If we look at the Indian digital space, there are three primary ways for companies to make money: subscriptions, advertising and transactions (commerce).
India’s digital advertising market is still quite small (about Rs 700 cr – $150 million), with Google being the dominant player. Many of the leading Indian portals are losing money. While transactions are happening in large numbers, it is limited to a few categories. Subscriptions are non-existent in the Internet space, but if we extend that to “user pays”, the category is worth over $1 billion in the mobile space. Only a fraction of that (about 20%) actually flows through to the content and value-added services companies.
Given the realities, I think the opportunity lies in creating services that users can pay small amounts of money for – like they do on the mobile. What is needed, thus, is the equivalent of an open app store with a payment mechanism where mobile operators and taxes do not eat up 80% of what users pay. A related opportunity in this space is to create a friction-free person-to-person micropayments capability, much like PayPal.
So, is there a way this can be created? And if so, what would be its impact?
Tomorrow: Part 3