Entrepreneurs are creating digital platforms in hopes to grab a slice of what will soon be Southeast Asia's largest Internet market.
Peacock Coffee is a nice little 24-hour coffee shop on Yogyakarta's Jalan Affandi near the universities. There are about a dozen universities in town. As someone used to toiling in Silicon Valley's digital salt mines (aka coffee shops), the thing that strikes you about Peacock is not the quality of the coffee (very good), but the number of laptops, the speed of the Internet, and the buzz. That's the only way to describe it. Buzz.
Online has momentum in Indonesia, you only have to look at the recent statistics:
If you are a publisher, is there opportunity for you in Indonesia? The answer is clearly yes. But timing is important. Audiences are shifting to online and mobile quickly, especially younger audiences in Jakarta, Surabaya, and Yogyakarta. Indonesia's traditional publishers and broadcasters are trying to follow the eyeballs, creating a very competitive environment. But, the online advertising market has continued to lag. ZenithOptimedia estimates that total online advertising will reach only $1.8 million in 2012. (Source: ADMA; ZenithOptimedia.) So, if you are a start-up online publisher planning on competing for the Indonesian market, you need to plan for the long term and think carefully about your content/audience and revenue strategies.
Traditional publishers like Kompas and the Jakarta Globe have followed the model of most markets by repurposing their printed content for online and mobile. But there are a couple of other notable content/audience experiments that build on Indonesians' enthusiasm for blogging. SalingSilang.com is an Indonesian blog directory that uses some semantic techniques to categorise and rank blog posts into larger aggregation sites. One of their most successful aggregation sites is Politikana.com, an aggregation hub for Indonesians discussing local politics. SalingSilang has also used their technology to launch sites that aggregate and rank blogger writings on travel, food, football, and even a local site on the city of Semarang, Central Java. Swaberita is another content strategy that is worth watching. Swaberita builds on Indonesians' enthusiasm for 'self-publishing' and creates a citizen journalism platform that resembles Malaysia's KomunitiKini and Citizen Journalism movements.
An online only publisher in Indonesia faces some significant revenue challenges to start. The major traditional publishers have begun to buddle their print advertising with online advertising, taking advantage of the 70 percent share that newspaper advertising still holds in Indonesia. But, many of the 'tools' that start-up online media have relied on elsewhere are not fully available yet in Indonesia. According to Google's AdSense blog, AdSense is available for search in Bahasa Indonesia, but not yet 'technically' available for content. Why 'technically'? Well, resourceful entrepreneurs have created several 'work arounds' to use AdSense on content pages. AdSentra.com is one of the many local ad networks that can provide some revenue support. But as a whole, the advertising market is small. There are not a lot of advertising tools or services to support content, and competition is strong. So, a start-up building a local audience will need to plan for the slow growth of the local advertising market.
Finally, if you check out some of the sites mentioned in this post, you will encounter one of the more frustrating aspects of launching a site in Indonesia. The country has poor hosting infrastructure. Many of the sites that are hosted in Indonesian facilities can experience load times in the minutes. Making one of the most important strategic decisions for a start-up where to host the site. Many local Indonesian start-ups are hosted in the U.S. or Australia. When you ask the students and entrepreneurs at Peacock Coffee, you find that a lot of them are hosting their blogs overseas. But access to a foreign currency credit card can make this a difficult choice for a start-up, putting faster, more reliable, and reportedly cheaper international hosting facilities out of the reach of a small local start-up. Recently Amazon has expanded AWS to Singapore, which makes hosting on the cloud a new option for Indonesian start-ups, especially news start-ups that may experience traffic surges that can be easily and cost-effectively handled through AWS. Hopefully this will offer one solution to the hosting problem.
There is an Internet buzz in Indonesia. Entrepreneurs are working to target the large audience and rapid growth to capture what will be Southeast Asia's largest Internet market in a year or two. While there are challenges from large traditional competition and poor infrastructure, entrepreneurial Indonesian online publishers have started to launch new products, like SalingSilang, to capture the market and address the obstacles. Stay tuned; my bet is that Indonesian entrepreneurs will see a few more acquisitions like Koprol from the large Internet multi-nationals in the next few years.
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Ross Settles is an International Committee for Journalists Knight Fellow. He currently works with the leading Malaysian news site, MalaysiaKini, to develop sustainable models for online journalism in Southeast Asia. Most recently, Settles managed online business operations for Hong Kong's South China Morning Post. Prior to SCMP, he directed marketing and business development efforts for Knight Ridder Digital, the online subsidiary of what was once the second largest U.S. newspaper publisher. During his tenure at Knight Ridder, Settles led efforts to invest in and implement strategies using new online technologies: social networking (Tribe Networks), vertical search (ShopLocal), news search and aggregation (Topix). Settles worked closely with local news and business operations to develop new business and distribution models for these new investments. He also held leadership positions at technology media company Red Herring Communications, The Baltimore Sun, and the Open Society Institute-funded Open Media Research Institute in Prague. Settles has spent a decade in China and East Asia. He speaks, reads and writes Mandarin Chinese. Settles holds an MBA from the University of Chicago and a BA in East Asian studies from Princeton University.
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