (Score:5, Insightful)

    by Yvanhoe (564877) on Tuesday April 28, 2009 @07:44AM (#27744237) Journal
    P2P a la bittorrent is the only way to feed the world with vidéos. Period.
    Companies like Youtube are making revenues that will not last : they occupy a temporary niche that will disappear sooner or later. Let's just hope they won't cling to their model like the **AA did.

    More broadcasting power to the people ! Call for a symmetrical up/down connectivity !
    • by Abcd1234 (188840)

      P2P a la bittorrent is the only way to feed the world with vidéos. Period.

      No. The only way to "feed the world with videos" is to use the multicasting technology that's built right into the internet. Too bad the ISPs and carriers screwed up so badly and forced developers to create a far less efficient L7 solution...

      • Uh, multicasting might work great for live events, but how does it solve the video-on-demand problem? Are enough people looking to watch exactly the same pre-recorded video at exactly the same time for multicasting to really help?
    • by westlake (615356)
      More broadcasting power to the people ! Call for a symmetrical up/down connectivity !

      How much does this cost and who pays the bills?

  • high bandwidth (Score:5, Informative)

    by ionix5891 (1228718) on Tuesday April 28, 2009 @07:52AM (#27744303)

    i run several large sites, all are very popular in south america, south east asia and middle east

    but the bandwidth bills are huge as is in gigabits/s

    what we started doing is capping speeds during peak hours to these places simply because not enough money is being made from sales and advertising to pay for it

    i know net neutrality people say thats wrong but were not a charity and have to pay alot to carriers :(

    • Re:high bandwidth (Score:5, Informative)

      by divisionbyzero (300681) on Tuesday April 28, 2009 @08:12AM (#27744521)

      This isn't a violation of net neutrality because as a site owner you could serve traffic to these locations but *choose* not to. If a provider prevented you from serving content to certain locations, etc, that would be a violation of network neutrality.

      • Re: (Score:3, Informative)

        by ionix5891 (1228718)

        true we have no restrictions offpeak 12 hours a day when we have agreements with carriers not to charge anything for bandwidth as they have plenty capacity then, so we just pass on the savings to users

        the problem is peak hours, even at 4.5-5$ a mbit @ 95th percentile the costs spiral very quickly :( and some places like iran where we get huge traffic from at times makes us nothing in income unfortunately

        the bandwidth prices are falling rapidly but the amount of users from developing countries is growing exp

        • by Nethead (1563)

          Be glad that you're not paying what I was back in 1998 for pipe. The best connection I had was for about $500/Mb/s measured at 95/5. And I was the largest consumer in Seattle at the time (7 peers using up to 1Gb/s.)

    • by c (8461)

      > i know net neutrality people say thats wrong

      Net neutrality people would rarely say it's wrong to discriminate against your own users with your own content. They only have a problem with third parties acting as gatekeepers.

      c.

  • by azgard (461476) on Tuesday April 28, 2009 @08:03AM (#27744425)

    So what's preventing advertising companies to have global or localized ads, depending where the user lives?

    I know Google does it, but all the other ads I see in Czech republic on the US pages are very local to America (companies/services I don't know).

    • So what's preventing advertising companies to have global or localized ads, depending where the user lives?

      Its technically feasible. But as an advertiser, are you going to pay for 18 localized versions of ads to locales that have very little money to buy your wares? And all the corporate infrastructure needed for that?
      • Re: (Score:3, Informative)

        by keeboo (724305)

        Its technically feasible. But as an advertiser, are you going to pay for 18 localized versions of ads to locales that have very little money to buy your wares? And all the corporate infrastructure needed for that?

        Little money? It depends on which so-called developing countries you're talking about.

        Now if you're expecting for a guy in Brazil to click in a banner written in English, advertising some generic random gadget, and after that, he would bother to make an international order (to pay a lot for transportation, local taxes, the long wait and any other hassle possible).... Well, think again.

        Why should someone bother? Would you?

        E-commerce in Brazil is quite popular, and you see lots of banners advertising p

  • Perhaps no company is more in the grip of the international paradox than YouTube, which [an analyst] recently estimated could lose $470 million in 2009, in part because of the high cost of delivering billions of videos each month.

    We just can't let this happen. Youtube is too big to fail. Just think of the impact it would have on the economy.

    We must support them with a government bailout.

  • by rodrix79 (1542781) on Tuesday April 28, 2009 @08:29AM (#27744661)
    Ok. I am south american and I have worked for years both in the computer industry and as a social worker. Now let me see if I am getting this straight: You are telling me that some web 2.0 companies can't make a profit from developing countries while cellphone companies sell millions and millions of shiny new cellphones and cellphones lines to poor people? And you tell me it is not the companies' fault? Mmmmm... I may be wrong, but could it be that sitting there in their air conditioned offices is not getting them a clear picture on how to make businesses in different cultures?

    PS: By the way, I haven't found an English translation for this, but we are not "poor people" but "personas en situaciÃn de pobreza". Hope you do get the difference there ;)
    • I don't speak either of portugese or spanish, but are you looking for something like lower per capita income when compared to the US counterparts?

    • by dtoffe (799874) on Tuesday April 28, 2009 @08:52AM (#27744925)
      There is not a direct translation that I know of, but I'll try to clarify what he means: We are not analphabet sheep herders isolated in the mountains (no pejorative intention here), we are educated people, even with university degrees, but mostly underpaid, unemployed, having to pay ridiculously high taxes but receiving ridicuously bad services from an incredibly bloated and inefficient state. A few days ago I've seen on the TV a field full of tents somewhere in USA, where people suffering from the current crisis had to go to live when they lost their house. That's close to what we mean. Cheers, Daniel from Arg.
    • Re: (Score:2, Informative)

      by karuna (187401)
      Exactly! Even if people have much less income comparing to the US or Western Europe, they still have some disposable money. Otherwise, how they are able to browse the Internet that certainly costs something. The content providers probably don't even realize that most people in third word countries don't have credit cards or bank accounts, so they are often simply unable to buy things online even if they want to. Micro-payments by cell phone are very popular, but they usually work only locally as they requi
    • Re: (Score:3, Insightful)

      by Exp315 (851386)
      You make a very good point. I think U.S. companies are often culturally naive about the rest of the world, and fail to exploit the international market because they simply don't understand it. I sell software online, and while the U.S. is certainly my biggest market, my sales also do very while in countries where I have been able to "localize". That means translating everything to the local language, pricing and marketing the product appropriately for the country, and not making it difficult to buy. If you
      • by tnk1 (899206)

        Software is a much different market. Assuming that your software is not being "pirated", no matter where in the world your customer is, it still costs pretty much the same to sell your product to them. The bandwidth is usually not a big deal, because it is a one-time download and you can make them wait as long as it takes to finish the download.

        Yeah, there's costs for internationalization and pricing, but those costs are generally fixed quantities that you can make a decision about before you decide to of

    • Ok. I am south american and I have worked for years both in the computer industry and as a social worker. Now let me see if I am getting this straight: You are telling me that some web 2.0 companies can't make a profit from developing countries while cellphone companies sell millions and millions of shiny new cellphones and cellphones lines to poor people? And you tell me it is not the companies' fault? Mmmmm... I may be wrong, but could it be that sitting there in their air conditioned offices is not getting them a clear picture on how to make businesses in different cultures?

      Simple. Completely different business models. Once the very expensive infrastructure is in place, the costs of new users is low; there is no real bandwidth limit since most people don't use every tower all the time and you can simply drop calls if you get overloaded; plus people pay in advance for the service and the phone. No pay? No service. You have a high startup cost with relatively low marginal costs for each additional user; plus you can limit service to profitable areas (or get government to sub

    • by tnk1 (899206)

      I think the problem is not that you can't make money in South America, its that the money is not easily made via targeted advertisements and the methods that work better in the Western world.

      It's easy to make money with cell phones: you have to buy a cell phone, and then you have to pay to continue service. Web sites offer all or most of their content for free up front and we hope you view enough content and click enough ads to generate cash. That means that we are working on a "If you build it, money wil

  • The Long View (Score:3, Interesting)

    by Bob9113 (14996) on Tuesday April 28, 2009 @08:32AM (#27744695) Homepage

    Going way off on a tangent here, into a "solution" which probably isn't really practical, but which would be cool if it worked.

    'But these people are so hungry for this content. They sit and they watch and watch and watch. The problem is they are eating up bandwidth, and it's very difficult to derive revenue from it.'

    Is there a subset of content which could increase the ability to derive revenue from those countries? If we selected a subset, it would reduce the cost to deliver it. If it was content that increased the ability to derive revenue, it would pay for itself in the long run.

    But what am I talking about? Content that increases the ability to derive revenue through advertising? Well, basically, I'm thinking of some TED Talks that have extraordinary ideas for increasing sustainable economic growth in third world countries. What if these companies, who know how to deliver content, focused on content like "how to convert cow dung into fuel pellets", "sustainable yield agriculture in equatorial climates", or "scrap metal Stirling engines". Even if the viewers (those who have access to computers) didn't use the knowledge for themselves, they might develop a hacker ethic to help bring up the rural areas of their country. Increased productivity at the edges lifts the whole country.

    For the target countries, it gives them something to watch instead of just building resentment. For the content companies, it is a very long-term approach to developing new markets of the future.

    Just spitballing. Any thoughts?

  • by cybernanga (921667) on Tuesday April 28, 2009 @08:52AM (#27744935) Homepage Journal

    Having lived for more than 2 decades in third world countries, there is more going on than you may think.

    It is true that may people in developing countries do not have the funds to pay, which is why the advertisers are getting upset. However, in my opinion the biggest problem is that even when you have the funds to pay, you can't find anyone who will accept your money.

    For example, how many online stores only accept Credit/Debit Cards, from their own country? PayPal is supposed to provide a solution for this, but only if you live in a western country. If you live in South America, Asia or Africa forget it, you can't use the service.

    Even in the poorest developing countries there are still many individuals who have disposable income, but they are limited to spending it within their own markets, because of artificially imposed trade barriers, often set-up by the very companies that complain that they can't penetrate said market.

    If you sell widgets online, and only allow payment via a Credit/Debit card with a US billing address, guess what, you will generally only make sales to people in the US. Everybody else relies on grey imports, and often the middle men\importers & smugglers will make more money than you on your own product.

    I don't have a complete solution, as the topic is very complicated, but I am trying in my own tiny little way.

    • Re: (Score:2, Interesting)

      Why is the US like that? I notice that many web sites won't sell to Canada.

    • by tnk1 (899206)

      It's true that it can be hard to buy things overseas, but bear in mind that it is risky to accept payments from countries where the economies may be less stable and profitable and regulation is unfamiliar or ineffective.

      With a US credit card, the seller knows that they will get their money, and they won't have to navigate through the laws, taxes and possibly even corruption in 140 other countries and territories worldwide to get it. They don't have to calculate exchange rates, or worry about how a rate shi

      • Re: (Score:3, Insightful)

        by keeboo (724305)

        It's true that it can be hard to buy things overseas, but bear in mind that it is risky to accept payments from countries where the economies may be less stable and profitable and regulation is unfamiliar or ineffective

        I mean no offense, but I don't believe the U.S. are exactly an example to the World on stability and profitability nowadays.

        With a US credit card, the seller knows that they will get their money, and they won't have to navigate through the laws, taxes and possibly even corruption in 140 other countries and territories worldwide to get it. They don't have to calculate exchange rates, or worry about how a rate shift will devalue their ask price.

        If a company wants to remain inside its comfort zone and deal only with US mechanisms, it should not complain foreign people don't buy from them. - It's not like it has some sort of "divine right" to sell to the rest of the world, anyway.

  • by cenc (1310167) on Tuesday April 28, 2009 @09:00AM (#27745041) Homepage

    I am sorry, but this is total BS. I have been developing web sites in Latin America (Mexico, Guatemala, Chile) for going on 10 years now. This might (MIGHT) apply to populations in Africa and some parts of Asia.Even there are people with money. If they have a computer, and sufficiently fast connection to watch things like U-tube, they have money.

    This is the idiots fault for not doing their market research. There are trillions of dollars to be made in developing country because of demand for things that are not easy to find or limited selection. It is the advertisers fault for not being able to create mechanisms to deliver the goods and accept payment.

    The problem is that what they are selling often requires a U.S. only credit card. Even people with credit cards, often have trouble buying things in the United States or Europe because they do not accept foreign cards.

    Solve the payment problem, and the revenue is unlimited. There are often plenty of domestic web sites in developing countries making plenty of money.

    As for advertising revenue, I have run many sites and know for a fact I can make many times the money for any given space on a popular site over what Google will pay me for it by selling to a domestic advertiser in a developing country.

    The ignorance of that article is impressive.

    • Re: (Score:3, Informative)

      by NineNine (235196)

      You're probably right. It probably IS the credit cards. But as an e-commerce seller in the US, I'm going to tell you straight up: I do not and will not accept credit cards from outside of the US. Why? Rampant fraud. Until other countries deal with their fraud issues, there is no way that online merchants of any kind are going to accept credit cards from outside of the US. The risk is waaaay too high.

      • by dkf (304284)

        Until other countries deal with their fraud issues, there is no way that online merchants of any kind are going to accept credit cards from outside of the US. The risk is waaaay too high.

        What about plans to deal with credit card fraud risk from inside the US?

        • Re: (Score:2, Informative)

          by NineNine (235196)

          What about plans to deal with credit card fraud risk from inside the US?

          You do the best you can. But from my experience, the fraud rate from inside the US is several orders of magnitudes better than outside of the country.

    • by drinkypoo (153816)

      Most sites that won't take international credit cards aren't interested in the massive amount of fraud that comes with them. It's much harder (read: effectively impossible) to find the people responsible when they're in another country.

    • by tnk1 (899206)

      Let's be honest. It's not that there is no money in South America, its that it costs a lot of money to get to a position where you can tap that market.

      Let's say I could make 100m dollars in Brazil, but it costs me 99m to make that 100m, then my profit is only 1m, even if I was able to tap millions in revenue.

      Your local businesses will pay less on the dollar to offer their services to you, that's how they can manage it. They might only make 3m dollars in revenue, but if it only cost them 1m dollars to get

  • leave them alone.. (Score:2, Interesting)

    by zr (19885)

    let it happen naturally. history shows forcing progress on people always results in some flavor of evil.

  • YouTube is already blocking content for other countries. So, regardless you are an american citizen, if you are in certain countries, you can't view many videos. Blocking content is NOT the solution! This will only lead to more isolation. I can't express well enough how dissapointed I am.

    I really expected better from Google, can't believe that with Vinton Cerf as one of it's VPs and all many other enlightened ones over there they took this lame approach.

    What has happened to the "Information should be free"

  • Web companies often need more servers to make content available to parts of the world with limited bandwidth

    Can anyone clarify what on earth this part of the summary means? Isn't that like saying "we've only got really thin pipes, so we'll need a more powerful pump to force enough water through them?"

  • You insensitive clo... oh, I'm ashamed of myself.
  • The proposition before us is that the developing world is a profit sink for web companies. We have seen some excellent responses from participants from South America who suggest there is money to be made in developing countries if you know how. I remember reading about a company that garnered considerable success specializing in marketing to developing countries with some incredibly innovative thinking, and I feel the answer lies in this direction.

    There was a country not mentioned as yet, however, that has

  • This is just capitalism in action. This is a variation of the "free rider" problem.

    The logical extension of restricting entire countries because you can't derive revenue from them is to block *any* group of users that you can't derive revenue from if you can figure out how to do that.

    The corollary is that you want to attract customers who you *are* likely to derive revenue from, so you create content to appeal to those groups.

    If the marketing geniuses figure out that senior citizens are "unprofitable" as in

  • How come Africans with pipes fat enough to watch streaming video are to poor to buy whatever crap that is advertised? Bandwith can't be that cheap in the 3rd world. Will adblock users be next? After all, we're just freeloading on the content and don't even see the ads.
  • ...are nothing but a bunch of window shoppers, eh? Welcome to the world of retail where clerks have been forever been frustrated when asking the question "May I help you?" and being told "Nah. I'm just looking.".

    Expect to see more of that by visitors from the developed world as unemployment continues to rise over the next year or so (if you believe the news) and their disposable income prevents them from buying as much as you need to maintain your websites and pay your advertisers.

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