The International Paradox

            I recently read a very interesting article in the New York Times that truly showed to me the flaws of the current business model. It also reflected the cold, business side of the internet, the side only concerned with profits. And not the social, philanthropic side of the internet, the side whose goal is to connect people and communties around the world.
                The article is entitled In Developing Countries, Web Grows Without Profit by Brad Stone and Miguel Helft. The article discusses that very popular social web sites such as Facebook, YouTube and Myspace, although their popularity is skyrocketing in developing countries, they are struggling to earn a profit.
                As these major web companies global audiences expand, their profits are dwindling because based on the current business model, they primarliy rely on advertising to produce their profits.
                 These web companies are growing in popularity exponentially in areas such as Asia and the Middle East but it is also more expensive to operate in these areas due to their limited bandwidth. These Web Companies need more servers in order to make the content available to places with the limited bandwidth. In addiditon to these countries being moore expensive to operate in, online advertisments to these countries are least likely to translate into results because the people more than likely cannot afford the products.
                      This creates an obvious dilemma. Although poplularity is booming in global audiences, they are eating up the bandwidth and its very difficult to derive revenue from it. Also, even though there are millions of people in the world wtih internet access, fewer than half of them have incomes high enough to interest major advertisers and they are not translating the advertisemnts into profits or results.
So what are these Web companies to do?
                 Well, in the article it discussed that the next step would be to limit or even stop their services to these parts of the countries. For instance, the article siad that last year, Veoh, a video-sharing site operated from San Diego, decided to block its services 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.
                          Michealangelo Volpi, chief executive of Joost, a video site with half its audience outside the United States said that if Web companies really want to make money, they would shut off services to all those countries.
               I personally dont think this is fair. The purpose of a socail netowrk is to connect people from around the world. Web companies are forgetting their original purpose.
                 YouTube, which is getting hit the hardest, with an estimated loss of $470 million in 2009, still tries to uphold thier standards and original purpose. Tom Pickett, the director of online sales and operations at YouTube said the company still hews to its vision of bringing online video to the entire globe.
                    However, Mr. Pickett did say that YouTube has made their services slower and a more lower-quality viewing experience in the developing countries in an attempt to lower costs.
                      This shows to me that their definatley is a need for a better business model, not just in the news industry but in the media world as well. Developing countries will have the misfortune of not being able to access these popular sites and I think that will be a set back for the Internet, because connecting global audiences is one of the founding principles the internet has been built upon.