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[liberationtech] The International Paradox

Yosem Companys companys at stanford.edu
Sat May 2 18:06:32 PDT 2009


*From Slashdot:*

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<http://www.nytimes.com/2009/04/27/technology/start-ups/27global.html>.
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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