Does the internet need a border fence to be profitable?
Brad Stone and Miguel Helft write in today’s New York Times that the exponential growth of internet usage in developing countries is bleeding the profit from many web-based companies. What’s happening is very simple: People in places like Turkey, Indonesia and India are spending extraordinary amounts of time on sites like YouTube and Facebook–far more than the average consumer in North America, Europe and Japan. They’re sucking up a tremendous amount of bandwidth. The problem with this is that thus far advertisers has placed little to no value on the eyeballs popular sites are attracting in the developing world. If these foreign consumers can’t or won’t buy their products, they don’t want to pay for reaching them.
As a result, the big online players have to ask themselves if growth that cannot be monetized is something they really want. It’s not out of the question that some of the most popular sites on the web will become restricted to residents of certain countries. Though this seems a betrayal of the egalitarian ethos of the internet, failing to make money is a betrayal of the reason the companies exist in the first place.