DS Dramas

It's been an interesting week. Most interestingly, Aulia wanted me to take the post down. The Twitter Drama

post was deemed irrelevant and confusing. I mustered some effort to explain why I posted it there - primarily because it was Part II to a series of (mostly planned) posts on how to make sense of the Indonesian internet scene.I ended up promising him to write more often. Maybe I will.

I chose Twitter as a general illustration of a new medium - widely popular and recognizable to most - even if they don't monetize yet. Or Detik.com - Maximum Reach with Tabloid Quality - except this one monetize.

The case studies confuse a whole lot of people and they saw many, many, many internet shops in Indonesia faltered and died because the ad money never comes.

Well, you can't sit around and expect people come to give you money. Not in any business model, or any market. You have to work to make money and you have to work hard, but I will not write another post to state the obvious.

I would simply offer you another perspective: online advertising is peanuts.

Online accounts for about 2.5% of total ad spend by the more optimistic estimate, closer to 1% in real cash terms in my guess. This nascent market is now almost wholly and entirely owned 4 or 5 large media companies that is producing a whole lot of content and advertising reach, plus ad people love fluff, commissions, bartering and stuff.

Reaching audience understandably requires scale and media companies know this best. Well, they used to know. Advertising used to be almost entirely half duplex - TV, Radio, Magazines, Newspapers - except now they now still have to deal with AdSense and Facebook and Twitter and whatnot.

Actually, they don't. Most of the money still go to the traditional media, even if more and more of the money will shift to online. The internet now reach more indonesians than Radio and Print and in a few years, it will be nearing 99% reach.

A lot of these hundreds of millions of people won't be accessing the internet with fancy gizmos or Apple toys - most of them will use Chinese made knockoff smartphones with prepaid accounts. Indonesian telcos raked off billions and billions of their GSM brethrens for many years using SMS technologies. The government just suspended all operations, even musicians are up in arms because primary sales for music these days are RBT for monochrome phones. They pay peanuts for peanuts, but people of all sort will pay for any content, so long as you're providing them the access. Access is about reach. Reach is about device and applications. Twitter timeline is for dramas, but if people seriously want to talk business models, they really should understand the market first.

A lot of people mentioned 'internet users' these days. Like any other year, the numbers from the ISPs and the respectable research houses don't tally and people get confused. Some say 40 million, others said 60 million. Whatever. I was redoing my computers and the home network and I found like 16 devices on the network. iPads, iPhones, Blackberries, Nokias, HTCs, Nexians, whatever. It doesn't matter. "Mobile now on the verge of being the dominant access point." says a Nielsen 2011 report of the Indonesian Internet users.

People will consume content - access the media, via whatever the distribution medium. It's almost irrelevant to count internet users when (almost) the whole country is connected to a data network. Yes, the network is crappy now, but it will only get better.

Internet Advertising in Indonesia is far from market saturation. There are hundreds of millions of Indonesian eyeballs coming online in the next few years and they will use the network to read, search, learn, studies, gossip, hear music, watch porn and whatever else. All of them will be served ads in some ways or form.

The industry, the market, the technology - the world - is changing dramatically in the last 10 years. For many millions of Indonesians emerging from under their past tight government supervision, modern day media and access and socializing is very much new and everybody is pretty much learning. Large media companies are going thru massive (and potentially destructive) just as media companies everywhere do. It's been a perilous decade since the internet popped the bubble - Google now have TV commercials, too.

Detik saw its market share dwindle from 80% or so to less than 40% or so, even as the revenue doubles every year and margins grow higher. Along with the heavy competition there will be a pressure for experienced people and hiring cost will go only higher, squeezing the marginally lazies out of the game. Producing content is a cutthroat business, in any media. Ask the TV people (or they Music people)

An Internet Industry - by most definition - must require some commerce for sustainability and fund the creation and innovation of new content and technology and eventually, to reach the intended audience.

There will be gazillion new opportunities for cool technologies and latest hipster fads to come later but at the heart of it, there will be an online advertising market. You're seeing only the very beginning of it. Everything else will be mostly run on top of it. Unless you're building robots, in which case you would have my fullest attention.

So yeah, maybe I'll write more later and make more sense later. It's only Saturday. If you think I don't make sense, rest assured, I do not always make sense, but if you leave questions in the comment, I will most likely try to respond. If you flame bait on twitter or anywhere else, I may or may not bother. I am moody like that.

The picture above is by the great Daniel Peacock who painted the picture I use as my avatar on Twitter (but the DS people aren't yet letting me have an avatar here). It has nothing to do with me (or this post) but it's Sunday.

Have all a good weekend.