NET.COLUMNS: In search of Profits on the Indian Internet

MUMBAI (May 21): If one were to look at the number of companies offering
(or at least claiming to offer) Internet services in India, one would definitely
feel that this is the gold rush of the 1990s. This herd mentality has
meant that the page creation and hosting business is becoming more of
a commodity. Many Indian businesses are getting on the Web. And yet,
the profits aren’t there for most companies. What’s wrong with the

The Internet business, like any other business, requires time to
mature. There is no proven successful business model. With entry
barriers very low to providing services, it is something that every
company (or in many cases, even an individual) feels can be done. So,
many companies get in. Result: falling prices, ineffective services,
confused customer. The same “home page” is offered for Rs 500 by one
organisation, and Rs 5,000 by another. At the low-end, it is almost
impossible to build a sustaining long-term business. And at the
high-end, the volumes are too small since most companies like to “test
out the waters” and therefore start small. Which leads to an obscure
presence, little traffic and disappointment.

Companies looking to build up content-based, advertiser-driven
businesses are in for a long race. Content is free, advertisers are
few. The domestic audience is not targeted directly by most Indian
sites. And the NRI is not going to easily part with his money, unless
you are a bank or offering him a nice house at a rock-bottom price. To
build up traffic and therefore advertising requires staying power,
implying time and money. Many sites start with a grandiose plan, and
not seeing the business or the traffic come in, get lethargic on the
updates. Which worsens the situation. The surfer today has plenty of
choice. Take newspapers, for example. Most Indian newspapers are up on
the web in the early hours of the morning to target the US
traffic. Are we getting US advertisers to reach out to this audience?
Not yet. Indian readers couldn’t care less: it is far cheaper to read
the hard copy than to spend time on the web.

Worldwide, the web business is one of changing models. 1996 was the
year of Content. 1997 is the year of Community. 1998 is likely to be
the year of Commerce. It is tough to evolve as fast as the Web. What
many companies and investors are realising is that things take time —
as in any normal business. Technology might make many things possible,
but customers are still old-fashioned, and slow to change. In this
scenario, it is very important to have a long-term perspective, with
an ability to look at what’s working on the Web and Indianise
it. Learning to harness the technology within the Indian constraints
is an ability few companies seem to have mastered. Thinking through
the future and challenging it everyday is what will make for
successful and profitable businesses on the Indian Internet.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.