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Developing World Is a Profit Sink For Web Companies

kdawson posted more than 5 years ago | from the international-paradox dept.

The Internet 203

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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Part of the online video problem . . . (4, Insightful)

cashman73 (855518) | more than 5 years ago | (#27744043)

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,...

Re:Part of the online video problem . . . (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#27744077)

THIS [youtube.com] is part of the online video problem.

Re:Part of the online video problem . . . (-1, Troll)

Anonymous Coward | more than 5 years ago | (#27744189)

Man, those niggers sure love their fried chicken. I think this video is a fitting rebuttal to any left-wing moron who denies that "welfare queens" exist.

Re:Part of the online video problem . . . (-1, Troll)

Anonymous Coward | more than 5 years ago | (#27744461)

No kidding! God forbid they drive their welfare-paid Ford Expedition to the grocery store and use part of their welfare check to buy some chicken, vegetable oil, and flour. How could Obama let these people suffer like this?

Re:Part of the online video problem . . . (0)

Anonymous Coward | more than 5 years ago | (#27745543)

Yeah! I mean, look at that one dude's tie, everyone KNOWS that you're supposed to wear a humble one-color drab tie when you're picking up your welfare check. Who does that lazy prick think he is, wearing a polka dot tie when he obviously (cause he's black, right?) doesn't have a job...

LOL. You're just pissed because it's far more probable that the people in the video have better jobs than you do, drive better cars and know how to get customer service to take notice.

On a more positive note, butthurt racists are the funniest kind of racists, so kudos to you, Mr Rationalizing Whitetrash!

Re:Part of the online video problem . . . (-1, Flamebait)

Anonymous Coward | more than 5 years ago | (#27744689)

lol @ niggers

Drive your ass to the grocery store, buy some chicken, and drive your ass home and fry it up. You know, like your grandma used to do, you fat, lazy, self-entitled fucks. Where's your savior Obama now? He can't clap his hands and turn water into fried chicken, can he?

Re:Part of the online video problem . . . (5, Informative)

jsoderba (105512) | more than 5 years ago | (#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.

Re:Part of the online video problem . . . (4, Informative)

fuzzyfuzzyfungus (1223518) | more than 5 years ago | (#27744147)

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.

Re:Part of the online video problem . . . (1)

jeillah (147690) | more than 5 years ago | (#27744329)

I don't think that you can consider Canada, the UK, Japan etc. developing countries. I'm sure the ad men do quite well in those countries. It is locals like India, Africa, most of Asia where there is a mostly poor population utilizing bandwidth that is disproportionate to the ad dollars that audience supports.

BBC Videos (1)

Warlord88 (1065794) | more than 5 years ago | (#27744055)

I was wondering from a long time whey videos on the BBC site cannot be accessed from here in India. Is this the reason?

Re:BBC Videos (3, Informative)

lordandmaker (960504) | more than 5 years ago | (#27744073)

That's more down to the BBC being funded by TV Licensing.

Re:BBC Videos (1, Informative)

Anonymous Coward | more than 5 years ago | (#27744117)

As others have mentioned from a US perspective, this is due to licencing. The BBC licences programs for distribution in the UK only (even from other parts of the BBC).

Re:BBC Videos (2, Informative)

91degrees (207121) | more than 5 years ago | (#27744569)

The things that the BBC produces in house are usually sold to other countries with a local exclusivity agreement for the buyer. They're contractually barred from showing them there by that side of the agreement as well.

Re:BBC Videos (1)

momfreeek (720443) | more than 5 years ago | (#27745161)

This is kind of missing the point. The BBC doesn't make any money from advertising so it's content is only made freely available to those who have already paid for it (UK licence payers).

1947-08-15 (5, Funny)

tepples (727027) | more than 5 years ago | (#27744145)

I was wondering from a long time whey videos on the BBC site cannot be accessed from here in India.

15 August 1947 [wikipedia.org] is the reason.

Re:1947-08-15 (5, Funny)

fuzzyfuzzyfungus (1223518) | more than 5 years ago | (#27744175)

In a move sure to inspire controversy, the BBC Online yesterday announced its new "Don't blame us, blame Ghandi." splash screen for viewers from Indian IPs...

Re:1947-08-15 (1)

jollyreaper (513215) | more than 5 years ago | (#27745203)

The median high-definition monitor, despite a larger pixel count, is still smaller than living-room SDTVs.

You mean in terms of total surface area? That's understandable. Typical use of a desktop monitor is from around two feet away; the television is anywhere from 5 to 20 feet away from the couch.

Re:BBC Videos (1)

blind biker (1066130) | more than 5 years ago | (#27744283)

I don't think so: most of the time I can't access BBC videos, although I live in Finland.

Re:BBC Videos (2, Interesting)

sopssa (1498795) | more than 5 years ago | (#27745537)

Finland actually counts as tier 3 country in internet advertising (revenue) perspective. Only lower countries are the likes of Iraq and Iran and African countries. Tier two is usually german, france and so and tier 1 is usa, uk and canada.

Re:BBC Videos (1)

momfreeek (720443) | more than 5 years ago | (#27744789)

The BBC doesn't run any advertising at all so there is even less incentive to make the content freely available outside the UK.

Re:BBC Videos (1)

hedwards (940851) | more than 5 years ago | (#27745489)

Um, yes they do. They don't in the UK, but whenever I watch BBC America I'm pretty sure that I'm seeing commercials at various points. Although it's been a while since I watched anything on it.

How else are they going to pay for the content? In the UK there's that infamous tax, but outside of the UK there isn't a similar tax so something has to give.

Time = Money, Right? (5, Interesting)

eldavojohn (898314) | more than 5 years ago | (#27744057)

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?

Re:Time = Money, Right? (1)

YrWrstNtmr (564987) | more than 5 years ago | (#27744097)

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.

Re:Time = Money, Right? (1)

zarkill (1100367) | more than 5 years ago | (#27744159)

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.

Re:Time = Money, Right? (3, Insightful)

YrWrstNtmr (564987) | more than 5 years ago | (#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.

Unless you can sell the localised version (0)

Anonymous Coward | more than 5 years ago | (#27744585)

or need it to get the government contract.

Either pay the developed world to do the work, or swap free video access to the developing world for it.

Re:Time = Money, Right? (1)

ScentCone (795499) | more than 5 years ago | (#27744705)

Half a billion dollars in micro translation, click fraud, link farming, and captch busting services?

Re:Time = Money, Right? (0)

Anonymous Coward | more than 5 years ago | (#27744149)

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

It's called captcha-busting, and they'll do it for 1./10 of 1 cent per captcha. In other words, it helps fuel spam.

Re:Time = Money, Right? (0)

EatHam (597465) | more than 5 years ago | (#27744221)

Ontology building services?

I am not sure there is a big market for cancer construction.

Re:Time = Money, Right? (3, Interesting)

TheNarrator (200498) | more than 5 years ago | (#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.

Re:Time = Money, Right? (0)

Anonymous Coward | more than 5 years ago | (#27744273)

Click fraud!

Re:Time = Money, Right? (0)

Anonymous Coward | more than 5 years ago | (#27744295)

This has been done - it is how captchas were broken.

Re:Time = Money, Right? (1)

fuzzyfuzzyfungus (1223518) | more than 5 years ago | (#27744431)

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 entities would likely be fairly simple.

Re:Time = Money, Right? (2, Insightful)

bami (1376931) | more than 5 years ago | (#27744881)

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 time, if somebody gives me a rapidshare link or something of that sort, I say screw that.
People want to be entertained NOW, instead of doing stupid stuff.

The interweb is slowly becoming a MMO, and I'm sure most people just say "screw that, I'll take my stuff somewhere else".

Re:Time = Money, Right? (2, Insightful)

inviolet (797804) | more than 5 years ago | (#27744733)

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.

Re:Time = Money, Right? (1)

hedwards (940851) | more than 5 years ago | (#27745515)

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

Re:Time = Money, Right? (2)

TheLink (130905) | more than 5 years ago | (#27745559)

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's a farm on WoW :) ).

Yes many 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.

Lastly while we in the "cheaper world" might not be producing anything particularly valuable, what's produced still does have some value - otherwise it wouldn't be selling in Walmart, newegg, Amazon, etc.

Re:Time = Money, Right? (1)

PMBjornerud (947233) | more than 5 years ago | (#27744879)

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.

Re:Time = Money, Right? (1)

eugene ts wong (231154) | more than 5 years ago | (#27745635)

Image tagging is a menial task that could benefit a lot of people.

kidneys (1)

spectrokid (660550) | more than 5 years ago | (#27744977)

How about ads for where to sell ^h^h^h^h donate a kidney? (running for the woods now...)

Let the users pay the bandwidth bills (4, Insightful)

Ed Avis (5917) | more than 5 years ago | (#27744093)

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.

Re:Let the users pay the bandwidth bills (3, Interesting)

Jah-Wren Ryel (80510) | more than 5 years ago | (#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.

SOPCASTS are like "Live" Torrents (1)

Fearan (600696) | more than 5 years ago | (#27744463)

Google "SOPCAST" and "p2p tv" and you will find a significant number of sites that provide live p2p video streaming. Basically while you download from someone, you upload to someone else at the same time. This is widely used for sports matches and other tv that is better enjoyed live than with an old-school torrent.

Re:SOPCASTS are like "Live" Torrents (0)

Anonymous Coward | more than 5 years ago | (#27744743)

And if you limit the download speed to the upload speed and also wait for 100% download before starting playback, you've won. That also means you get more than a 1.00 ratio because you keep seeding during playback.

Re:SOPCASTS are like "Live" Torrents (1)

Inda (580031) | more than 5 years ago | (#27745763)

TVU is another. In fact there are a dozen. And all these new P2P flash players do a decent job too.

Sopcast is the daddy as far as I'm concerned. When I use VLC with it, it is almost a perfect solution for sports. I just wish the quality would improve. For someone like me, with a high upload rate, I think I should be offered high quality.

If I could just get it to stream to my 360, I'd be laughing. The one or two discussions I've read about it on the net are not enough; I can never get the stream to play even though my laptop says it's spitting out bits and bytes.

Would love to see an OSS solution. And no, I'm not clever enough to roll it myself.

Re:Let the users pay the bandwidth bills (2, Interesting)

inasity_rules (1110095) | more than 5 years ago | (#27744841)

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] .

Re:Let the users pay the bandwidth bills (1)

Jah-Wren Ryel (80510) | more than 5 years ago | (#27744913)

My experience is limited to asia where music and video streaming at the cafes is pretty common and most of the people in the cafes don't have jobs with internet access or PCs at home.

Re:Let the users pay the bandwidth bills (4, Insightful)

dejanc (1528235) | more than 5 years ago | (#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:Let the users pay the bandwidth bills (2, Informative)

Acer500 (846698) | more than 5 years ago | (#27745593)

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...

Re:Let the users pay the bandwidth bills (1)

Ed Avis (5917) | more than 5 years ago | (#27745841)

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 be because people tend to close their Bittorrent client after downloading, which means the last block of the file would become the scarcest if it worked sequentially.) So that would need changing.

Re:Let the users pay the bandwidth bills (1)

CookedGryphon (1096241) | more than 5 years ago | (#27744363)

It would be perfect if the much talked about Video element supported p2p streaming. It can't be that hard to set up either, you have a definitive list of everyone who is watching the video at the time so tracking should be easy. The only problem I can see is getting the end of the video, when people who have finished watching close their browser and don't upload their fair share of the end of the video.

Even if it's not perfect, it would take a lot of the burden off these sites, hopefully enough to make it worth their while to host.

This would also be a boon for smaller innovative sites which want to host videos but can't afford the bandwidth.

Re:Let the users pay the bandwidth bills (1)

ivoras (455934) | more than 5 years ago | (#27744565)

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 total bandwidth consumption goes way up.

Re:Let the users pay the bandwidth bills (0)

Anonymous Coward | more than 5 years ago | (#27744971)

I'm actually suprised no one has mentioned more caching by ISPs.

Re:Let the users pay the bandwidth bills (1)

nathan.fulton (1160807) | more than 5 years ago | (#27745035)

Or you could just use Pirate B... oh, right.

Business or Charity? (4, Insightful)

squoozer (730327) | more than 5 years ago | (#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:Business or Charity? (2, Insightful)

Anonymous Coward | more than 5 years ago | (#27744887)

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 the humor or intent of the ad. Now show me a ad from Japan or Sweden and I am left wondering what the hell was that. I am not trying to slight those cultures but some of the stuff I see produced from their cultures is just plain weird to me. I would not know what the hell to buy even if I understood the message of the ad half of the time. Conversely I am sure that it is the same for other cultures watching US / UK / Australian cultural advertisement. Some of the stuff we spend money on probably seems foolish at best to them. If it was delivered in a context they could relate to you may get better conversion. In business some times itâ(TM)s easier to brand a group of people freeloaders, wait till a startup captures that market and then consume them.

Re:Business or Charity? (2, Insightful)

jfrankmbl (1542851) | more than 5 years ago | (#27745639)

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 wise to remember their goals and figure out what they can do outside of "making a buck".

Bad business model, perhaps? (4, Insightful)

moon3 (1530265) | more than 5 years ago | (#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:Bad business model, perhaps? (3, Funny)

Anonymous Coward | more than 5 years ago | (#27744327)

Are we still on web2.0?

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

Re:Bad business model, perhaps? (2, Informative)

dtoffe (799874) | more than 5 years ago | (#27744809)

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 payment methods available, perhaps even in the local currencies, tailored to the local markets you are trying to enter ?? Daniel

No paradox (4, Insightful)

Tx (96709) | more than 5 years ago | (#27744129)

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.

In fact a censorship (4, Insightful)

sysupbda (1502727) | more than 5 years ago | (#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)

Re:In fact a censorship (0)

Anonymous Coward | more than 5 years ago | (#27744453)

You're right, but this argument isn't for the companies, it's for the governments. What you're essentially saying is that information is a human right, and I think this is why this sort of thing unsettles us even though the pragmatist in us sees the coroporation's position is untenable.

The government I believe should get involved, and help support internet infrastructure. I'm no where near smart enough to work out how to do that effectively though..

Re:In fact a censorship (4, Insightful)

MosesJones (55544) | more than 5 years ago | (#27744511)

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).

Contribute or be Cut Off (-1, Flamebait)

RobotRunAmok (595286) | more than 5 years ago | (#27744165)

As much as it amuses me to see the decadent and salacious content of Satan America's Hollywood Filth Factories streamed into repressed and otherwise medieval (except for the broadband and nukes) societies, somebody has to pay the piper.

Maybe YouTube can get some Obama Stimulus, or put it into the defense budget under propaganda/psychological warfare? It's like having a private sector Tokyo Rose...

Re:Contribute or be Cut Off (1)

elrous0 (869638) | more than 5 years ago | (#27744531)

I seriously doubt a million videos of skaters doing faceplants, idiots who just THINK they can sing, and comedy bits devoid of any actual comedy are going to improve our image in the world.

P2P (4, Insightful)

Yvanhoe (564877) | more than 5 years ago | (#27744237)

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 !

Re:P2P (1)

Abcd1234 (188840) | more than 5 years ago | (#27745061)

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...

Re:P2P (1)

RoverDaddy (869116) | more than 5 years ago | (#27745629)

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?

Re:P2P (1)

Abcd1234 (188840) | more than 5 years ago | (#27745733)

Doh, good point... *sigh*

high bandwidth (5, Informative)

ionix5891 (1228718) | more than 5 years ago | (#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 (5, Informative)

divisionbyzero (300681) | more than 5 years ago | (#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:high bandwidth (2, Informative)

ionix5891 (1228718) | more than 5 years ago | (#27745325)

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 exponentially, sometimes I envy google for their deep pockets and being able to afford services like youtube running

Re:high bandwidth (0)

Anonymous Coward | more than 5 years ago | (#27745353)

your example isn't anti-net neutrality. If your user's ISP decided to cap traffic to your site and instead allowed full access to disney that would be a better example.

Why don't they target the whole world with ads? (2, Interesting)

azgard (461476) | more than 5 years ago | (#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).

Re:Why don't they target the whole world with ads? (1)

YrWrstNtmr (564987) | more than 5 years ago | (#27744607)

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?

Then bill customers for what they actually used. (0, Redundant)

Hurricane78 (562437) | more than 5 years ago | (#27744471)

Was that so hard? ^^

(Yes, I know that people expect everything to be free. But hey, if it's worth it, people will pay. [But that is a huge if.])

Youtube too big to fail! (2, Funny)

RemoWilliams84 (1348761) | more than 5 years ago | (#27744479)

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.

that is ironic (-1, Flamebait)

sgt scrub (869860) | more than 5 years ago | (#27744489)

People in the US probably just have less bandwidth.

underserving market leads to piracy (0)

Anonymous Coward | more than 5 years ago | (#27744651)

Anybody who did not understand that, has to.

Simple as that.

If these markets are leeching, and somebody does not see a viable interest it does not mean that there is no market to be used. It happens again and again, and it will happen until somebody does not pick up his behind and think of some way of using such potential. No meter how small it is.

And then in couple years, You will see another Google coming up. Or maybe the same Google occupying another market and thriving with it.

That is not easy, because it requires a change of mind and business.

Re:underserving market leads to piracy (0)

Anonymous Coward | more than 5 years ago | (#27744929)

No meter how small it is.

All meters are of equal size. That's the beauty of the metric system.

Here in South America... (4, Interesting)

rodrix79 (1542781) | more than 5 years ago | (#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 ;)

Re:Here in South America... (1)

sarathmenon (751376) | more than 5 years ago | (#27744855)

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?

Re:Here in South America... (4, Informative)

dtoffe (799874) | more than 5 years ago | (#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:Here in South America... (2, Informative)

karuna (187401) | more than 5 years ago | (#27745043)

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 required agreements with local phone companies.

Re:Here in South America... (2, Insightful)

Exp315 (851386) | more than 5 years ago | (#27745171)

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 sell a product or service from the U.S., with all information in English only, priced for the U.S. market in US$, accepting only U.S. credit cards for payment etc., your international sales might be limited - duh!

Re:Here in South America... (1)

Registered Coward v2 (447531) | more than 5 years ago | (#27745195)

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 subsidize unprofitable ones as well as the early build out of the infrastructure).

Web companies, OTOH, don't have low marginal costs as each additional user cost real money for bandwidth; and they don't get paid for the bandwidth nor can they control where their sites are streamed nor who accesses them; at least not as easy as a cell phone company can. So their only real choice is to cut access to unprofitable regions.

I'm sure they'd love to sell millions and millions of shiny new webphones and charge monthly fees but until they can their need to look at what makes them money and cut their loses.

Re:Here in South America... (1)

tnk1 (899206) | more than 5 years ago | (#27745771)

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 will come" model.

Speaking as someone who works for a unnamed company who is trying to make a living off of web based advertisement, I can tell you that the margins on web advertising can be really thin, and the complexity of extending the infrastructure internationally is high. It's even worse when you have to make up for the lack of infrastructure you have in other places.

Let's be clear, we're not just talking about outside the Western world. It is a pain in the ass to build out an app from the US to Europe. The major difference is that Europe generally has the audience and advertising money that other parts of the world simply don't have. It's expensive to set up shop there for a US company, but there is definitely money to be made, so the effort is usually made.

I think there is definitely a way to monetize South America and other places, but the current model needs some tweaking to make it profitable. At the very least, I think that content from high traffic, but low profitability locations should be blocked unless a cover fee is paid by the ISP. That fee would offset the costs of doing business, and the ISP could pass the charge to the consumer, possibly as a tiered package deal. Or, the ISP could pay for a co-location of your applications locally so that the bandwidth is limited to replication between sites. Equipment, in and of itself is not really all that expensive, its the charges for bandwidth as well as for power and space in remote locations that will kill you.

The Long View (2, Interesting)

Bob9113 (14996) | more than 5 years ago | (#27744695)

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?

There is NO way for them to pay (5, Informative)

cybernanga (921667) | more than 5 years ago | (#27744935)

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:There is NO way for them to pay (1)

vrai (521708) | more than 5 years ago | (#27745565)

It is distinctly non-trivial to set up a secure, trustworthy, reliable internet payment system. It's a financially worthwhile undertaking for the high per-capita income markets, but not for the rest of the planet; predominately due to the vast array of regulation and red tape one would have to jump through for each new country.

This is compounded by the problem that many middling-to-lower markets have onerous Governments that are often outright kleptocracies. These kind of Governments don't take kindly to payment systems they don't control and can't easily manipulate.

South American nations could make their citizens' lives easier in this regard by converting Mercosur in to a regulatory union: with common bank controls and free movement of wealth, if not a common currency. This would greatly increase the viability of an internet accessible payment system being profitable and so successful.

IT IS THE CREDIT CARDS STUPID!!!! (4, Interesting)

cenc (1310167) | more than 5 years ago | (#27745041)

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:IT IS THE CREDIT CARDS STUPID!!!! (3, Informative)

NineNine (235196) | more than 5 years ago | (#27745373)

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.

leave them alone.. (2, Interesting)

zr (19885) | more than 5 years ago | (#27745109)

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

Block the Ubuntu downloads to african people?! (1)

chord.wav (599850) | more than 5 years ago | (#27745275)

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" motto I, as many of you, grew up with? Where are the "hacker ethics" now?
Suddenly it as all about bussines.

So what's next? Block the Ubuntu downloads to african people?! What a load of bullshit!!! They should be sorry and ashamed.

Some probable reasons (0)

Anonymous Coward | more than 5 years ago | (#27745359)

I run a profitable small web site in Latin America, and I believe there are two things to that make it difficult for US (or any high income country) web companies to make advertising profit in the deloping world.

1) The difficulty to reach (and get money from) local advertisers. Most advertising in the developing world is local, and most global ad networks have very little to non advertisers from this part of the world. That is, if you run a website in the developing world, there are almost none profitable ad networks to hook your site to, meaning that you need local ad sales teams, knocking on every customer door. This can make the operation less profitable and be complicated for US or Europe based companies.
2) The ad market is significantly smaller in the developing world. Whilst in the US total advertising is around $1.000 per inhabitant, in a middle income country like Panama, total advertising is around $100 per inhabitant.

There is one upside to this: the less overall market efficiency in the developing world makes relative prices to go up, and, if you operate locally, costs are significantly lower, compensating aforementioned facts and making it viable to profitably operate web companies in the developing world.

In conclusion, I believe that local sites (operated from each developing market/country) have a higher chance of making a profit from advertising related ventures.

Cultural problem (0)

Anonymous Coward | more than 5 years ago | (#27745443)

The primary problem is that you need to understand your customers first, before trying to set up a business model.

Yeah, ads work in USA but doesn't work in Brazil. Why?

Simply because the culture is different. Brazil has one of the highest numbers of piracy. What is piracy? Get the same (or almost the same) for less, or yet, for free.

That's the main issue. 3rd world countries with high levels of piracy can tell a lot about the customers you will find. They're not buying your cheap Google Ad, simply because the products those banners sale are not cheap enough.

I have seen tons of websites that didn't made profits from Googl Ad, but made huge profits from banners of auctions web sites like Mercado Livre (an eBay like website).

The ads were explicitly anouncing products that tou couldn't find for less in anywhere else. (Including pirated products)

Yeah, that's what 3rd world people want, more for less. And you can be sure that those people will eat your resources until you discover how to make profit or charge by the service. When you charge for it, they will simply disappear and look for a similar one for free.

Pipes? (1)

YourExperiment (1081089) | more than 5 years ago | (#27745677)

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?"

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