Malaysian Web 2.0

Building a better Malaysian Web… Dinesh Lal Kumar 9 May 2007 Version 1.0 UNRAVELLING THE PROMISE OF WEB 2.0: A MALAYSIAN PERSPECTIVE TRACKS WEB 2.0 WEB 2.0 SERVICES PURSUING THE PROMISE MALAYSIAN CHALLENGES In my own words… Web 2.0 refers to a range of online services where niche communities come together around a common interest, share content, interact with each other and, by doing so, form a collective consciousness on the web. O‟Reilly, who coined the term, defines Web 2.0 better In Web 1.0, the user was consuming content created by someone else. 1.0 is an architecture of consumption. In Web 2.0, the content is created by the user. 2.0 is an architecture of participation. On the old Web, the user is the audience. In the new Web, the user is the participant. The following video illustrates it best … Title: By: Source: The Machine is Us/ing Us Michael Wesch YouTube Licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License TRACKS WEB 2.0 WEB 2.0 SERVICES PURSUING THE PROMISE MALAYSIAN CHALLENGES THE WEB AS A PLATFORM SOCIALISE COMMERCE Bought by Yahoo for US 1.65 billion (RM 5.7 billion) Adds 150,000 users a day. Bought by Wide Web became “In 2006, the World Rupert Murdoch’s News Corporation together the small a tool for bringing for US 580 million (RM 2 billion). contributions of millions of people and making them matter” Time, December 25, 2006 DISCOVER PLAY A virtual world with its own currency (current exchange rate: 270 Linden Dollars = 1 US Dollar) and an economy that fully supports some player’s real world income, ranging from a few hundred to several thousand US dollars per month. TRACKS WEB 2.0 WEB 2.0 SERVICES PURSUING THE PROMISE MALAYSIAN CHALLENGES PURSUING THE 2.0 PROMISE Since its launch in January 2005, LifeLogger.com has been commended by various media establishments outside Malaysia. TechTV‟s Leo Laporte described LifeLogger as “the perfect web app to log your life online”. Business Week featured LifeLogger being voted by enough readers to land the service a much coveted Top 8 recommended blogging tools in 2006. LifeLogger today is involved in the implementation of Web 2.0 User Generated Content (UGC) initiatives for various international companies. LifeLogger also powers its parent company‟s social networking community platform serving Mixed Martial Arts athletes and enthusiasts in the US, ProElite.com. LifeLogger was originally founded in MALAYSIA, by MALAYSIANS. What have we learnt from our pursuit of the Web 2.0 promise? TRACKS WEB 2.0 WEB 2.0 SERVICES PURSUING THE PROMISE MALAYSIAN CHALLENGES FINANCING PERCEPTION REACH CENSORSHIP INCUMBENTS UNRAVELLING THE PROMISE OF WEB 2.0: A MALAYSIAN PERSPECTIVE Photo by: Ian Koh Source: Flickr Licensed under a Creative Commons Attribution-NonCommercial 2.0 License REACH A question posed in 2005 * The answer that came in 2007 2.5 % in April 06 ** ie; 560,000 Malaysians are subscribed to Broadband. In total. MySpace users added each day: 150,000 Ceteris paribus, No of days to get ALL of Malaysia‟s broadband users signed up on MySpace = 3.73 days. So, is Web 2.0 currently relevant to Malaysia? Possibly. But for now, do not rely purely on a Malaysian base for a sustainable web-based business. LifeLogger considered „Mobile 2.0‟ and messaging based services to sustain itself early on. Source: * www.redesignmalaysia.com ** MCMC April 2007 INCUMBENTS Malaysia has a healthy mobile penetration rate (80% in 2006), with widespread adoption of messaging services (9 billion SMS sent during 2005 alone). Complementing a Web 2.0 based service with a mobile, messaging or „presence‟ skewed offering is thus a viable consideration for a startup. “However, although the web-based social network boom and the rising use of cell phones for non-voice functions, makes the trendy „mobile social network‟ phenomenon an obvious area for investment, but the reality is that it‟s difficult to base a business off of just turning an unknown brand into a single mobile social network. You need a lot of money to grow the subscriber counts” 8 May 2007, You could be considering co-promoting your service together with mobile operators and ISPs. There are already many customer touchpoints, such as billing, notification alerts and content distribution which require some form of partnerships to be in place anyway. The challenge is that Web 2.0 social networking sites have their roots in the web, and its corresponding business model - i.e creating an appealing enough and free core offering in order to grow the user base en masse, and then creating a sustainable revenue stream off of the volume of users within the network. Mobile operators however are rightfully inclined to look at their base offering as the voice and data plans they offer, as this is where a significant portion of their capex investments and licensing costs have gone towards. As such, all content and additional revenue streams are viewed merely as Value Added Services (VAS). INCUMBENTS Therefore, with the high level of competition on their base offerings, operators may not be inherently geared towards developing the core competencies required to build a sustainable social network in-house. Thus, they may be interested in partnering niche 2.0 services. The challenge to startups is that the cost of doing business through operator networks, whether as a branded or non-branded operator service, is relatively high. Revenue share models and the inclination to progressively charge for each user interaction also compounds the challenge as these mechanisms are usually in favor of the operator and not the Web 2.0 premise of giving enough away in order to exponentially and quickly grow the userbase. As a sidenote, the Web 2.0 revenue stream, once a service has reached critical mass, typically has either of the following characteristics: „Pro‟ services at a fee - Selling users a range of advanced features sets that enhance the free base offering (Skype, Second Life, Flickr, ProElite) 3rd Party revenue - Example; selling ads to third parties looking to market to their userbase (Google Adwords, MySpace, LifeLogger) The value proposition of social networks are clear though and, whether they want to or not, mobile operators, ISPs and some broadcasting networks are slowly realising the need to fully capitalise on this new „open web platform‟. FINANCING One of the key challenges facing Malaysian startups is the insufficient access to viable pre-seed funding which does not impose excessive credit related restraints. Furthermore, as the venture capital and funding industry in Malaysia is relatively young, there is an apparent lack of understanding of the true nature of what‟s needed and how long it takes to make internet and software investments fruitful. Web 2.0 startups need funds to grow their business, create value and build a „disruptive‟ service, which may take awhile, while venture capitalists and funding institutions in Malaysia focus on their exit and short term return-on-investments. Technology columnist Toh Mei Ling said “it takes about seven years on average for content developers to break even in the business, let alone turn a profit. Venture capitalists do not understand this” The Star, „Content developers face hurdles‟ April 12 2007 Thus, instead of nurturing the entrepreneurial spirit, the funding mechanism in the country has a tendency to clip it. This contributes to the country‟s severe “brain drain” problem, especially in information technologies, as the more talented look for better technical education and more challenging work abroad. On a positive note, although they are few and far between, but some of the initiatives that do try to encourage entrepreneurs, without excessive credit restraints, are such as: MSC Malaysia R&D Grant Scheme MDeC‟s Technopreneur Pre-Seed Fund Programme And Microsoft and MDeC‟s jointly launched MSC Malaysia OneISV Programme PERCEPTION There is an underlying sentiment that Malaysian brands which have not yet achieved mainstream success outside the country, especially technology related brands, are more likely to be pegged inferior. From the typical response upon discovering LifeLogger was actually founded in Malaysia, it does seem that the „Malaysia Boleh‟ spirit is not in flight. In part, this could be due to the perceived failures of numerous multi-million dollar backed ventures and non-delivered projects in the past. But it is a challenge all the same that any aspiring Web 2.0 company has to face and overcome. Ventures that have limited funding resources are thus challenged to get an initial headstart in growing their Web 2.0 business, even if it is a world class and cutting edge service, as they are invariably caught in a Catch 22: In order to succeed in your own country, you must first prove yourself outside of it. In order to prove yourself outside of it, you must first achieve some success in your own backyard. It is for this reason that, in order to achieve acceptance in its own backyard, LifeLogger initially partnered with established global brands such as Nokia, Ericsson, Motorola and Telenor for various co-branding, marketing and pilot initiatives. The service itself was also subtly presented as a non-Malaysian initiative. Photo by: Nurul Rahman Source: http://nurulrahman.edublogs.org Licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 2.5 License THANK YOU Lets Build A Better Web ...